Investing.com -- The United Kingdom (TADAWUL: 4280 )’s Competition and Markets Authority (CMA) has concluded that the partnership between Microsoft Corporation (NASDAQ: MSFT ) and OpenAI, Inc., a nonprofit organization and its for-profit subsidiary OpenAI OpCo LLC, does not warrant an investigation. This decision comes after an analysis of the complex and evolving relationship between the two entities.

Microsoft’s partnership with OpenAI has led to it acquiring certain rights related to OpenAI. The terms of this partnership have been changing as Microsoft increases its investment in OpenAI, and the scope of their collaborations expands. The CMA has been monitoring these developments closely.

Despite the complex nature of the AI sector and the ongoing changes in the partnership, the CMA does not believe that the current format of the partnership results in a relevant merger situation. Specifically, the CMA does not consider that there has been a shift in control from Microsoft having material influence to de facto control over OpenAI. As a result, the partnership will not be referred under section 22 of the Enterprise Act 2002.

The CMA’s investigation into whether there has been a change in the level of Microsoft’s control over OpenAI has been intricate. It has required careful consideration of the commercial realities of the relationship between the parties, not just the formal terms of the arrangement. This has involved a review of a wide range of evidence, including submissions and responses to information requests from Microsoft and OpenAI, and internal documents regarding developments in OpenAI’s governance in November 2023 and how the partnership has operated in practice over time.

In conclusion, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, but instead exerts a high level of material influence over that policy. Therefore, it does not constitute a change of control leading to a relevant merger situation. The CMA reached this conclusion after considering three main potential sources of influence and/or control: Microsoft’s investment and involvement in OpenAI’s corporate governance, Microsoft’s supply of compute, and Microsoft’s IP and commercialization rights.

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