US Opens Inquiry into Big Tech’s Partnerships with AI Startups
US antitrust enforcers have launched an investigation into the relationships between major artificial intelligence (AI) startups and tech giants such as Amazon, Google, and Microsoft. The inquiry specifically focuses on the influence and impact these partnerships have on the rapidly growing generative AI sector, which includes the development of chatbots like ChatGPT and other innovative AI tools that generate imagery and sound.
We’re examining whether these ties allow dominant companies to exert undue influence or gain preferential access in ways that could undermine fair competition, stated Lina Khan, chair of the US Federal Trade Commission (FTC), during an AI forum on Thursday.
The FTC has issued compulsory orders to five companies, namely Amazon, Google, and Microsoft, as well as AI startups Anthropic and OpenAI, requiring them to provide information about their agreements and the decision-making processes involved.
Among these partnerships, Microsoft’s long-standing relationship with OpenAI stands out. Google and Amazon have also recently made multi-billion dollar deals with Anthropic, a San Francisco-based AI startup founded by former leaders at OpenAI.
While Google welcomed the FTC inquiry, it also subtly criticized Microsoft’s OpenAI relationship and its history of facing antitrust scrutiny. We hope the FTC’s study will shine a bright light on companies that don’t offer the openness of Google Cloud or have a long history of locking-in customers – and who are bringing that same approach to AI services, stated Google.
Rimy Alaily, Microsoft’s corporate vice president for competition and market regulation, expressed the company’s willingness to cooperate with the FTC and defended such partnerships as beneficial for competition and innovation.
Amazon, Anthropic, and OpenAI declined to comment on the matter.
Concerns about Microsoft’s investments in OpenAI have already prompted investigations by the European Union (EU) and the United Kingdom. The EU’s executive branch recently announced that the partnership could trigger an investigation under regulations that cover mergers and acquisitions, potentially harming competition across the 27-nation bloc. The UK’s antitrust watchdog initiated a similar review in December.
Advocates for antitrust measures applauded both the FTC and Europe for taking action, as these deals have been criticized as quasi-mergers. Big Tech firms know they can’t buy the top AI companies, so instead they are finding ways of exerting influence without formally calling it an acquisition, said Matt Stoller, director of research at the American Economic Liberties Project.
Microsoft has never disclosed the total value of its investment in OpenAI publicly, stating that it is a complicated thing, according to CEO Satya Nadella. However, he emphasized that Microsoft’s contribution includes not only financial support but also computing power and other resources.
OpenAI’s governance and its partnership with Microsoft faced scrutiny last year after the sudden firing and subsequent reinstatement of CEO Sam Altman. The incident caused turmoil within the company and attracted significant attention. Eventually, a new agreement was reached, granting Microsoft a nonvoting board seat but not control over OpenAI’s operations.
The FTC has been signaling its intention to address illegal practices related to AI for almost a year. In April, Khan stated that the US government would take action against harmful business practices involving AI. One area of concern is the use of AI-generated voices and imagery for fraudulent activities and phone scams.
However, Khan emphasized that the inquiry’s focus goes beyond harmful applications and extends to the concentration of market power in a few AI leaders who could potentially solidify their dominance.
