The UK’s competition regulator is once again launching an investigation into partnerships between Big Tech companies and startups, in a sign that such deals – worth billions of pounds – will continue to be scrutinised.
This week, the Competition and Markets Authority (CMA) opened an investigation looking at investments made by Google parent company Alphabet into Anthropic, a prominent US-based AI research company founded by former employees of ChatGPT maker OpenAI.
In 2023, Alphabet invested around £1.56bn in Anthropic. The competition regulator argued the relationship between the companies may constitute a merger resulting in weakened competition in the AI market.
The move is the latest signal that such deals remain firmly in the crosshairs of the CMA. It comes just months after the CMA launched an investigation into Amazon’s relationship with Anthropic on the same grounds. Amazon has invested around $4bn into the company.
The CMA’s investigations into Big Tech AI partnerships really started last year, however, when it looked into the partnership of Microsoft and OpenAI.
The CMA also began scrutinising Microsoft’s dealings with France’s AI crown jewel startup, Mistral.
This was a fairly speedy case, however, as after less than a month, the CMA concluded Microsoft’s investments and partnerships with Mistral did not constitute a merger.
In a statement, Anthropic said: “We are an independent company and none of our strategic partnerships or investor relationships diminish the independence of our corporate governance or our freedom to partner with others.”
Alphabet said in a statement that “Anthropic is free to use multiple cloud providers and does, and we don’t demand exclusive tech rights.”
Commenting on the CMA’s probe into Alphabet and Anthropic, Josh Mesout, chief innovation officer at cloud computing firm Civo said: “As an industry we should be cautious over powerful partnerships as they pose a threat to the entire ecosystem by suffocating competition and innovation. We cannot surrender AI to a virtual monopoly before it has really started.
“To keep the market fair and open, regulators should be eyeing these types of partnerships warily. Otherwise, we risk AI following the path of cloud, where hyperscalers run unchecked and leave a broken, locked-in, and stifled market in their wake.”
AI regulation backdrop
As successive UK governments fight to establish an AI superpower, the nation’s competition regulator has been waving its own banner in the face of Big Tech’s dominance in the sector.
The UK has yet to finalise the regulatory framework concerning the technology, with the hopes of building a better understanding of the situation before putting pen to paper.
However, AI companies are not obliged to pause their activities while governments catch up, leaving regulators to act within their existing briefs to monitor the sector.
Sarah Cardell, the CMA’s chief executive, spoke at a Washington DC conference in April. There she warned of the growing influence of a handful of Big Tech companies, who have the means to completely dominate the AI market.
“When we started this work, we were curious. Now, with a deeper understanding and having watched developments very closely, we have real concerns,” Cardell said.
“We’re committed to applying the principles we have developed, and to using all legal powers at our disposal.”
The role of regulators like the CMA in policing the AI sector may well change pending new legislation, however, for now, the watchdog has made clear it will not pull punches for the sake of courting prominent tech companies.
As the debate around the openness of AI and its position – to borrow words from former deputy prime minister and Meta executive Nick Clegg – inside the “clammy hands” of Californian tech giants continues, the role of competition regulators will only become more important.
The CMA will not be alone in its fight, however, having agreed in principle with its counterparts in the US and EU on the best practices to encourage competition in the space earlier this month.
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