The Competition and Markets Authority (CMA) is pushing ahead with an investigation into AI deals struck by Microsoft and Amazon, but some industry stakeholders warn the move could hamper innovation in the space.
Earlier this month, the competition watchdog said it was concerned that certain partnerships could be entrenching market dominance by the firms - and it is now following through by calling for comments from interested third parties.
The CMA initially raised concerns about what it described as an 'interconnected web' of more than 90 partnerships and strategic investments involving the same firms, along with Microsoft’s hiring of former employees and related arrangements with Inflection AI.
"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," said Joel Bamford, executive director of mergers at the CMA.
Specifically, it plans to look into a partnership between Amazon and Anthropic, which saw the tech giant pledge support to the tune of $1.25 billion in September 2023, with a further $2.75 billion in March this year.
The deal also includes agreements for purchasing computing capacity, and non-exclusive commitments to make Anthropic models available on Amazon’s Bedrock service.
Meanwhile, the CMA will focus attention on Microsoft’s recent deal with Inflection AI which saw CEO and co-founder Mustafa Suleyman join the firm to lead its new consumer AI division.
The tech giant’s deal with French AI startup, Mistral, will also be examined. Under the terms of the deal, Microsoft will supply Mistral AI with its Azure supercomputing infrastructure, and Mistral’s models will be made available on Microsoft’s Azure platform.
While calls for heightened regulatory scrutiny on these deals have been growing, some industry stakeholders are concerned that the move from the CMA could hamper innovation and confidence in the AI space.
The Computer & Communications Industry Association (CCIA) warned that the CMA should act proportionately and avoid risking the UK’s reputation for responsible regulation.
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"The CMA needs to be cautious as a formal investigation into a modest partnership agreement, based on speculative concerns, could be hugely disruptive and deter investment in vitally important AI innovation," said Matthew Sinclair, the CCIA's senior director, UK.
Sinclair suggested that if commercial agreements such as these are “held up by overly broad and premature” regulatory scrutiny, this could dissuade some businesses from investing in the future, thereby “undermining competition in what is currently a dynamic market”.
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