UK regulator looks into Microsoft and Amazon’s AI partnerships

Microsoft logo

The United Kingdom’s competition body is launching preliminary inquiries into whether Microsoft and Amazon’s partnerships with artificial intelligence (AI) start-ups comply with its merger rules and if these investments could impact competition.

Wednesday’s announcement by the UK’s Competition and Market Authority (CMA) comes as Big Tech companies invest heavily in AI companies without formerly being in merger agreements, bypassing regulation.

The CMA said it was looking into partnerships between Microsoft and Mistral AI, as well as Amazon and Anthropic.

They will also look into Microsoft’s hiring of former employees and related arrangements with Inflection AI.

The regulator also identified an “interconnected web” of over 90 partnerships and “strategic investments” involving the same firms, which the CMA said could be used to “shield themselves from competition”.

The authority is inviting views on the partnerships and will then assess them if they fall within UK merger rules and whether they have an impact on competition.

The UK and Europe are also looking to regulate so-called foundational models, which are the underlying infrastructure on which AI systems are built.

“Foundation Models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors – healthcare, energy, transport, finance and more,” Joel Bamford, the CMA’s executive director of mergers, said in a statement.

“So open, fair, and effective competition in Foundation Model markets is critical to making sure the full benefits of this transformation are realised by people and businesses in the UK”.

It is not the first investigation into these partnerships. The UK and European Commission are looking into Microsoft’s investment in ChatGPT maker OpenAI.

The CMA probe “is noteworthy in several respects,” said Alex Haffner, competition partner at UK law firm Fladgate.

“Firstly, coming against several recent announcements by CMA (in tandem with its counterparts in other jurisdictions, particularly the EU and US) that further regulatory oversight of the fast-moving AI sector is required to ensure that competition is preserved,” he said in a statement to Euronews Next.

“Second, is the fact that the CMA appears to be looking at several different corporate events involving Microsoft together – whereas ordinarily it would be expected to consider each in turn”.

Microsoft said in a statement that “common business practices such as the hiring of talent or making a fractional investment in an AI start-up promote competition and are not the same as a merger,” adding that it will provide the agency with the required information.

Amazon responded that “unlike partnerships between other AI startups and large technology companies, our collaboration with Anthropic includes a limited investment, and doesn’t give Amazon a board director or observer role”.