Large-scale investments into artificial intelligence startups by Big Tech is coming under scrutiny from UK regulator the Competition and Markets Authority.
The CMA has launched an ‘invitation to comment’ on partnerships between Microsoft and Mistral AI; Amazon and Anthropic; and Microsoft’s hiring of former employees and related arrangements with Inflection AI.
It said it has not yet formed any conclusions on whether the deals fall within UK merger rules or raise competition concerns in the UK.
The first part of the information gathering process, it comes in advance of the launch of formal Phase 1 reviews.
Last September Amazon invested £3.2 billion into US firm Anthropic – an AI safety and research company – and recently invested a further £3.2bn.
This year Microsoft backed French startup mistral AI with £12.9m. It has a non-exclusive licensing deal with US-based Inflection AI which allows it to use its large-language models, while it has hired former employees at the firm.
The announcement follows a recent report published by the CMA which outlines three key interlinked risks to open, fair and effective competition in the markets for AI Foundation Models – specifically, concerns that partnerships involving key players could be exacerbating existing positions of market power through the FM’s value chain.
In its report, the CMA identified an interconnected web of over 90 partnerships and strategic investments involving the same firms. Though these partnerships have the potential to bring pro-competitive benefits, the CMA says it remains vigilant against the possibility that incumbent technology firms could use partnerships and investments to shield themselves from competition.
“We will assess, objectively and impartially, whether each of these three deals fall within UK merger rules and, if they do, whether they have any impact on competition in the UK,” said Joel Bamford, executive director of mergers at the CMA.
“Foundation Models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors – healthcare, energy, transport, finance and more. So open, fair, and effective competition in Foundation Model markets is critical to making sure the full benefits of this transformation are realised by people and businesses in the UK, as well as our wider economy where technology has a huge role to play in growth and productivity.
“Given the global nature of these markets, competition authorities around the world are actively looking into AI.
“The CMA recently committed to step up the use of its merger control powers as part of its recent Foundation Models update. While we remain open minded, and haven’t drawn any conclusions, our aim is to better understand the complex partnerships and arrangements at play.”
The CMA is also considering feedback received earlier this year on Microsoft’s partnership with OpenAI and is currently waiting for information it has requested from the firms. The CMA has not yet opened a formal Phase 1 review of the deal.
An Amazon spokesperson said it was “unprecedented for the CMA to review a collaboration of this type”.
“Unlike partnerships between other AI startups and large technology companies, our collaboration with Anthropic includes a limited investment, doesn’t give Amazon a board director or observer role, and continues to have Anthropic running its models on multiple cloud providers.
“We’re confident that the facts speak for themselves, and hope the CMA agrees to resolve this quickly.”
A spokesperson for Microsoft said: “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.
“We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously.”
