European Commission joins UK Competition and Markets Authority in examining application of merger control rules to OpenAI/Microsoft partnership 

On 9 January 2024, the European Commission (EU) issued a press release announcing that it is reviewing whether Microsoft’s investment in OpenAI could be caught by the EU Merger Regulation (EUMR) (here).  This follows the issuing by the UK Competition and Markets Authority (CMA) of an invitation for comments on whether the arrangement could be subject to UK merger control rules on 8 December 2023 (here).

As in the case of the CMA’s review under UK merger control rules, a key issue will be whether Microsoft exercises control over OpenAI. The threshold for control under the EUMR is higher than that under UK rules, so it is likely that the EC will find it harder to conclude that the threshold is met.  Microsoft has no formal equity stake in OpenAI and only a non-voting observer seat on OpenAI’s board.  Unless new facts emerge, it seems likely that the EC would need to break new ground on the circumstances giving rise to control for EUMR purposes in order to treat the deal as a merger. 

However, even if the EC concludes that it does not have jurisdiction under the EUMR, it may seek to investigate the Microsoft/OpenAI relationship under the prohibition on anti-competitive agreements under Article 101 TFEU.  In the same press release, the European Commission states that it is looking into the market impact of some of the agreement concluded between large digital market players and generative artificial intelligence (AI) developers and providers and has sent requests for information to several large digital players. 

Finally, as part of the same announcement, the EC launched two calls for contributions from interested stakeholders on their experience of the level of competition in the context of virtual worlds and generative AI. It hopes to hold a workshop in the second quarter of 2024 to discuss the issues further.  

If events in the UK are a guide, it seems likely that the EC will receive an enthusiastic response to its call for contributions.  A coalition of seven civil society groups, including the Irish Council for Civil Liberties (ICCL), the Open Markets Institute (OMI), Foxglove, Balanced Economy Project, Rebalance Now, the Mozilla Foundation, and ARTICLE 19 have responded to the CMA’s invitation for comments raising concerns (here).