Microsoft Dodges UK Competition Crackdown Over OpenAI Deal, Watchdog Director Says Partnership Doesn't Get 'A Clean Bill Of Health'

On Wednesday, the U.K.'s Competition and Markets Authority ruled that Microsoft Corporation's (NASDAQ:MSFT) $13 billion investment in OpenAI does not warrant a formal merger investigation.

What Happened: The CMA announced that Microsoft's investment in OpenAI does not constitute a merger, as there was no "change of control" giving Microsoft "de facto control" over the AI startup, reported the Financial Times.

This decision follows months of scrutiny into whether Microsoft's stake in OpenAI could stifle competition in the AI market.

See Also: Microsoft Unveils AI-Powered Dragon Copilot To Ease Clinician Workloads

The regulator pointed to "recent developments" that have reduced OpenAI's dependence on Microsoft, including its newly formed $100 billion AI infrastructure partnership with SoftBank Group (OTC:SFTBY) (OTC:SFTBF).

The CMA's executive director for mergers, Joel Bamford, cautioned that this decision "should not be read as the partnership being given a clean bill of health on potential competition concerns."

Why It Matters: The decision marks a win for Microsoft, allowing it to continue its lucrative partnership with OpenAI without immediate regulatory hurdles.

Meanwhile, it has also been reported that SoftBank is currently in discussions to spearhead a new funding round for OpenAI, aiming to raise $40 billion.

This investment could push the ChatGPT creator's valuation to $300 billion, marking a record-breaking funding round for a private company.

Price Action: Microsoft’s stock closed Wednesday at $401.02, rising 3.19%. However, it dipped 0.25% in after-hours trading. Year-to-date, the stock is down 4.20%, according to Benzinga Pro data.

Photo Courtesy: Shutterstock.com

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.