The Federal Trade Commission (FTC) has launched an investigation into the significant investments made by tech giants Microsoft, Amazon, and Alphabet into artificial intelligence (AI) startups OpenAI and Anthropic. The FTC has issued compulsory orders to the companies, with the aim of scrutinizing their relationships with AI startups and assessing their impact on competition.
FTC Chair Lina Khan emphasized the importance of ensuring healthy competition in the development and monetization of AI. Khan stated, As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. The FTC’s study will shed light on whether dominant companies’ investments and partnerships risk distorting innovation and undermining fair competition. Microsoft, Amazon, and Alphabet have 45 days to respond to the agency’s inquiries.
The rise of generative AI, particularly since OpenAI’s release of ChatGPT in late 2022, has generated significant enthusiasm for its potential to enhance productivity. However, it has also stirred concerns about potential job losses. Against this backdrop, several major tech companies have been competing to develop their own versions of generative AI technology while investing billions of dollars in smaller startups focused on its development. For instance, Microsoft invested over $13 billion in OpenAI, securing a 49 percent stake. Microsoft has integrated OpenAI’s technology into Bing, its search engine, as well as Windows and Office. Amazon and Alphabet have also made investments, with $4 billion and $2 billion respectively, in AI startup Anthropic, which specializes in a chatbot called Claude.
FTC Chair Lina Khan’s opinion column in The New York Times last year highlighted the risks associated with the expanding adoption of AI and the potential for large incumbent technology firms to further solidify their market dominance. Khan argued for the importance of AI regulation.
As part of its investigation, the FTC is seeking specific information regarding the investments made by Microsoft, Amazon, and Alphabet. The agency is interested in understanding decisions surrounding new product releases, oversight rights, market share analyses, and potential sales growth, among other details.
It’s not just the US that is scrutinizing the ties between Big Tech and generative AI startups. Last month, the UK’s Competition and Markets Authority also announced an examination of whether Microsoft’s investment in OpenAI violates antitrust law.
Microsoft’s president, Brad Smith, portrayed the company’s investment in OpenAI as a partnership fostering AI innovation and competition while preserving independence for both companies. Smith noted that Microsoft currently holds a non-voting observer seat on OpenAI’s board, emphasizing that this is a distinct arrangement from an acquisition.
Engadget reached out to Microsoft, Amazon, Alphabet, Anthropic, and OpenAI for comment, but they did not immediately respond.
Overall, the FTC investigation reflects growing concerns about the potential anticompetitive impact of dominant tech companies’ investments and partnerships in the generative AI sector. The inquiry aims to ensure fair competition and prevent the stifling of innovation in this rapidly expanding field.
