The Federal Trade Commission is investigating whether Big Tech investments into some of the largest artificial intelligence developers are diminishing the competitive market and violating antitrust laws.
The FTC issued orders to Amazon, Google, Microsoft, OpenAI, and Anthropic on Thursday inquiring about their investments and partnerships involving the development of generative AI. Microsoft invested over $10 billion into OpenAI and has implemented its models into several of its products. Amazon and Google, meanwhile, have also invested billions into Anthropic.
The FTC’s inquiries will attempt to determine what influence the Big Tech companies have had over OpenAI and Anthropic’s decisionmaking and whether that influence is affecting the AI market’s competitive landscape. It is the first inquiry by the commission to analyze how the interactions between the companies and their implications for the industry.
“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity,” said FTC Chairwoman Lina Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”
The orders requested descriptions of the companies’ relationships and internal documentation detailing the nature of the deals made.
Khan has taken an aggressive approach to business deals involving Big Tech companies and to the agency’s enforcement in general. Khan wrote a well-known 2017 paper, “Amazon’s Antitrust Paradox,” at Yale, in which she made the case for antitrust enforcement against the company over its size and market presence. The FTC sued Amazon in September over allegations of penalizing sellers for having lower prices than its products by hiding them in their search results and barring them from selling on other platforms.
Microsoft has also been in battle with the FTC over its purchase of Call of Duty developer Activision-Blizzard in early 2021. The FTC initially moved to block the Microsoft deal, pushing it to trial. Judge Jacqueline Scott Corley in San Francisco ruled in favor of Microsoft in July, arguing that the FTC “has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition.”
The FTC is already investigating OpenAI over allegations that its product violated consumer protection laws by placing personal reputations and data at risk. Khan has said that enforcers and regulators “need to be vigilant early” when it comes to AI.
Microsoft’s deal with OpenAI came under scrutiny last month when the UK-based Competition and Markets Authority inquired about whether Microsoft’s investment into OpenAI could be considered a merger.
“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,” a Google spokesperson told the Washington Examiner.
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“The U.S. has assumed a global AI leadership position because important American companies are working together,” Rima Alaily, the VP at Microsoft’s Competition and Market Regulation Group, said in a statement to the Washington Examiner. “Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation. We look forward to providing the FTC with the information it needs to complete its study.”
Amazon declined to comment on the FTC inquiry.
