The European Commission is considering whether Microsoft’s US$13billion investment in ChatGPT developer OpenAI complies with its merger regulations.

Reports overnight say EC executive vice president Margrethe Vestager has announced that the regulator will look closely at the relationship between the companies.

“The European Commission is checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation,” the EC says in a statement.

The Guardian reports that OpenAI now lists Microsoft as “minority owner” of OpenAI, a change in standing that took place after the drama around the sacking and reappointing of Sam Altman as OpenAI CEO.

The Commission, which is the executive arm of the European Union, has also called for stakeholders to share their experiences on competition “in the context of virtual worlds and generative AI”.

The move seems more a preliminary investigation and a fact finding mission rather than a hard-nosed probe, although the commission says it is also “looking into some of the agreements that have been concluded between large digital market players and generative AI developers and providers”. The European Commission is investigating the impact of these partnerships on market dynamics,” it says in a statement.

The reference to virtual worlds takes the preliminary investigation beyond Generative AI systems to AI-enhanced economies being developed around virtual reality, which would include the Metaverse.

“Venture capital investment in AI in the EU is estimated at more than €7.2 billion in 2023,” the statement says. “The size of the virtual worlds market in Europe is estimated to have reached more than €11 billion in 2023. Both technologies are expected to grow exponentially in the next years and are likely to have a major impact on how businesses compete.

“Effective enforcement of EU competition rules is essential to maintain competition in the EU’s Single Market, which is Europe’s best asset in terms of creating jobs and economic growth. These calls for contributions follow other calls carried out in recent years regarding the application of EU competition rules in various contexts.”

Although not stated explicitly in the news release, any investigation is likely to include the impact of virtual worlds on national sovereignty given that virtual worlds attempt to operate beyond the reach of national boundaries and regulations with their own economies centred usually around cryptocurrencies.

“Virtual worlds and generative AI are rapidly developing,” says Margrethe Vestager, executive vice-president in charge of EC competition policy.

“It is fundamental that these new markets stay competitive, and that nothing stands in the way of businesses growing and providing the best and most innovative products to consumers. We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics.”

For now, US tech giants are likely to home in on the EC plans to investigate mergers, especially the relationship between Microsoft and AI explicitly referenced in the statement, and whether it meets EU merger rules.

The UK already has announced it is looking into Microsoft’s investments in generative AI and whether that will lead to market dominance in sectors such as cloud services.