AI deals between Microsoft and OpenAI, Google and Samsung, in EU crosshairs

FILE PHOTO: The Microsoft store sign is pictured in the Manhattan borough of New York City, New York, U.S., January 18, 2022. REUTERS/Carlo Allegri/File Photo

By Foo Yun Chee

BRUSSELS (Reuters) -Microsoft's partnership with OpenAI could face an EU antitrust investigation as regulators singled out their exclusivity clauses while Google's artificial intelligence deal with Samsung also triggered scrutiny.

EU antitrust regulators will seek additional third-party views, EU competition chief Margrethe Vestager said on Friday.

The moves underscore the unease among regulators worldwide on Big Tech leveraging its dominance into the new technology, echoing the companies' market power in other sectors.

Vestager in March sent questionnaires to Microsoft, Google, Meta's Facebook and ByteDance's TikTok as well as other big tech companies related to their AI partnerships.

"We have reviewed the replies, and are now sending a follow-up request for information on the agreement between Microsoft and OpenAI. To understand whether certain exclusivity clauses could have a negative effect on competitors," she told a conference.

Google logo and AI Artificial Intelligence words are seen in this illustration taken, May 4, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

Reuters was first to report that EU regulators were building a case that could lead to an investigation into the partnership between the two companies.

"We stand ready to respond to any additional questions the European Commission may have," a Microsoft spokesperson said.

Microsoft's partnership with OpenAI will not be subject to EU merger rules because of the absence of control, Vestager said.

While OpenAI's parent is a nonprofit, Microsoft has invested $13 billion in a for-profit subsidiary, for what would be a 49% stake.

Vestager also cited concerns about Big Tech blocking smaller AI developers from reaching users and businesses.

"We are also sending requests for information to better understand the effects of Google's arrangement with Samsung to pre-install its small model Gemini Nano on certain Samsung devices," she said.

Google in January reached a multi-year deal with the South Korean company to embed its generative artificial intelligence technology in Samsung's Galaxy S24 series smartphones.

Vestager also said she was looking into "acqui-hires," where one company acquires another mainly for its talent, as exemplified in Microsoft's $650-million acquisition of startup Inflection in March that allowed it to use Inflection's models and hire most of its staff.

"We will make sure these practices don't slip through our merger control rules if they basically lead to a concentration," she said.

(Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Rod Nickel)