The UK’s Competition and Markets Authority (CMA) has decided to close its investigation into Microsoft’s partnership with OpenAI, ruling that while the tech giant has “material influence” over the artificial intelligence firm, it does not exert de facto control over it.

The decision marks the end of an inquiry launched in December 2023, following concerns that Microsoft’s $13 billion (£11 billion) investment in OpenAI could have altered the competitive landscape. The CMA assessed whether Microsoft’s involvement, particularly following the firing and reinstatement of OpenAI’s chief executive officer, Sam Altman, had increased its control over the company’s commercial decisions.

Joel Bamford, the CMA’s executive director for mergers, stated: “We have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI. Because this change of control has not happened, the partnership in its current form does not qualify for review under the UK’s merger control regime.”

While the CMA determined that Microsoft’s level of influence did not justify a full merger investigation, it stressed that this did not mean there were no competition concerns. “A finding that the partnership does not give rise to a relevant merger situation does not constitute a finding that no competition concerns arise from its operation,” the watchdog said.

The decision has drawn criticism from digital rights campaigners. Rosa Curling, co-executive director of the campaign group Foxglove, accused the government of weakening the regulator’s ability to hold major tech firms accountable. “The CMA has sat on this decision for over a year, yet within just a few weeks of a former Amazon boss being installed as chair, it has decided everything was absolutely fine all along, nothing to see here,” she told the BBC.

Concerns over the CMA’s approach to regulating big tech have been growing, particularly following the government’s recent directive for regulators to prioritise pro-growth policies. The removal of the CMA’s former chair, Marcus Bokkerink, in January and the appointment of Doug Gurr, a former Amazon UK executive, as interim chair have fuelled speculation that the watchdog will adopt a more lenient stance towards major technology firms.

Despite closing this inquiry, the CMA has been scrutinising a wider network of partnerships between tech giants and artificial intelligence start-ups. Similar investigations have examined Amazon’s investment in Anthropic, Google’s ties to the same firm, and Microsoft’s partnerships with Mistral AI and Inflection. None of these deals have yet met the threshold required for a full-scale probe.

Microsoft welcomed the CMA’s decision, with a spokesperson stating: “Our OpenAI partnership and its continued evolution promote competition, innovation, and responsible AI development. We welcome the CMA’s conclusion, after careful and prudent consideration, to close its investigation.”

However, regulatory scrutiny of Microsoft’s AI investments is far from over. In the United States, the Federal Trade Commission (FTC) has raised concerns about whether Microsoft’s deep financial ties to OpenAI could entrench its dominance in the cloud computing sector. While the FTC has not yet pursued formal action, its report warned that big tech partnerships with AI start-ups could “create lock-in, deprive start-ups of key AI inputs, and reveal sensitive information that can undermine fair competition.”

The European Commission has also taken an interest in Microsoft’s AI investments. In April 2024, it concluded that while Microsoft exerted influence over OpenAI, it did not exercise direct control. Nevertheless, former Commission executive vice president Margrethe Vestager expressed concerns that such partnerships could function as “a disguise for one partner getting a controlling influence over the other.”

The CMA’s decision comes as the UK government seeks to position the country as a global leader in AI innovation while maintaining a balance between regulation and business confidence. Whether the watchdog’s softer stance will foster competition or embolden big tech dominance remains to be seen.

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