[ad_1]
Microsoft cut a deal to get nearly half of OpenAI’s revenue, sources said. (File)
With international authorities investigating Microsoft Corp.’s $13 billion investment in OpenAI, the software giant has a simple argument it hopes will come to the antitrust authorities: It’s not He has a culture that is at the beginning chaotic that cannot be said to be controlled.
When Microsoft discussed an additional $10 billion investment in OpenAI in January, it opted for an unusual arrangement, people familiar with the matter said at the time.
Instead of buying a piece of the artificial intelligence lab, it cut a deal that would provide almost half of OpenAI’s revenue until the investment was repaid over a previously set cap, the said one of the people. The unusual structure was created because OpenAI is a for-profit company housed in a non-profit organization.
It’s not clear that regulators see a difference, however. On Friday the UK Competition and Markets Authority said it was collecting information from stakeholders to determine whether the collaboration between the two companies would threaten competition in Britain, the home of Google’s AI research. lab Deepmind. The US Federal Trade Commission is also investigating the nature of Microsoft’s investment in OpenAI and whether it may violate antitrust laws, according to a person familiar with the matter.
The investigation is preliminary and the agency has not opened an official investigation, according to the person, who asked not to be named to discuss a confidential matter.
Microsoft did not report the transaction to the agency because the investment in OpenAI is not the same as controlling the company under US law, the person said. OpenAI is non-profit and acquisitions by non-profit organizations are not reported under US corporate law, regardless of value. Officials are investigating the situation and evaluating his options.
“While the details of our agreement remain confidential, it is important to note that Microsoft does not own a part of OpenAI and is only entitled to a portion of the distribution of profits,” said the Microsoft spokesperson in a statement. Earlier on Friday, Microsoft President Brad Smith said “the only thing that has changed is that Microsoft will now have a non-voting member on the OpenAI board.” He described his relationship with OpenAI as “very different” from Google’s direct acquisition of DeepMind in the UK.
“Our partnership with Microsoft empowers us to pursue our research and development of safe and useful AI tools for everyone, while remaining independent and competitive. Their people don’t vote, they don’t give up.” they are not in charge or in control of OpenAI’s operations,” an OpenAI spokesperson said in a statement.
From the beginning, Microsoft and OpenAI tried hard to publicize the independence of the two companies. Microsoft hoped to reassure business owners and consumers that they were not too dependent on a single partner. OpenAI didn’t want employees, customers and other investors to think it was just an outpost of Redmond, Washington-based Microsoft. That cautious stance was reversed last month with the firing of OpenAI CEO Sam Altman and the start of the near-explosion.
The Altman imbroglio revealed both Microsoft’s lack of control and its influence. Microsoft received only a few minutes of notice that the OpenAI board planned to announce the dismissal of Altman, and did not discuss its management in the end. But Microsoft CEO Satya Nadella played an important role, along with other investors, in forcing the board to change its decision. At one point Microsoft said it would hire Altman and his OpenAI colleagues to build a new Microsoft AI unit.
Once Altman was reinstated as CEO, Microsoft executives debated the wisdom of sitting on the OpenAI board, people familiar with the matter said at the time. On the one hand, the authorities feared that the board seat or the observation boat might attract the authorities. On the other hand, Microsoft wanted to take a close look at its partner and protect its investments – something important to carry the day, despite the risks.
Finally, Microsoft can face a world of control head. European regulators are also listening, according to a spokesperson for the European Commission. In order for a transaction to be notified to the Commission under the EU Regulation, it must involve a change of management on a permanent basis. Although this transaction was not officially announced, the Commission followed the situation even before the administration was in turmoil, the spokesperson said.
Last month, Germany’s competition authority said it would not submit Microsoft’s OpenAI funding to a joint review. But the manager said they will stop because OpenAI doesn’t have much business in Germany. After reviewing the deal and talking to the companies, the investment manager found that it would give Microsoft a “fairly competitive advantage” over the AI company that might warrant future exploration or when OpenAI expands its operations in Germany.
The partnership raises competitive issues if Microsoft reduces its own AI research and development or if the investment prevents OpenAI from partnering with technology rivals, said Jennifer Rie, analyst antitrust Bloomberg Intelligence. Antitrust officials may also have concerns about Microsoft’s board of directors since it will give Microsoft additional information on OpenAI’s plans even without the rights. to drive results.
(Except for the headline, this story has not been edited by NDTV staff and is published from an affiliate feed.)