The U.K.'s Competition and Markets Authority (CMA) has intensified its scrutiny of big tech's involvement in the artificial intelligence market, focusing on partnerships between Microsoft and Amazon with smaller generative AI model makers. The watchdog has issued invitations to comment on three deals, including Microsoft's investment in French firm Mistral and its hiring of former Inflection AI employees, as well as Amazon's $4 billion investment in U.S. startup Anthropic.
The CMA's move is a procedural step that paves the way for a formal investigation into whether these partnerships qualify as mergers and raise competition concerns. The regulator has already asked for comments on Microsoft's relationship with OpenAI, the developer of ChatGPT, and has singled out six tech companies - Google, Microsoft, Meta, Amazon, Apple, and Nvidia - as being at the heart of an "interconnected web" of AI partnerships.
Joel Bamford, the executive director of mergers at the CMA, stated, "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." Sarah Cardell, the chief executive of the CMA, has also warned that the watchdog has "real concerns" about the AI market.
The CMA's next step with Microsoft and Amazon will be a "phase one" investigation, during which the watchdog will examine whether the partnerships fall under the UK merger regime and whether they raise competition concerns. If the CMA finds there are concerns and decides to proceed with a phase two investigation, it could seek remedies from the companies involved.
Microsoft recently made a 15 million euro ($16 million) investment into Mistral, a firm set up by former employees of Meta and Google's DeepMind AI lab. Under the deal, Mistral would make its large language models available on Microsoft's Azure cloud computing platform, becoming the second company to host its LLM on Azure after OpenAI. Microsoft also appointed Mustafa Suleyman, the co-founder of DeepMind, as head of its new AI division and recruited several employees from his Inflection AI startup.
Amazon, meanwhile, has invested $4 billion into U.S. AI firm Anthropic, which is behind the Claude large language model and chatbot. Under the deal, Anthropic will use Amazon as its main cloud provider and utilize the company's custom chips to build, train, and deploy AI models.
Both Microsoft and Amazon have responded to the CMA's scrutiny. A Microsoft spokesperson 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." The spokesperson added that Microsoft will provide the CMA with the information it needs to complete its inquiries expeditiously.
An Amazon spokesperson called the CMA's move "unprecedented" and argued that the company's collaboration with Anthropic is different from other tie-ups announced by big tech firms. "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," the spokesperson said.
The CMA's early scrutiny into Microsoft's and Amazon's AI partnerships is another sign of how the British regulator is looking to take a tougher stance on mega U.S. technology companies and address competition issues posed by these firms. Last year, for example, the CMA held up Microsoft's blockbuster deal to acquire video game maker Activision Blizzard for several months before ultimately giving it the green light after Microsoft made concessions.
