EU Merger Watchdogs Clear Microsoft’s OpenAI Investment

Microsoft Corp’s (NASDAQ:MSFT) $13 billion investment in OpenAI Inc will not undergo a formal investigation by the European Union‘s merger watchdogs, easing concerns about potential regulatory interventions.

The European Commission has determined that the collaboration between Microsoft and OpenAI does not constitute a takeover, with Microsoft not exerting control over OpenAI’s operations. This decision comes after initial scrutiny sparked by Microsoft’s close ties to the developer of ChatGPT, prompting a review under the EU’s merger regulation.

Although the EU typically approves most deals with unresolved competition issues, the Commission concluded that Microsoft’s partnership with OpenAI does not raise significant competition concerns. Microsoft has emphasised that the collaboration fosters innovation and competition while maintaining the independence of both companies.

While the EU’s decision clears Microsoft’s investment, the U.K.’s Competition and Markets Authority (CMA) is examining the partnership between Microsoft and OpenAI for potential competition issues. Additionally, Microsoft is engaging with the Cloud Infrastructure Services Providers in Europe (CISPE) to address a complaint filed with the European Union regarding the tech giant’s cloud computing licensing practices.

The complaint, initiated by CISPE in late 2022 and involving Amazon.Com Inc (NASDAQ:AMZN) and 26 smaller EU cloud providers, alleges that Microsoft’s contractual conditions negatively impact Europe’s cloud computing market.

Microsoft has faced €1.6 billion in EU antitrust fines over the past decade. Despite regulatory challenges, Microsoft’s stock has surged over 42% in the last 12 months. Investors interested in Microsoft’s stock can gain exposure through SPDR Select Sector Fund – Technology (NYSE:XLK) and Fidelity MSCI Information Technology Index ETF (NYSE:FTEC).