Seek feedback on CMA, AI partnerships and other arrangements

The Competition and Markets Authority (CMA) today launches an Invitation to Comments (ITC) for interested third parties regarding the partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and the suitability of Microsoft's employment of former employees and associates. Did. The arrangements with Inflection AI fall within the scope of UK merger rules, which also take into account the impact these arrangements may have on UK competition.

The first part of the CMA's information gathering process, the ITC, precedes the start of the formal Phase 1 review. ITC will not initiate a formal Phase 1 review. It also does not necessarily mean that the CMA has jurisdiction.

Today’s announcement follows a recent report published by the CMA, which identified three key interrelated risks to open, fair and effective competition in the AI-based models (FM) market, specifically: It outlines concerns that partnerships involving companies may worsen existing market positions. We demonstrate our power through the FM value chain.

In its report, the CMA identified more than 90 interconnected partnerships and strategic investments involving the same companies. Although these alliances have the potential to provide pro-competitive benefits, the CMA remains wary of the potential for established technology companies to use alliances and investments to protect themselves from competition.

As outlined in the report, not all partnerships and arrangements are subject to the merger rules. If the CMA determines that a partnership and/or arrangement falls within the UK merger rules and is likely to give rise to competition concerns in the UK, the CMA may commence an investigation to assess these.

The CMA is currently reviewing whether the partnerships and other arrangements between Microsoft and Inflection AI, Amazon and Anthropic, and Microsoft and Mistral AI create a relevant merger situation, and, if so, the impact of these transactions.5 Opinions are being solicited by Thursday, March 9th. About competition in the UK.

Joel Bamford, Executive Director of Mergers at CMA, said:

Today, we are seeking comment regarding the partnership between Microsoft and Mistral AI, Amazon and Anthropic, the employment of former Microsoft employees, and related arrangements with Inflection AI. We will objectively and impartially assess whether each of these three transactions falls within the UK merger rules and, if so, whether they have an impact on competition in the UK.

The underlying model has the potential to fundamentally impact the way we all live and work, including products and services across many sectors in the UK, including healthcare, energy, transport and finance. Open, fair and effective competition in the foundation model market is therefore essential for UK people and businesses, as well as the wider economy, where technology plays a major role in growth and development, to reap the full benefits of this transformation. is essential. Productivity.

Given the global nature of these markets, competition authorities around the world are actively focusing on AI.

The CMA has recently committed to enhancing the use of its merger control powers as part of the underlying model update. We remain open-minded and have not drawn any conclusions yet, but our aim is to gain a deeper understanding of the complex partnership and the arrangements in place.

The CMA is also considering feedback received earlier this year regarding Microsoft's partnership with OpenAI and is currently awaiting information requested from companies. The CMA has not yet begun its formal first stage review of the transaction.

More information about the CMA's investigations can be found on our Microsoft/Inflection AI Arrangement, Amazon/Anthropic Partnership, and Microsoft/Mistral AI Partnership Merger Investigation Cases pages.

Note to editors:

1. The CMA continues to closely monitor current and new AI partnerships and strategic agreements as part of our ongoing efforts to protect competition for the benefit of consumers and businesses.
2. Other regulators around the world are also considering partnerships and arrangements in the AI ​​market within their respective jurisdictions. for example:
3. The ITC will be issued prior to the start of the formal Phase 1 review. The period prior to commencing a formal Phase 1 review is known as advance notice. During pre-notification, the CMA will collect the information necessary to carry out a formal Phase 1 review, including information from the merging parties about their UK activities, data and internal documents. Once the CMA has sufficient information about a transaction, a formal Phase 1 review will begin. The time it takes to gather this information will vary on a case-by-case basis, depending on the complexity of the issue and how quickly the parties provide the necessary information.
4. Under CMA rules, Phase 1 merger review must be completed within 40 business days.
5. Following a Phase 1 merger review, the CMA may conclude that the transaction in question is not in a relevant merger situation and issue a 'found ineligible' determination. Confirm that the transaction is or may be in a relevant merger situation but does not raise competition concerns and make a clearance decision. or the CMA decides to refer the transaction for a detailed Phase 2 review if it is found that the transaction is, or is likely to be, in a relevant merger situation and is likely to result in a significant reduction in competition. can be lowered. If the CMA issues a Phase 1 decision finding concerns, the merging party may suggest that he seeks to resolve the CMA's concerns at that stage to avoid reference to Phase 2. .
6. Relevant merger situations are transactions that meet certain criteria under the Corporations Act 2002 (the Act). Various types of transactions and arrangements may constitute relevant merger situations, such as the acquisition of minority interests and, in some cases, the transfer of assets or employees, and commercial arrangements such as outsourcing agreements. If the CMA investigates a transaction and concludes that it does not give rise to a relevant merger situation, the CMA does not have jurisdiction under its merger powers to take further action in relation to the transaction and will not issue a 'determined ineligibility' decision. I'll have to lower it.
7. The Phase 2 review will last up to 24 weeks (extendable by up to 8 weeks in certain circumstances) and will be led by an independent expert panel.
8. Amazon.com, Inc. (Amazon) enters into a partnership with Anthropic PBC (Anthropic) in which Amazon will invest $1.25 billion (September 2023) and an additional $2.75 billion (March 2024) in Anthropic. Funded. The partnership also includes an agreement to purchase computing power and a non-exclusive commitment to make the Anthropic model available on Amazon's Bedrock service.
9. The CMA understands that Microsoft Corporation has hired Mustafa Suleyman CBE (previously the CEO and co-founder of Inflection AI), along with a significant number of other Inflection AI employees. At the same time, Inflection AI announced that it will now focus on its AI studio business for commercial customers.
10. Microsoft has entered into a partnership with Mistral AI. This includes an investment by Microsoft in Mistral AI and a multi-year commitment in which Microsoft will supply Mistral AI with Microsoft's Azure supercomputing infrastructure and Microsoft and Mistral will make Mistral's models available on Microsoft's Azure platform. Includes contract.
11. For media inquiries please contact the CMA Press Office on 020 3738 6460 or press@cma.gov.uk.