Regulators in the UK have set sights on Microsoft and Amazon over their growing strategic partnerships with smaller artificial intelligence model makers. The regulators are probing the alliances to see whether they qualify as mergers and thus are subject to more regulatory scrutiny.
Microsoft and Amazon AI Investments
The UK’s Competition and Markets Authority has invited people to comment on Microsoft’s strategic partnership with French AI firm Mistral. The probe comes on the US tech giant making a $16 million investment in Mistral to gain access to breakthrough AI innovations. Mistral has emerged as a key powerhouse amid the AI revolution, backed by former Meta and Google’s DeepMind AI lab employees.
The strategic collaboration will see Mistral make its large language models available to Microsoft’s Azure cloud computing platform. Consequently, it became the second company to host LLM on Azure after OpenAI, in which Microsoft had already invested more than $13 billion.
The CMA is also receiving views on Amazon’s strategic partnership with US startup Anthropic. The US e-commerce giant invested $4 billion in the AI firm behind the popular Claude large language model. The tech giant has confirmed it will maintain a minority stake in the US firm but won’t hold a board seat.
Microsoft has already refuted claims that its strategic investments and collaborations with emerging startups amount to mergers. In a statement, the company insists that fractional investments and hiring talent in AI startups do not constitute merging but are aimed at promoting competition.
Amazon insists it is unprecedented for the CMA to review any collaboration it makes in Anthropic, insisting that its investment is only geared towards making the AI segment more competitive than it has been.
Anthropic has also come to Amazon’s defense, insisting that it remains independent from Amazon and that its relationship with the tech giant does not affect its independence, let alone the freedom to partner with other companies. The US AI startup is open to cooperating with the CMA and provides a complete picture of Amazon’s investment and commercial collaboration.
AI Regulatory Scrutiny
The latest scrutiny underscores how the UK’s regulator looks to take a tougher stance against US tech giants. It also affirms its readiness to address the tech giant’s competition issues, given the amount of financial muscle it wields. In recent years, there have been concerns that the development of AI, if unregulated, could pose significant risks down the line.
The bone of contention has always been that tech giants could manipulate the technology to favor their core business at the expense of the much-needed competition. Last year, the CMA delayed the approval of the $69 billion acquisition of Activision Blizzard on concerns that it would lessen competition in the video gaming industry. It only approved the deal after Microsoft agreed to some concessions, including granting French video publisher Ubisoft cloud rights to console games and Activision PC.
Meanwhile, Microsoft is increasing spending at a rate not seen before. Expenditures in its recent quarter jumped 79% from a year earlier to $14 billion, much faster than a 17% jump in revenues. The soaring spending comes as the company moves to strengthen its data centre infrastructure to deploy artificial intelligence models. The company has a demand for data centres that exceeds supply amid the ever-increasing amount of computing to run hefty workloads and generative AI features.
