 "EU to investigate AI Deals between Microsoft and OpenAI, Google and Samsung")
The European Union is set to investigate artificial intelligence deals involving Microsoft and OpenAI, as well as Google’s agreement with Samsung. EU antitrust regulators have raised concerns about the exclusivity clauses in these partnerships, signalling increased scrutiny over how big tech firms are leveraging their dominance in the AI sector.
Margrethe Vestager, EU’s competition chief announced that regulators will look for more third-party perspectives in order to understand the implications of these deals in a better way. Moves like these a broader global unease among regulators about Big Tech extending its market power into emerging technologies.
In March, Vestager sent questionnaires to major tech companies, including Microsoft, Google, Meta’s Facebook, and ByteDance’s TikTok, regarding their AI partnerships.
She stated that the responses have been reviewed and follow-up requests for information are being sent, particularly concerning the agreement between Microsoft and OpenAI. Vestager emphasized the need to examine whether certain exclusivity clauses in this partnership could adversely affect competition.
Vestager explained how they have reviewed the replies and are now sending follow-up requests, to understand the deal between Microsoft and OpenAI and see if certain exclusivity clauses could have had a negative effect on competitors.
According to a report by Reuters, EU regulators are building a case that might lead to a formal investigation into the Microsoft-OpenAI partnership. A Microsoft spokesperson told Reuters “We stand ready to respond to any additional questions the European Commission may have.”
Vestager noted that the Microsoft-OpenAI partnership would not be subject to EU merger rules due to the absence of control. While OpenAI’s parent organization is a nonprofit, Microsoft has invested $13 billion in a for-profit subsidiary, which would give it a 49 per cent stake.
Impact Shorts
More ShortsVestager also expressed concerns about Big Tech potentially blocking smaller AI developers from accessing users and businesses. She highlighted that the EU is sending requests for information to better understand the impact of Google’s arrangement with Samsung. This deal involves pre-installing Google’s small AI model, Gemini Nano, on certain Samsung devices. In January, Google secured a multi-year agreement with the South Korean company to embed its generative AI technology in the upcoming Galaxy S24 series smartphones.
Additionally, Vestager mentioned investigating “acqui-hires,” where companies acquire others primarily for their talent. She cited Microsoft’s $650-million acquisition of the startup Inflection in March, which allowed Microsoft to utilize Inflection’s models and hire most of its staff. Vestager stressed the importance of ensuring that such practices do not bypass merger control rules if they effectively result in market concentration.
The EU’s proactive stance on investigating these AI deals underscores its commitment to maintaining competitive markets and preventing dominant players from stifling innovation. As the investigations proceed, the outcomes could have significant implications for how tech giants conduct their business in the rapidly evolving AI landscape.
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