Microsoft labels OpenAI as competitor in SEC filing despite ties

Microsoft said OpenAI, the ChatGPT developer, is a competitor in the artificial intelligence (AI) and search sectors alongside other major players like Google, Meta, and Amazon. This was contained in the tech giant’s annual 10-K filing with the US Securities and Exchange Commission (SEC).

The move has sparked speculations about Microsoft’s intentions, particularly in light of its relationship with OpenAI. However, the company stated in its filing that many listed competitors are current or potential partners.

Microsoft and OpenAI interests

Microsoft’s recent move is unexpected, considering its significant investment in OpenAI. The Satya Nadella-led company has poured $13 billion into the startup for a 49% stake and fostered a mutually beneficial partnership with the leading generative AI startup.

However, analysts have linked Microsoft’s decision to OpenAI’s recent actions, which include entering into a partnership with Apple to integrate ChatGPT into the iPhone-maker devices. As part of this agreement, Apple secured an observer seat on OpenAI’s board, mirroring Microsoft’s previous role before relinquishing its seat.

Additionally, OpenAI has launched SearchGPT, a new AI-powered search tool that may directly compete with Microsoft Bing. Despite its AI integration, Bing has considerably struggled to gain market share against Google Search, but critics opine that OpenAI’s tool could grow to become the biggest challenger to Google.

Despite the filing, Microsoft and OpenAI are expected to continue their profitable partnership. For context, the two firms recently launched a $2 million fund to boost AI education ahead of the November US elections.

Besides, Microsoft’s investment in the ChatGPT creator has granted it access to cutting-edge AI systems that have been used to enhance some of its products, like Microsoft Cloud services and AI-powered Copilot.

Microsoft could be trying to reduce regulatory scrutiny

Meanwhile, the decision to label OpenAI as a competitor could also be part of Microsoft’s strategy to address regulatory concerns. The tech giant has been under antitrust regulatory scrutiny in the US and Europe for its investment in OpenAI and its influence within the company.

To assuage the antitrust concerns, the company recently forfeited its observer seat on the board of OpenAI. It had taken up the seat after the drama within the startup last year led to the firing and rehiring of its CEO, Sam Altman.

With this new decision, Microsoft might try to convince the regulators that its partnership with OpenAI does not prevent competition, even between the two companies. The tech giant has been trying to reduce its reliance on OpenAI systems, even before the recent filing. The company has now started its in-house Microsoft AI division, led by Mustafa Suleyman, the cofounder of Deepmind and InflectionAI.