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Microsoft singles out Google's competitive edge in generative AI

FILE PHOTO: Illustration shows Microsoft logo

(This March 14 story has been corrected to say 15 million euros and not 15 billion euros, in paragraph 11)

By Foo Yun Chee

BRUSSELS (Reuters) - Alphabet unit Google enjoys a competitive edge in generative artificial intelligence due to its trove of data and AI-optimised chips, Microsoft has told EU antitrust regulators, underscoring the rivalry between the two tech giants.

The comments by Microsoft were in response to a consultationlaunched by the European Commission in January on the level of competition in generative AI.

The growing popularity of generative AI, which can generate human-like responses to written prompts and is exemplified by Microsoft-backed OpenAI's ChatGPT and Google's chatbot Gemini, has triggered concerns about misinformation and fake news.

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"Today, only one company - Google - is vertically integrated in a manner that provides it with strength and independence at every AI layer from chips to a thriving mobile app store. Everyone else must rely on partnerships to innovate and compete," Microsoft said in its report to the Commission.

It said Google's self-supply AI semiconductors will give it a competitive advantage for the years to come, while its large sets of proprietary data from Google Search Index and YouTube enable it to train its large language model Gemini.

"YouTube provides an unparalleled set of video content; it hosts an estimated 14 billion videos. Google has access to such content; but other AI developers do not," Microsoft said.

It said AI-powered voice assistants such as Google's Google Assistant and Apple's Siri give both companies an advantage.

"They are well positioned to evolve and leverage their respective existing voice assistants into leadership positions in generative AI. New entrants and competitors of Google and Apple will not enjoy the same advantages," Microsoft said.

Microsoft, whose more than $10 billion investment in OpenAI is now in EU antitrust regulators' crosshairs, also sought to fend off regulatory worries about such partnerships between Big Tech and start-ups.

"All of these start-ups relied on different forms of investments and partnerships that enabled them to enter and expand in the space," it said.

It pointed to Anthropic which has Google and Amazon as investors, France's Mistral in which Microsoft has invested 15 million euros and Canada's Cohere which has Salesforce and Nvidia as investors.

"Encouraging pro-competitive partnerships in the AI space is an effective way to prevent companies from becoming vertically integrated in a manner that would result in an anticompetitive advantage," Microsoft said.

(Reporting by Foo Yun Chee; Editing by Susan Fenton)