The UK’s antitrust regulator said it will not launch a formal investigation into Microsoft’s (MSFT) ties with ChatGPT maker OpenAI, a major win for the tech giant as it seeks to build on its relationship with the AI startup and secure regulatory approval for the partnership on either side of the Atlantic.
Britain’s Competition and Markets Authority (CMA) opened an investigation into the deal in 2023 following OpenAI’s boardroom battle that saw CEO Sam Altman ousted and then return. The CMA was looking at whether Microsoft’s closely-bound relationship with OpenAI constituted an effective merger that would hurt competition in the nascent AI industry in the UK.
Closing what it described as a “complex” investigation today, the CMA said there was no merger situation, citing in particular the recent developments to reduce OpenAI’s reliance on Microsoft for processing power, known as compute.
The CMA said it does not believe that Microsoft currently controls OpenAI’s commercial policy, though it said it does exert “a high level of material influence over that policy.”
MSFT-OpenAI Ties Still Face Scrutiny
In January, the U.S. Federal Trade Commission (FTC) raised antitrust concerns regarding Microsoft’s $13.75 billion investment in OpenAI. The antitrust regulator suggested that the investment may extend Microsoft’s dominance in cloud computing into that of the emerging AI market.
A year before the FTC had opened investigations into three separate deals – Microsoft and OpenAI, the $8 billion Amazon (AMZN) and Anthropic deal, and Alphabet’s (GOOGL) $2.55 billion also with Anthropic.
“The FTC’s report sheds light on how partnerships by big tech firms can create lock-in, deprive start-ups of key AI inputs, and reveal sensitive information that can undermine fair competition,” said the then FTC chair Lina Khan.
The FTC under Biden-era chair Khan appears very different to the agency under the new Trump-appointed Andrew Ferguson today, however. Khan became the bane of big tech, fighting Silicon Valley’s most powerful names over antitrust issues. Ferguson is seen as taking a lighter-touch approach to mergers and acquisitions.
Meanwhile in June last year, Margrethe Vestager, at the time the EU’s competition commissioner, said officials couldn’t review Microsoft’s investments in OpenAI under merger rules, but would send the companies follow-up questions under antitrust rules “to understand whether certain exclusivity clauses could have a negative effect on competitors.”
Is MSFT Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 28 Buy and three Hold ratings. The average price target of $508.96, implying around 30% upside.
