Yesterday, the U.S. Federal Trade Commission (FTC) announced that it is launching an investigation into the investments made by tech giants Microsoft, Alphabet, Amazon, Anthropic, and OpenAI in artificial intelligence (AI) startups. The FTC has called on these companies to disclose information regarding recent investments and partnerships involving generative AI companies and major cloud service providers. The investigation aims to address concerns about the concentration of power and potential anticompetitive behavior in the rapidly growing AI market.
Amazon and Google have already injected a total of $6 billion in Anthropic, while Microsoft pledged over $10 billion to OpenAI. The FTC wants to ensure that these investments do not undermine competition or create barriers for new entrants in the AI market.
During a summit hosted by the agency, industry experts discussed the concentration of the AI tech stack, from the semiconductor level to the cloud and data. Daven Rauchwerk, a technologist and founder of a semiconductor startup, highlighted the dominance of Nvidia in producing AI chips. This concentration makes it challenging for new players to enter the market, as hyperscalers end up announcing their own chips and gaining innovation surveillance capabilities.
Corey Quinn, the chief cloud economist at The Duckbill Group, pointed out the lack of transparency in the distribution of AI chips by vendors like Nvidia. Hyperscalers, such as Amazon, bundle and package deals across different business units, ensuring their access to a large number of chips. Quinn emphasized the interdependencies of the hyperscalers, stating that even the U.S. government relies significantly on the Big Three hyperscalers for its compute needs.
Tania Van den Brande, director of economics at the U.K.’s communications regulator Ofcom, highlighted the difficulties faced by customers in moving their data out of the hyperscalers’ clouds due to egress fees and re-engineering challenges.
FTC Chair Lina M. Khan emphasized the importance of ensuring healthy competition in the AI market. As companies rush to develop and monetize AI, it is crucial to prevent tactics that stifle opportunities for competition and innovation.
The investigation by the FTC aims to shed light on the investments and partnerships of these tech giants and assess their impact on market competition. The agency has given Microsoft, Alphabet, Amazon, Anthropic, and OpenAI 45 days to respond with the required information. The outcome of the investigation could have significant implications for the future of the AI market and the concentration of power among dominant players.
As the FTC delves deeper into the actions of these tech goliaths, the breadth of their investments and partnerships in the AI space will be scrutinized. It remains to be seen whether this investigation will lead to regulatory action in order to safeguard competition and foster a more open and accessible AI market.
