The UK competition regulator has opened and almost immediately closed a merger inquiry into the partnership between Microsoft and OpenAI.

In December 2023 Competition and Markets Authority (CMA) had begun seeking feedback on the partnership between Microsoft and AI pioneer OpenAI. It wanted to know whether the deal between the two resulted in a relevant merger situation that it needed to be investigated.

And then on Tuesday 4 March 2025 the CMA announced the launch of its merger inquiry, but a day later on Wednesday 5 March said that the CMA “decided that Microsoft’s partnership with OpenAI does not qualify for investigation under the merger provisions of the Enterprise Act 2002.”

Microsoft, OpenAI

The CMA had been initially been concerned at the fact Microsoft was a big backer of OpenAI from its startup days, and has sunk billions of dollars into the San Francisco-based AI pioneer.

In return Microsoft uses OpenAI technology for most of its AI offerings. OpenAI also utilises Azure cloud services.

The CMA had previously stated that Microsoft’s multi-billion dollar investment, collaboration in technology development and exclusive provision of cloud services by Microsoft to OpenAI, “represents a close, multi-faceted relationship between two firms with significant activities in FMs and related markets.”

But since then OpenAI has also attracted other big name investors such as Japan’s Softbank and Nvidia.

In light of this, the CMA stated that “overall, taking into account all of the available evidence, particularly in light of recent developments in the Partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy. In other words there is no change of control giving rise to a relevant merger situation.”

“Accordingly, the CMA has concluded that no relevant merger situation has been created, and that it does not have jurisdiction to review the Partnership in its current form,” the regulator stated. “In light of this, the CMA has not had to conclude on whether the other criteria for establishing a relevant merger situation are met.”

“The Partnership will therefore not be referred under section 22 of the Act,” the regulator concluded.

Government pressure

The CMA, under the previous Conservative government, had adopted a robust attitude to policing big acquisitions and mergers in the tech space.

For example in 2023 the CMA had warned that it was focusing on the AI market and was investigating Foundation Models (FMs).

It then confirmed it had “real concerns” with AI Foundation Models (FMs) that are controlled by a small number of tech firms.

But now the Labour government is in charge, and after the unpopular budget of Chancellor Rachel Reeves last October revealed record tax increases for British citizens and businesses, the Labour government has repeatedly said growing the economy is their number one priority, and it has been critical of regulation.

The Prime Minister, along with the Chancellor and Business Secretary wrote to British watchdogs including the CMA, Ofgem, and Ofwat on Christmas Eve, telling them to remove barriers to economic growth.

Then more pressure was to follow in the new year, when Business Secretary Jonathan Reynolds in January suddenly announced that CMA chair Marcus Bokkerink was stepping down and was replaced by interim CMA Chair Doug Gurr – a former country manager of Amazon UK and President of Amazon China.

Media outlets at the time noted that Marcus Bokkerink had been effectively ousted by the Business Secretary.

Then in February Jonathan Reynolds set out a new ‘strategic steer’ for the CMA, demanding the country’s competition watchdog be “more agile” and “less risk averse” to support the government’s pro-growth agenda.

The decision to close the OpenAI Microsoft probe is not the first such AI decision by the British regulator.

In September 2024 the CMA had also cleared Microsoft’s hiring of former staff at Inflection AI.

It has also cleared both Amazon’s and Google’s partnership deals with Anthropic.