The Federal Trade Commission (FTC) has announced an inquiry into the multibillion-dollar investments made by tech giants in leading artificial intelligence (AI) companies. The move comes amidst concerns that the AI revolution is further consolidating the power of a few companies that have long dominated the internet economy.
The agency has sent demands to OpenAI and Microsoft, following Microsoft’s multiple investments in the maker of ChatGPT. This includes an exclusive deal to provide cloud computing for OpenAI’s research and products. The FTC is also reviewing deals between Amazon and Google with Anthropic, a public-benefit corporation focused on responsible AI creation.
In a news release, FTC Chair Lina M. Khan stated, History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.
The Department of Justice (DOJ) and the FTC are currently discussing which agency will review the Microsoft and OpenAI deal. The findings of the FTC study could potentially inform any future investigation conducted by either the DOJ or the FTC into the partnership.
The scrutiny of Big Tech companies’ acquisitions of smaller rivals has intensified under the Biden administration. Legal challenges have been brought against Meta’s acquisition of Within and Microsoft’s purchase of Activision. However, in the era of generative AI, major players in Silicon Valley have circumvented obstacles by investing in younger AI companies and securing deals that prioritize their computing services.
The FTC’s study will examine the competitive impact of these deals, focusing on whether they harm competitors or hinder market expansion. Although the inquiry is expected to take several months, its findings could potentially influence future government challenges to AI deals. The FTC has previously conducted similar investigations into deceptive advertising on social media and tech giants’ acquisitions.
The FTC is already conducting an investigation into whether OpenAI has violated consumer protection laws. This probe was first reported by The Washington Post in July.
The partnership between Microsoft and OpenAI has also drawn the attention of competition regulators worldwide. The UK competition enforcer is currently investigating the partnership, while the European Union is examining whether the deal falls under the bloc’s competition laws. Regulators have become increasingly vigilant ever since Microsoft gained a nonvoting board seat following CEO Sam Altman’s return to the company.
At the World Economic Forum, Microsoft CEO Satya Nadella defended the partnership, stating that the facts speak for themselves. He emphasized that the two companies have distinct governance structures and boards.
OpenAI CEO Sam Altman expressed his belief that companies should be allowed to partner and invest in each other, suggesting that sometimes Microsoft may want to give instructions. The partnership between Microsoft and OpenAI remains subject to scrutiny and continues to raise eyebrows among regulators globally.
Overall, the FTC’s inquiry into tech giants’ AI deals reflects the growing concerns surrounding the consolidation of power in the AI industry. The study aims to evaluate the impact of these deals on competition and innovation, potentially paving the way for future government actions. As the investigation unfolds, the tech industry is awaiting the results and implications for the future of AI partnerships and investments.
