Microsoft, Amazon AI partnerships face scrutiny from British regulators

British antitrust regulators are seeking views on partnerships between Microsoft and Amazon with smaller generative AI model makers.

The U.K.’s Competition and Markets Authority on Wednesday said that it was opening invitations to comment for interested third parties to give their views on major AI partnerships between Microsoft and French AI firm Mistral, and Amazon and U.S. startup Anthropic, as well as Microsoft’s hiring of former employees from Inflection AI.

The CMA, which is seeking views from interested parties by May 9, is attempting to investigate whether the arrangements between these companies qualify as mergers.

The invitation to comment is the first part of an information gathering process that comes ahead of the launch of a formal Phase 1 review by British regulators. An invitation to comment does not start the formal Phase 1 review, the CMA noted.

Microsoft recently made a 15 million euro ($16 million) investment into Mistral, a young French AI firm set up by former employees of Meta and Google’s DeepMind AI lab.

Under the deal, Mistral, which was last valued by investors at 2 billion euros, would see Mistral make its large language models (LLM) — the technology behind generative AI products — available on Microsoft’s Azure cloud computing platform, making it the second company to host its LLM on Azure after OpenAI.

Amazon, meanwhile, has invested a whopping $4 billion into U.S. AI firm Anthropic, which is behind the Claude large language model and chatbot. Amazon said it will maintain a minority stake in Anthropic and won’t hold a board seat.

Microsoft disputed the notion that its deal with Mistral and its hirings from Inflection constituted mergers.

In a statement, a Microsoft spokesperson said: “We remain confident that 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.”

“We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously,” the spokesperson added.

An Amazon spokesperson said it was “unprecedented” for the CMA to review a collaboration of the kind that the company had agreed with Anthropic.

“Unlike partnerships between other AI startups and large technology companies, our collaboration with Anthropic includes a limited investment, doesn’t give Amazon a board director or observer role, and continues to have Anthropic running its models on multiple cloud providers,” Amazon’s spokesperson said.

“By investing in Anthropic, which has just released its industry-best, new Claude 3 models, we’re helping make the generative AI segment more competitive than it’s been the last couple years. And, customers are very excited about the opportunities this collaboration is providing them. We’re confident that the facts speak for themselves, and hope the CMA agrees to resolve this quickly.”

The CMA’s early scrutiny into Microsoft and Amazon’s AI partnerships is another sign of how the British regulator is looking to take a tougher stance on mega U.S. technology companies, and address competition issues posed by these firms.

Last year, for example, the CMA held up a blockbuster deal from Microsoft to acquire video game maker Activision Blizzard for $69 billion for several months. The regulator initially moved to block the deal, concerned it would result in a substantial lessening of competition.