UK Watchdog Scrutinizes Microsoft, Amazon AI Deals Amid Competition Concerns

British competition regulators announced Wednesday that they will investigate recent deals made by Microsoft and Amazon, expressing concerns that these moves could hinder competition within the AI industry.

The Competition and Markets Authority (CMA) stated that it will examine Microsoft’s partnership with French AI company, Mistral AI, as well as the hiring of key staff from another AI startup, Inflection AI. Separately, the watchdog has also launched an investigation into Amazon’s $4 billion investment in San Francisco-based Anthropic.

These investigations come amid a surge in investment by Big Tech companies into generative AI startups, fueled by growing public and business interest in the technology. However, these investments have also drawn the attention of antitrust authorities.

The CMA stated that it will seek comments from interested third parties before deciding whether to initiate more in-depth antitrust investigations. ‘We will assess, objectively and impartially, whether each of these three deals falls within U.K. merger rules and, if they do, whether they have any impact on competition in the U.K.,’ said Joel Bamford, the CMA’s executive director of mergers.

Microsoft has indicated that it will cooperate with the CMA’s inquiries, but maintains that its actions promote competition and do not constitute mergers. Last month, Microsoft hired Mustafa Suleyman, co-founder of Google’s DeepMind AI research lab, to lead its consumer AI business. The company also hired several key scientists and engineers from Inflection AI.

Microsoft’s partnership with Mistral AI, which has emerged as a prominent AI company in France since its founding last year, follows its existing collaboration with ChatGPT creator OpenAI, which is also under scrutiny by the CMA.

Amazon’s investment in Anthropic is part of a broader collaboration between the two companies to develop foundation models, which form the basis of generative AI systems that have garnered widespread attention. ‘It’s unprecedented for the CMA to review a collaboration of this type,’ Amazon said. The company emphasized that its investment in Anthropic does not grant it a board seat or observer role, and that Anthropic continues to operate its models across multiple cloud providers.

The CMA’s increased scrutiny of foundation models follows a report highlighting the potential for dominant companies to leverage partnerships with key AI players to strengthen their market positions.

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