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By Paul Sandle and Muvija M
LONDON (Reuters) -Britain dropped its probe into Microsoft's partnership with ChatGPT maker OpenAI on Wednesday, saying the software giant did not have the level of control over the AI company that would warrant further investigation.
The partnership, which started in 2019 with an initial $1 billion investment by Microsoft, has come under antitrust scrutiny in Britain and the U.S.
A battle in the startup's boardroom that led to the exit and return of CEO Sam Altman in 2023 raised questions about the company's structure.
Britain's Competition and Markets Authority (CMA) said although Microsoft did acquire material influence over OpenAI in 2019, it had not since gained de facto control and therefore it did not qualify for review under the UK's merger control regime.
However, it said the conclusion "does not constitute a finding that no competition concerns arise from its operation."
A Microsoft spokesperson said the partnership with OpenAI and its continued evolution "promote competition, innovation, and responsible AI development".
"We welcome the CMA's conclusion, after careful and prudent consideration of the commercial realities, to close its investigation," the spokesperson said.
The CMA has been looking into the ties between big tech companies and AI start-ups in recent years.
It has examined partnerships between Microsoft and Mistral AI, Amazon and Anthropic and Google-owner Alphabet and Anthropic, but none have met the threshold of control required to progress to a full investigation under its merger control remit.
The CMA this year gained new powers, in addition to its merger controls, to investigation the biggest tech firms if it determines they have "strategic market status".
It has already launched investigations into Apple and Google's smartphone ecosystems and Google's search services.
However, the appointment in January of former Amazon executive Doug Gurr as the regulator's interim chair signalled it could be prepared to go easier on deal making in future, analysts and lawyers have said.
(Reporting by Paul Sandle, Muvija M and Sarah Young, editing by Catarina Demony and Christina Fincher)
