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Invitation to comment launched by the CMA on the partnerships between Microsoft and Mistral AI, and Amazon and Anthropic, and Microsoft’s hiring of former employees and related arrangements with Inflection AI.

The Competition and Markets Authority (CMA) has today opened invitations to comment (ITCs) for interested third parties to give their views on whether the partnerships between Microsoft and Mistral AI, and Amazon and Anthropic, as well as Microsoft’s hiring of former employees and related arrangements with Inflection AI, fall within UK merger rules and the impact that these arrangements could have on competition in the UK.  

The ITCs, which are the first part of the CMA’s information gathering process, come in advance of the launch of formal Phase 1 reviews. An ITC does not start the formal Phase 1 review, nor does it necessarily mean the CMA has jurisdiction.

The announcement today follows a recent report published by the CMAwhich outlines 3 key interlinked risks to open, fair and effective competition in the markets for AI Foundation Models (FMs) – specifically, concerns that partnerships involving key players could be exacerbating existing positions of market power through the FMs value chain.

In its report, the CMA identified an interconnected web of over 90 partnerships and strategic investments involving the same firms. Though these partnerships have the potential to bring pro-competitive benefits, the CMA remains vigilant against the possibility that incumbent technology firms could use partnerships and investments to shield themselves from competition.

As outlined in the report, not all partnerships or arrangements will fall within the merger rules. Where the CMA considers that a partnership and/or arrangement may fall within UK merger rules and may give rise to competition concerns in the UK, the CMA may open an investigation to assess these.

The CMA is now inviting views by Thursday 9 May on whether the partnerships and other arrangements between Microsoft and Inflection AI, Amazon and Anthropic, and Microsoft and Mistral AI result in the creation of relevant merger situations and, if so, the impact of these deals on competition in the UK.

Joel Bamford, Executive Director of Mergers at the CMA, said:  

Today we’re inviting comments into the partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft’s hiring of former employees and related arrangements with Inflection AI. We will assess, objectively and impartially, whether each of these 3 deals fall within UK merger rules and, if they do, whether they have any impact on competition in the UK.

Foundation Models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors – healthcare, energy, transport, finance and more. So open, fair, and effective competition in Foundation Model markets is critical to making sure the full benefits of this transformation are realised 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.  

Given the global nature of these markets, competition authorities around the world are actively looking into AI.

The CMA recently committed to step up the use of its merger control powers as part of its recent Foundation Models update. While we remain open minded, and haven’t drawn any conclusions, our aim is to better understand the complex partnerships and arrangements at play.

The CMA is also considering feedback received earlier this year on Microsoft’s partnership with OpenAI and is currently waiting for information it has requested from the firms. The CMA has not yet opened a formal Phase 1 review of the deal.

More information on the CMA’s investigations can be found on the Microsoft / Inflection AI arrangements, Amazon / Anthropic partnership, and Microsoft / Mistral AI partnership merger inquiry case pages.

Notes to editors:  

1. The CMA is continuing to closely monitor current and emerging AI partnerships and strategic agreements as part of its ongoing work to protect competition for the benefit of consumers and businesses.
2. Other regulators across the globe are also examining partnerships and arrangements in AI markets within their own jurisdictions. For example:
   • The European Commission is assessing competition in ‘virtual worlds’ and generative AI and has called for information from several large digital players to ‘examine the market dynamics’ of partnerships in this space.
   • The Federal Trade Commission (FTC) has an ongoing inquiry into generative AI investments by technology companies, to assess whether these ‘investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition’.
3. The ITCs are being issued ahead of launching formal Phase 1 reviews. The period prior to launching a formal Phase 1 review is known as pre-notification. During pre-notification, the CMA gathers the information it will need to carry out a formal Phase 1 review, including information from merger parties about their UK activities, data and internal documents. Once the CMA has sufficient information in relation to a transaction it will begin its formal Phase 1 review. The amount of time it takes to gather this information varies from case to case depending on the complexity of the issues and how quickly the parties provide the required information.
4. Under the CMA’s rules, a Phase 1 merger review must be completed within 40 working days.
5. Following a Phase 1 merger review, the CMA may conclude that the transaction in question is not a relevant merger situation and issue a ‘found not to qualify’ decision; find that the transaction is or may be a relevant merger situation, but does not raise competition concerns and issue a clearance decision; or find that the transaction is or may be a relevant merger situation and that it may result in a substantial lessening of competition, in which case the CMA can issue a decision referring the transaction for an in-depth Phase 2 review. Where the CMA issues a Phase 1 decision finding concerns, the merging parties can offer undertakings to try to resolve the CMA’s concerns at that stage to avoid a reference to Phase 2.
6. A relevant merger situation refers to a transaction that meets certain criteria under the Enterprise Act 2002 (the Act). A range of different kinds of transactions and arrangements may constitute a relevant merger situation, including, for example, the acquisition of a minority shareholding or, in some circumstances, the transfer of assets or employees or commercial arrangements such as outsourcing arrangements. Where the CMA investigates a transaction and concludes that it does not result in a relevant merger situation, the CMA would not have jurisdiction under its mergers powers to take further steps with respect to that transaction and would issue a ‘found not to qualify’ decision.
7. Phase 2 reviews last up to 24 weeks (extendable by up to 8 weeks in certain circumstances) and are led by an independent panel of experts.
8. Amazon.com, Inc. (Amazon) has entered into a partnership with Anthropic PBC (Anthropic) under which Amazon funded Anthropic by $1.25 billion (in September 2023) and by a further $2.75 billion (in March 2024). The partnership also includes agreements for purchasing computing capacity and non-exclusive commitments to make Anthropic models available on Amazon’s Bedrock service.
9. The CMA understands that Microsoft Corporation has hired Mustafa Suleyman CBE – prior to that arrangement, CEO and Co-Founder of Inflection AI – together with a significant number of other Inflection AI employees. At the same time, Inflection AI announced that, going forward, it would focus on its AI studio business for commercial customers.
10. Microsoft has entered into a partnership with Mistral AI, involving an investment by Microsoft in Mistral AI and a multi-year agreement through which Microsoft will supply Mistral AI with Microsoft’s Azure supercomputing infrastructure and Microsoft and Mistral will make Mistral’s models available on Microsoft’s Azure platform.
11. For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.