Alphabet Inc., Amazon.com Inc., and Microsoft Corp. have received subpoenas from the US Federal Trade Commission (FTC) as part of a study into the impact of artificial intelligence (AI) on competition in the technology industry. The subpoenas were sent in relation to the companies’ investments and partnerships with AI startups Anthropic and OpenAI. The FTC is particularly interested in over $19 billion in investments made by the three tech giants, which have solidified alliances between major cloud-services companies and leading AI software developers.
Concerns have been raised by antitrust enforcers worldwide about the heavy reliance of many promising AI startups on established tech companies for financing and infrastructure. During a public workshop, FTC Chair Lina Khan emphasized that AI companies cannot use claims of innovation as an excuse for breaking the law. She stated, There is no AI exemption from the laws on the books.
While Google, Amazon, and Anthropic declined to comment on the subpoenas, Microsoft and OpenAI have yet to respond to requests for comment. This inquiry comes as tech giants increasingly play a significant role in supporting agile AI startups in hopes of establishing a presence in the thriving sector. Microsoft has reworked most of its products around AI tools powered by OpenAI’s technology over the past year. Google, on the other hand, plans to incorporate its powerful Gemini language model into its experimental search tool in the coming months.
Microsoft’s investment in ChatGPT creator OpenAI exceeds $13 billion. The close relationship between Microsoft and OpenAI, highlighted by the temporary ousting and subsequent reinstatement of OpenAI CEO Sam Altman, has already triggered antitrust inquiries in the UK and the European Union.
Meanwhile, Google has committed to providing $2 billion in backing to Anthropic, and Amazon agreed to invest up to $4 billion in the same startup last year. Anthropic, founded in 2021 by former OpenAI employees, split from the company due to disagreements over its business direction.
Rebecca Kelly Slaughter, one of the FTC’s three Democrats, criticized tech giants for structuring their transactions in a way that evades US merger law, which would typically require them to report to antitrust enforcers. She warned that these investments could lead to an overly consolidated market dominated by only a few players.
Despite the criticism and concerns, it is important to note that studying the market is meant to complement, rather than replace, appropriate enforcement actions. Microsoft’s investment in OpenAI was not reported to the FTC, as it does not amount to control of the company under US law, while the deal between Google, Amazon, and Anthropic was structured as convertible notes, which do not require immediate reporting.
The FTC has the authority to issue subpoenas under section 6(b) to conduct market studies. The agency typically releases a report based on its findings after analyzing the information provided by companies, although this process may take several years. The FTC is currently finalizing the results of studies on pharmaceutical middlemen and supply chains conducted in 2021 and 2022.
It is worth noting that the information collected by the FTC for research purposes can also be utilized in official investigations or to support ongoing inquiries. Last summer, the agency launched an investigation into whether OpenAI violated consumer protection laws with its popular ChatGPT conversational AI bot.
The FTC and the Justice Department both have jurisdiction over antitrust investigations and have been deliberating internally on which agency should lead on AI-related matters. The Justice Department has historically handled antitrust matters involving Microsoft, while the FTC oversaw Microsoft’s acquisition of game developer Activision Blizzard Inc.
Furthermore, the European Commission is currently examining various agreements between major digital market players and generative AI developers and providers. The EU’s executive arm is investigating the impact of these partnerships on market dynamics, and the UK’s Competition and Markets Authority has already announced its own investigation into Microsoft and OpenAI’s partnership.
As the use of AI grows and its impact on competition becomes more significant, regulators around the world are focused on ensuring fair and healthy market conditions. With major tech companies investing heavily in AI startups, the stakes are high, and antitrust enforcement will play a critical role in shaping the future of the industry.
