FTC Opens Formal Investigation: Does Microsoft Effectively Own OpenAI?

The FTC is finally asking the question Silicon Valley has been whispering for two years: does Microsoft effectively own OpenAI? The formal investigation examines whether the complex $13B deal — mixing equity, cloud computing credits, and profit-sharing — is a de facto acquisition that should have triggered antitrust review.

Here's why this matters: when one company acquires another above a certain size, they must notify the FTC under the Hart-Scott-Rodino Act. Microsoft and OpenAI structured their deal specifically to avoid triggering that requirement. The FTC is now examining whether that was legal.

"We cannot allow the most transformative technology of our generation to be controlled by a handful of companies through financial engineering that avoids regulatory scrutiny."

— FTC Chair Lina Khan

If the FTC determines the deal should have been reported, it could unwind the investment — a seismic event for the AI industry — impose massive fines, or establish new rules for how tech companies can invest in AI startups.