Microsoft’s Answer to OpenAI Inquiry: Doesn't Own Stake; Link not same as Google and DeepMind
With global regulators examining Microsoft Corp.'s $13 billion investment in OpenAI, the software giant has a simple argument it hopes will resonate with antitrust officials: It doesn't own a traditional stake in the buzzy startup so can't be said to control it.
When Microsoft negotiated an additional $10 billion investment in OpenAI in January, it opted for an unusual arrangement, people familiar with the matter said at the time. Rather than buy a chunk of the cutting-edge artificial intelligence lab, it cut a deal to receive almost half of OpenAI's financial returns until the investment is repaid up to a pre-determined cap, one of the people said. The unorthodox structure was concocted because OpenAI is a capped for-profit company housed inside a non-profit organization.
It's not clear regulators see a distinction, however. On Friday the UK Competition and Markets Authority said it was gathering information from stakeholders to determine whether the collaboration between the two firms threatens competition in the UK, home of Google's AI research lab Deepmind. The US Federal Trade Commission is also examining the nature of Microsoft's investment in OpenAI and whether it may violate antitrust laws, according to a person familiar with the matter.
The inquiries are preliminary and the agency hasn't opened a formal investigation, according to the person, who asked not to be named discussing a confidential matter.
Microsoft didn't report the transaction to the agency because the investment in OpenAI doesn't amount to control of the company under US law, the person said. OpenAI is a non-profit and acquisitions of non-corporate entities aren't reported under US merger law, regardless of value. Agency officials are analyzing the
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