A new wave of artificial intelligence (AI) startups has caused a stir in the tech industry throughout the year, paving the way for exciting collaborations with big tech players. According to reports, Microsoft’s $10 billion investment in OpenAI earlier this year spurred other tech giants to follow suit by partnering with leading AI startups. Salesforce led a funding round in Hugging Face, valuing the startup at $4.5 billion, while Alphabet and Amazon invested billions in rival company Anthropic. Nvidia, on the other hand, seemed to support nearly every noteworthy AI startup. As a result, many of the most promising AI startups now heavily rely on established tech companies for financing and infrastructure support, raising concerns among regulators.
The Tech Giants’ AI Monopoly
The increasing dependence of AI startups on big tech companies for their financial and infrastructure needs has caught the attention of regulators. In both the UK and the US, competition regulators have taken a keen interest in Microsoft’s partnership with OpenAI. The US Federal Trade Commission, in particular, has been tasked with promoting a fair and competitive AI ecosystem. The agency has previously sought public input on the anti-competitive nature of large cloud computing contracts. Ngor Luong, a senior research analyst at Georgetown University’s Center for Security and Emerging Technology, suggests that regulators may be concerned that the strategic investments made by big tech companies could potentially lead to an AI monopoly.
Partnerships as a Vital Lifeline
For AI startups, partnerships with big tech companies provide a crucial lifeline. The development of large language models, such as the ones powering AI chatbots like ChatGPT, requires significant financial and computational resources. Only large tech companies possess the necessary infrastructure and funds to support these efforts. On the other side of the equation, big tech companies can leverage these partnerships to solidify their position in a competitive and rapidly evolving market. Some were caught off guard by OpenAI’s ChatGPT’s overwhelming success a year ago. By collaborating with AI startups, tech giants can also boost demand for their own products, be it Nvidia’s chips or cloud computing services offered by Microsoft, Google, and Amazon.
Big Tech’s Involvement and Impact
Nvidia, for example, disclosed that it made investments in over two dozen AI startups this year, highlighting the mutually beneficial nature of these partnerships. The company views these collaborations as avenues for joint innovation, enhancing their overall platform and expanding their ecosystem. Microsoft, apart from its investment in OpenAI, has also invested in other billion-dollar AI startups like Inflection AI and Adept, albeit on a smaller scale. Notably, Microsoft’s unique relationship with OpenAI came under the spotlight when OpenAI CEO Sam Altman briefly left the startup, only to be reinstated after intervention from Microsoft CEO Satya Nadella and other investors. Microsoft even contemplated forming a new AI unit with Altman and his OpenAI colleagues, further emphasizing their close ties.
The Absence of Apple and Meta Platforms
While tech giants like Microsoft, Amazon, and Alphabet have actively pursued partnerships with AI startups, Apple and Meta Platforms Inc. have been relatively quiet in this domain. Apple has developed its own large language model, Ajax, and introduced an internal chatbot named Apple GPT. Meta, formerly known as Facebook, has an open-source large language model and has formed alliances with other big tech companies, including Microsoft and Amazon.
Looking Forward
As regulators keep a close watch on the strategic investments and collaborations between big tech companies and AI startups, the landscape of the AI industry continues to evolve. Both sides stand to gain from such partnerships, with startups benefitting from the financial support and infrastructure provided by established players, and tech giants solidifying their position in the market while driving demand for their products. However, concerns about potential monopolistic practices loom, and regulators aim to strike a balance between fostering innovation and ensuring fair competition in the AI ecosystem. The outcome of this delicate equation will shape the future of AI partnerships and the tech industry as a whole.
