U.S. antitrust inquiry targets AI partnerships

The U.S. Federal Trade Commission (FTC) says it has directed OpenAI, Microsoft, Alphabet, Amazon, and Anthropic to furnish details regarding their recent investments and partnerships in the realm of generative AI companies and cloud service providers.

The FTC orders empower the agency to closely examine agreements between Microsoft, Google, and Amazon with AI providers. This scrutiny aims to aid the antitrust and consumer protection agency in comprehending the impact of these deals on competition.

The comprehensive document request seeks insights into how the collaborations with Big Tech shape strategy and impact “decisions on product and service pricing, access provision, and personnel-related determinations.”

The agency, which also wants information on exclusivity agreements, said the companies have 45 days to respond to the orders.

It also signals to the industry that “we’re watching, we’re learning and we will continue to observe” and that if the time comes for future action, the agency will be fully prepared, said former FTC chair William Kovacic, who teaches at George Washington University law school.

Generative AI, which like ChatGPT in utilizing data for content creation, has garnered global attention from lawmakers and regulators. There are concerns about its potential use in threatening national security, amplifying influence operations, or facilitating fraud.

Microsoft, in a statement, affirmed its commitment to supplying the FTC with the required information for the review. The company highlighted that collaborative endeavors among American firms contribute to positioning the U.S. as a leader in the field of AI.

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“Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation,” said Rima Alaily, Microsoft’s corporate vice president for its competition and market regulation group.

Google said it hoped the inquiry would “shine a bright light on companies” that are less open than it is and that have a “long history of locking-in customers.”

Spokespeople for Anthropic and Amazon declined to comment. OpenAI did not immediately respond to requests for comment.

In June of last year, FTC staff outlined potential anticompetitive areas in a blog post, asserting their intent to employ a “full range of tools to identify and address unfair methods of competition.” The post emphasized the critical role of competition, particularly in the realms of data, talent, and computational resources.

During her first visit to Silicon Valley as FTC chair, Lina Khan said AI is a theme the agency was studying to determine if the technology has been controlled by a handful of companies.

In 2023, corporate investors, notably Microsoft and Amazon, have significantly dominated AI funding. According to an analyst note from Morgan Stanley, corporate investors constituted 90% of generative AI private fundraising, a substantial increase from the approximately 40% average in previous years.