In a bid to address the escalating influence of major technology companies in the artificial intelligence (AI) sector, the Federal Trade Commission (FTC) has launched a comprehensive inquiry into the multibillion-dollar investments made by Microsoft, Amazon, and Google in AI start-ups, OpenAI and Anthropic.
The Wall Street Journal reports that Microsoft’s significant financial support for OpenAI, the creator of ChatGPT, and the substantial commitments from Amazon and Google to Anthropic have sparked concerns about the potential impact on competition within the industry. The FTC’s move represents a departure from traditional antitrust regulatory focus on acquisitions, highlighting a new emphasis on understanding how strategic investments reshape the competitive landscape in the AI sector.
Lina Khan, the Chair of the FTC, stressed the importance of the investigation in determining whether the investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition. Appointed in 2021, Khan has been a proponent of modernizing antitrust laws to address challenges in the digital age. The agency, under her leadership, previously filed an antitrust suit against Amazon, alleging artificial price inflation.
The FTC’s inquiry will delve into the extent of influence that Microsoft, OpenAI, Amazon, Google, and Anthropic exert over each other and their decision-making processes in partnerships. Internal documents from these companies have been demanded to gain insights into the deals and their potential effects on competition.
This marks the first major effort by the agency to comprehend how partnerships and investments contribute to the expanding influence of tech giants in the AI sector. The global regulatory landscape is also responding to the surge in interest in tech companies’ investments in AI start-ups. The Competition and Markets Authority in the UK is reviewing Microsoft’s deal with OpenAI to determine if it constitutes a merger that could harm competition. The European Commission is similarly examining the applicability of antitrust laws in this context.
The inquiry by the FTC aligns with broader efforts by regulators to keep pace with the rapid advancements in AI technology. Generative AI, which enables the rapid production of human-level content by software, has become a focal point of the investigation. Concerns are raised about big tech companies, particularly Amazon, Microsoft, and Google, leveraging their computing power capabilities to dominate this sector.
Microsoft’s reported $13 billion investment in OpenAI, coupled with Amazon and Google’s investments in Anthropic, have positioned these companies as key players in the generative AI sector. The collaboration between Amazon and Anthropic, involving the use of AWS cloud infrastructure and AI chip development, will be closely scrutinized by the FTC.
As the investigation unfolds, the FTC aims to gain a deeper understanding of market trends and business practices, potentially guiding the commission to take legal action. The European Commission has also initiated a preliminary study of Microsoft’s investment in OpenAI, exploring the possibility of it being a disguised merger.
In the face of these inquiries, Anthropic, OpenAI, Amazon, and Google have not provided immediate comments. The outcome of the investigations holds significant implications for the future of AI competition and collaboration among tech giants, prompting a reevaluation of antitrust regulations in the digital era.