In case you missed it, Microsoft’s partnership with OpenAI is in the clear, at least with the UK’s Competition and Markets Authority (CMA). The antitrust watchdog has been looking into the multi-billion dollar partnership from 2023, trying to establish whether Microsoft’s mega investment in the ChatGPT maker is an acquisition.
And now, it has indeed established that the partnership isn’t a merger. The watchdog detailed that its investigation didn’t unearth any indication that the Microsoft-OpenAI partnership had formed some sort of merger to warrant in-depth scrutiny.
According to the UK’s CMA:
“Overall, taking into account all of the available evidence, particularly in light of recent developments in the Partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy. In other words, there is no change of control giving rise to a relevant merger situation.”
Microsoft is OpenAI’s largest investor, with a $13 billion bet in its technology that it has integrated across its products and services. However, recent events suggest that the partnership might soon take a different turn.
For instance, OpenAI CEO Sam Altman unveiled the company’s $500 billion bet on the Stargate project, designed to facilitate the construction of data centers across the United States for its AI advances.
As a result, Microsoft lost its exclusive cloud provider status for OpenAI. However, the software giant holds the “right of first refusal” and remains the first option to host OpenAI workloads in its cloud infrastructure and services.
The developments prompted buzz in the tech landscape, with key players like Salesforce CEO Marc Benoff predicting that Microsoft won’t use OpenAI’s technology in the future.
Microsoft’s partnership with OpenAI couldn’t be more complicated
It’s evident that OpenAI is having a difficult time keeping the lights on, predominantly because of its resource-hungry AI advances. Last year, multiple reports emerged indicating the AI firm was on the verge of bankruptcy with projections of making a $5 billion loss in one year.
However, the company escaped the cusps of bankruptcy after key investors, including Microsoft, SoftBank, NVIDIA, and Thrive Capital raised $6.6 billion to keep its operations afloat, pushing its market valuation to $157 billion.
A separate report suggests the ChatGPT maker is in discussions to hold another round of funding. SoftBank is reportedly set to lead the funding round with a stake of between $15 billion and $25 billion, potentially dethroning Microsoft as OpenAI’s largest investor.
Elsewhere, OpenAI is under pressure from investors to evolve into a for-profit entity within the next two years or risk refunding the money raised during its last round of funding. Failure to meet this threshold could open it up to hostile takeovers and outsider interference.
Interestingly, market analysts and experts predict Microsoft could acquire OpenAI within 3 years. The ChatGPT maker’s bid to evolve into a for-profit venture has been riddled with critical issues, including two lawsuits filed by former OpenAI co-founder Elon Musk, citing a stark betrayal of its founding mission and involvement in racketeering activities.
While Musk’s bid to block OpenAI’s evolution to a for-profit entity was dismissed, other issues raised in the lawsuit will proceed to trial. Still, OpenAI could encounter objections from key stakeholders, including employees and board members.
More recently, a report emerged suggesting Microsoft may be looking at other alternatives aside from OpenAI’s proprietary models to power Copilot, including DeepSeek, Meta, and Elon Musk’s xAI.
Interestingly, Microsoft is reportedly developing in-house reasoning models, potentially suggesting the company might be moving away from its overreliance and dependency on OpenAI for its AI efforts.
This news isn’t entirely surprising as Microsoft alreay aired its concerns about OpenAI’s AI models, indicating it’s too expensive and isn’t fast enough to meet its enterprise customers’ requirements.
