Has Microsoft taken over control of OpenAI? Brad Smith issues clarification

Microsoft president Brad Smith clarified on Friday that the sole change in Microsoft’s role with OpenAI is its position as an observer on the AI company’s board. He said that having a non-voting observer on OpenAI’s board is distinct from an acquisition.

Microsoft CEO Satya Nadella (R) greets OpenAI CEO Sam Altman during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. (Getty Images via AFP)

The Competition and Markets Authority (CMA), Britain’s antitrust regulator, announced on Friday that it will assess whether Microsoft’s partnership with OpenAI constitutes an “acquisition of control,” indicating a review of potential material influence by one party over another.

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“The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK,” Smith said in a statement.

Microsoft President expressed commitment to collaborate closely with the CMA, providing all the necessary information.

The antitrust regulator is additionally assessing whether the deal has led to the establishment of a relevant merger situation.

The CMA said, “There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft.”

“In light of these developments, the CMA is now issuing an ITC to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition.”

Microsoft has pledged an investment exceeding $10 billion in OpenAI, securing a 49 per cent ownership stake in the company.

OpenAI CEO Sam Altman announced on November 29 that Microsoft would hold a non-voting observer position on OpenAI’s board, granting access to confidential information without voting rights.

This occurred after the OpenAI board briefly ousted Altman, but it didn’t sit well with Microsoft. CEO Satya Nadella announced that Altman would join Microsoft’s AI team.

However, in another dramatic turn, Altman was reinstated as OpenAI chief, and the board was reconfigured.

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