Apple

when

<p>Microsoft wants the feds to view its relationship with OpenAI as more of a frenemies (friends and enemies) situation than a real partnership, judging by a report filed with the SEC in July.&nbsp;</p>
<p>In the <a href="https://microsoft.gcs-web.com/static-files/1c864583-06f7-40cc-a94d-d11400c83cc8" rel="noopener noreferrer nofollow" target="_blank">filing</a>, a form 10-K periodic financial performance and conditions report, Microsoft declared OpenAI as its rival in several passages while also stating numerous times throughout the document that OpenAI was its “strategic partner.”</p>
<h2 id="strategic-competitors">Strategic competitors</h2>
<p>Interestingly, Microsoft cites dozens of rivals and “intense competition across all markets” in its statements on competition. These include companies ranging from Apple to Nintendo as well as several software and coding organizations.</p>
<p>But the Redmond, Washington company cites only one strategic partner in the entire document: OpenAI.</p>
<p>A cursory examination revealed 72 mentions of the word “partner” including “partnership” and plural versions of both. Among those, it doesn’t appear as though Microsoft actually names any partners aside from OpenAI. Most references were simply to “Microsoft partners” and “our partnerships.”</p>
<p>While this isn’t likely to hold any legal significance, it is noteworthy considering that OpenAI and Microsoft face antitrust probes in the UK, US, and EU over their strategic partnership.</p>
<h2 id="rival-partners">Rival partners</h2>
<p>The relationship between Microsoft and OpenAI has had all the hallmarks of a big tech buyout, without the buyout.</p>
<p>In July of 2019, Microsoft <a href="https://openai.com/index/microsoft-invests-in-and-partners-with-openai/" rel="noopener noreferrer nofollow" target="_blank">invested</a> a billion dollars in OpenAI and became its sole cloud provider, essentially buying the rights to host ChatGPT a few years before it launched.</p>
<p>Once ChatGPT launched, Microsoft <a href="https://www.nytimes.com/2023/01/23/business/microsoft-chatgpt-artificial-intelligence.html" rel="noopener noreferrer nofollow" target="_blank">invested</a> another $10 billion. Subsequently, Microsoft got early and semi-exclusive access to implement GPT-4 into its own “Copilot” and “Bing” services alongside upgrades to OpenAI’s own services.</p>
<p>In 2023 OpenAI <a href="https://cointelegraph.com/news/sam-altman-returns-openai-ceo-microsoft-new-board">experienced a tumultuous leadership coup</a> that saw CEO and cofounder Sam Altman briefly ousted alongside changes to the company’s board of directors. While Altman was on the outs, Microsoft pledged to hire him and any other OpenAI employees fired or willing to defect and give them their own division within the company.</p>
<p>Altman was ultimately returned to his position at the head of OpenAI and the board was restructured to include an observer seat reserved for Microsoft. Eight months later, in July of 2024, <a href="https://cointelegraph.com/news/microsoft-apple-withdraw-openai-board">Microsoft renounced that board seat</a> claiming that it no longer believed the observer seat was necessary.</p>
<h2 id="regulatory-scrutiny">Regulatory scrutiny</h2>
<p>Meanwhile, the aforementioned antitrust investigations began heating up with <a href="https://cointelegraph.com/news/eu-says-may-review-microsoft-investments-artificial-intelligence-open-ai-under-merger-regulations">the UK and EU issuing probes</a> in late 2023 and early 2024. As recently as June, 2024, the US Justice Department and the Federal Trade Commission have <a href="https://www.nytimes.com/2024/06/05/technology/nvidia-microsoft-openai-antitrust-doj-ftc.html" rel="noopener noreferrer nofollow" target="_blank">launched</a> formal inquiries into Microsoft, Nvidia, and OpenAI over concerns related to the trio’s alleged dominance over the AI industry.</p>
<p>While none of this adds up to any cause for alarm just yet — antitrust inquiries are common when it comes to big tech companies — it is noteworthy that Microsoft appears to be framing the narrative around its unique dealings with OpenAI as ordinary rival/partner stuff.</p>

Microsoft declares OpenAI both ‘strategic partner’ and ‘competition’ in SEC filing

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