AI Deals Between Microsoft and OpenAI, Google and Samsung, Under EU Scanner

EU antitrust regulators will seek additional third-party views, EU competition chief Margrethe Vestager said on Friday.

By Reuters | Updated: 1 July 2024 19:20 IST

Photo Credit: Reuters

Microsoft also acquired AI startup Inflection for $650 million in March

Highlights

EU's Vestager has sent questionnaires to Microsoft, Google, other firms
Microsoft's partnership with OpenAI will not be subject to EU merger rule
Microsoft has invested $13 billion in OpenAI

Microsoft's partnership with OpenAI could face an EU antitrust investigation as regulators singled out their exclusivity clauses while Google's artificial intelligence deal with Samsung also triggered scrutiny.

EU antitrust regulators will seek additional third-party views, EU competition chief Margrethe Vestager said on Friday.

The moves underscore the unease among regulators worldwide on Big Tech leveraging its dominance into the new technology, echoing the companies' market power in other sectors.

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Vestager in March sent questionnaires to Microsoft, Google, Meta's Facebook and ByteDance's TikTok as well as other big tech companies related to their AI partnerships.

"We have reviewed the replies, and are now sending a follow-up request for information on the agreement between Microsoft and OpenAI. To understand whether certain exclusivity clauses could have a negative effect on competitors," she told a conference.

Reuters was first to report that EU regulators were building a case that could lead to an investigation into the partnership between the two companies.

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"We stand ready to respond to any additional questions the European Commission may have," a Microsoft spokesperson said.

Microsoft's partnership with OpenAI will not be subject to EU merger rules because of the absence of control, Vestager said.

While OpenAI's parent is a nonprofit, Microsoft has invested $13 billion (roughly Rs. 1,08,425 crore) in a for-profit subsidiary, for what would be a 49 percent stake.

Vestager also cited concerns about Big Tech blocking smaller AI developers from reaching users and businesses.

"We are also sending requests for information to better understand the effects of Google's arrangement with Samsung to pre-install its small model Gemini Nano on certain Samsung devices," she said.

Google in January reached a multi-year deal with the South Korean company to embed its generative artificial intelligence technology in Samsung's Galaxy S24 series smartphones.

Vestager also said she was looking into "acqui-hires," where one company acquires another mainly for its talent, as exemplified in Microsoft's $650-million (roughly Rs. 5,422 crore) acquisition of startup Inflection in March that allowed it to use Inflection's models and hire most of its staff.

"We will make sure these practices don't slip through our merger control rules if they basically lead to a concentration," she said.

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