Key themes emerging from the UK CMA's review of AI partnerships under its merger control rules

The UK Competition and Markets Authority (CMA) has recently sought to review the competitive impact of a number of AI partnerships between large technology companies and AI foundation model (FM) firms under the UK's merger control rules. This has given rise to considerable debate as to the appropriate approach to questions of both jurisdiction and substance, amidst concerns that too much interventionism risks stifling innovation and much-needed funding for start-up companies in this area.

On 19 November 2024, the CMA announced its latest decision, concluding that an AI partnership between Alphabet and Anthropic did not qualify for investigation under the UK's merger control rules because Alphabet had not acquired a sufficient degree of control. This echoed its earlier decisions in Microsoft/Mistral AI (May 2024), which was found not to qualify on the same basis, and Amazon/Anthropic (September 2024), which was found not to qualify as the partnership did not meet the relevant turnover or share of supply tests (which meant that the CMA did not assess the degree of control acquired in any detail). In only one of its four decisions in this area to date has the CMA concluded that it had jurisdiction – Microsoft/Inflection – which resulted in an unconditional Phase 1 clearance in September 2024.  

The CMA is still considering whether to launch a formal Phase 1 merger inquiry in respect of Microsoft/OpenAI (which remains in pre-notification over 11 months after the CMA first announced its investigation), and it is anticipated that further reviews will be opened into other AI partnerships in the coming months against a backdrop of new investment announcements. The CMA's approach to issues relating to both jurisdiction and substance in the context of AI partnerships will no doubt evolve further in these future cases. However, with four out of five of the investigations launched to date now having concluded, and the recent publication of the full text of the Microsoft/Inflection decision offering insights into the CMA's substantive analysis of the competitive impact of an AI partnership, this is a good opportunity to reflect on the CMA's approach to date. This briefing note sets out our summary of the key emerging themes that companies active in this sector should consider and speculates as to where the CMA is likely to go next, given its clear policy focus on this high-profile area.

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