Amidst an antitrust investigation, Microsoft declares of no ownership in OpenAI
By MYBRANDBOOK
Microsoft defends against antitrust concerns by claiming it does not hold a traditional stake in OpenAI. Instead, the company worked out an arrangement to take home nearly half of OpenAI's financial gains. Authorities in the US and the UK are investigating whether Microsoft's $13 billion investment in OpenAI violates any antitrust rules.
"While details of our agreement remain confidential, it is important to note that Microsoft does not own any portion of OpenAI and is simply entitled to a share of profit distributions," a Microsoft spokesperson said in a statement. Earlier Friday, Microsoft President Brad Smith said "the only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI's board." He described its relationship with OpenAI as "very different" from Google's outright acquisition of DeepMind in the UK.
"Our partnership with Microsoft empowers us to pursue our research and develop safe and beneficial AI tools for everyone, while remaining independent and operating competitively. Their non-voting board observer does not provide them with governing authority or control over OpenAI's operations," said an OpenAI spokesperson in a statement.
Microsoft hoped to reassure investors and customers that it's not overly reliant on one partner. OpenAI didn't want employees, customers and other investors thinking it was merely an outpost of Redmond, Washington-based Microsoft. That careful positioning was upended last month with the firing of OpenAI Chief Executive Officer Sam Altman and the startup's near implosion.
Once Altman was restored as CEO, Microsoft executives debated the wisdom of taking a seat on the OpenAI board, people familiar with the matter said at the time. On the one hand, executives feared that a board seat or observer slot might draw the attention of regulators. On the other hand, Microsoft wanted to keep a closer eye on its partner and protect its investment-an imperative that carried the day, despite the risks.
Ultimately, Microsoft could face a world of regulatory headaches. Regulators in Europe are also paying attention, according to a spokesperson for the European Commission. In order for a transaction to be notifiable to the Commission under the EU Merger Regulation, it has to involve a change of control on a lasting basis. While this transaction has not been formally notified, the Commission had been following the situation even before the management turmoil.
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