UK regulator examines Microsoft and Amazon’s AI dealmaking
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The UK competition regulator has taken the first steps towards three more probes into alliances between Big Tech companies and artificial intelligence start-ups, after the agency said its concerns about dealmaking in the fast-growing sector were increasing.
The Competition and Markets Authority on Wednesday invited comments on Microsoft’s hiring of key talent from Inflection AI and its minority investment in French start-up Mistral, as well as Amazon’s $4bn investment in US-based Anthropic, a leading rival to OpenAI.
Seeking views from rivals is a necessary precursor to a formal investigation. The CMA said it had not yet determined whether the deals fall within UK merger rules or raise competition concerns in the UK.
Regulators are worried that Big Tech companies may be taking advantage of AI companies’ insatiable need for computing power to train large language models, by luring cash-strapped start-ups to their cloud services in exchange for a stake that could give them outsized influence in often nascent businesses.
The CMA is already examining Microsoft’s $13bn investment in OpenAI, a deal that has also attracted attention from antitrust authorities in the US and Europe.
Microsoft, which participated in a $1.3bn funding round for Inflection last year, in March hired the start-up’s chief executive Mustafa Suleyman, co-founder of Google’s DeepMind, alongside several other team members. The move followed Microsoft striking a “multiyear partnership” with Mistral, a year-old AI start-up, in February.
Amazon last month expanded its existing investment in Anthropic, the maker of the Claude AI system. Anthropic had previously received funding from Google.
In a paper this month, the CMA said it had found an “interconnected web” of more than 90 partnerships and investments involving the same six Big Tech groups — Google, Apple, Microsoft, Meta, Amazon and chipmaker Nvidia — creating a risk of “over-dependence on a handful of major firms”.
Sarah Cardell, the CMA chief, said the regulator was “determined to apply the lessons of history” after a small number of primarily US-based companies came to dominate the online advertising, cloud computing and mobile industries.
Amazon, which has previously sparred with the CMA over its minority investment in UK food delivery company Deliveroo, hit out at the regulator’s latest potential intervention.
“It’s unprecedented for the CMA to review a collaboration of this type,” Amazon said, pointing to a “limited investment” in Anthropic that does not grant it board seats or require the start-up to exclusively use its cloud computing service. “By investing in Anthropic . . . we’re helping make the generative AI segment more competitive than it’s been the last couple years.”
Microsoft, which spent most of last year fighting the CMA over its acquisition of Activision Blizzard, noted that it was unusual for the agency to examine a deal involving recruitment rather than an outright merger.
“We remain confident 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,” Microsoft said. “ We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”