Amazon and Microsoft in trouble over partnerships

The UK’s Competition and Markets Authority (CMA) is investigating and asking for comments from third parties about the partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft's recent hiring of Inflection AI staff.

Why is the CMA investigating Microsoft and Amazon?

The CMA is following the footsteps of the Federal Trade Commission and the EU, who previously launched investigations into Google, Amazon, and Microsoft's various investments in AI companies, concerned that they could “distort innovation and undermine fair competition.”

Although the EU recently cleared Microsoft's $13B investment in OpenAI, the CMA is having similar concerns, about Microsoft and Amazon’s “hiring of former employees and related arrangements with AI start-ups” and is assessing whether the partnerships are actually mergers (from a regulatory viewpoint) which could impact fair competition.

“Open, fair, and effective competition in AI model markets is critical to making sure the full benefits of this transformation are realized by people and businesses in the UK, as well as our wider economy where technology has a huge role to play in growth and productivity.” - Joel Bamford, The CMA’s Executive Director of Mergers

A straightforward acquisition would invite regulatory scrutiny, but partnerships, investments, and “acqui-hires” could be a way of circumventing this scrutiny.

Why are Amazon and Microsoft under scrutiny?

The CMA is targeting Microsoft after it hired most of the Inflection AI team (as part of a $650M deal) and invested $16M in Mistral AI, and Amazon because it recently invested $4B investment into AI start-up, Anthropic.

But is Amazon fighting back?

While Microsoft has confirmed that it will provide all the information CMA needs so it can complete its inquiries quickly, and remains confident that:

“Our 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.” - Microsoft

Amazon has called the investigation “unprecedented,” claiming that its partnership with Anthropic doesn’t give it a seat on its board, and they aren’t restricting its use of cloud providers, other than AWS.

“By investing in Anthropic, we’re helping make the generative AI segment more competitive than it’s been the last couple years.” – Amazon

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