Artificial intelligence deals between Microsoft and OpenAI, Google and Samsung in the EU’s crosshairs

Executive Vice President for a Digital and Competition Ready Europe Margrethe Vestager gives a press conference on the antitrust case against Mondelez in Brussels, Belgium, May 23. EPA-Yonhap

Microsoft’s partnership with OpenAI could face an antitrust investigation in the EU as regulators have carved out its exclusivity clauses, while Google’s relationship with Samsung over AI has also come under scrutiny.

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

The moves underscore concern among regulators around the world about Big Tech leveraging its dominance in new technologies, which mirrors the market power of companies in other sectors.

In March, Vestager sent questionnaires to Microsoft, Google, Facebook (Meta) and TikTok (ByteDance), as well as other major tech companies regarding their AI partnerships.

“We have reviewed the responses and are currently sending out another request for information on the agreement between Microsoft and OpenAI. To understand whether certain exclusivity clauses could have a negative impact on competition,” she said at the conference.

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

“We stand ready to answer any additional questions the European Commission may have,” a Microsoft spokesman said.

Vestager said Microsoft’s partnership with OpenAI would not be subject to EU merger rules due to a lack of scrutiny.

Although OpenAI’s parent is a nonprofit, Microsoft has invested $13 billion in the for-profit subsidiary, which would represent a 49% stake.

Vestager also mentioned concerns that big tech companies will block smaller AI developers from reaching users and businesses.

“We are also sending out requests for information to better understand the implications of Google’s agreement with Samsung to pre-install the small Gemini Nano model on some Samsung devices,” she added.

In January, Google entered into a multi-year agreement with the Korean company under which its generative AI technology will be built into Samsung’s Galaxy S24 series smartphones.

Vestager also said she is considering the possibility of a company acquisition, where one company acquires another primarily for its talent, as exemplified by Microsoft’s $650 million acquisition of startup Inflection in March, which allowed it to leverage Inflection’s models and hire most of its employees.

“We will make sure that these practices do not slip through our merger control rules if they do in fact lead to a concentration,” she said. (Reuters)