Microsoft faces FTC investigation for its relation with OpenAI, Google, Amazon to be investigated too

Alphabet, Amazon, and Microsoft are facing scrutiny from the US Federal Trade Commission (FTC) regarding their investments and partnerships with artificial intelligence (AI) startups Anthropic and OpenAI. The investigation is part of a broader study on how AI impacts competition in the technology industry.

The FTC, an antitrust and consumer protection agency, issued subpoenas to gather information, focusing on over $19 billion in investments made by Microsoft, Amazon, and Alphabet’s Google.

These investments solidified alliances between major cloud service providers and leading developers of AI software. The agency is particularly concerned about the dependence of promising AI startups on established tech companies for financing and infrastructure.

FTC Chair Lina Khan emphasized during a public workshop that the agency is closely monitoring the industry, cautioning that claims of innovation should not be used as a cover for legal violations. She asserted, “There is no AI exemption from the laws on the books.”

While Google clarified that it does not have exclusive rights to Anthropic’s technology, Microsoft defended its collaborations with OpenAI, highlighting its contribution to promoting competition and accelerating innovation.

The inquiry comes at a time when technology giants play a significant role in supporting agile AI startups to secure a position in the growing sector.

Microsoft has recently revamped its products around AI tools powered by OpenAI’s technology, while Google plans to integrate its powerful language model, Gemini, into its experimental search tool.

Microsoft’s investment of over $13 billion in OpenAI has already triggered antitrust reviews in the UK and the European Union. Similarly, Google committed to a $2 billion backing of Anthropic, and Amazon agreed to invest as much as $4 billion.

Anthropic, founded in 2021 by former OpenAI employees, saw differences in the business’s direction, leading to their departure from OpenAI.

Rebecca Kelly Slaughter, a Democrat at the FTC, criticized the tech giants for structuring transactions to avoid US merger laws, expressing concerns about the potential consolidation of the market.

The FTC is conducting the inquiry using its 6(b) authority, allowing it to issue subpoenas for market studies. The agency is expected to release a report on its findings, although this process may take years. The collected information could potentially lead to official investigations or support existing probes. Last summer, the FTC initiated an investigation into whether OpenAI violated consumer protection laws with its ChatGPT conversational AI bot.

Both the FTC and the Justice Department share jurisdiction over antitrust probes and have been internally debating which should lead investigations related to AI.

The European Commission is also examining agreements between digital market players and generative AI developers, while the UK’s Competition and Markets Authority announced a probe into Microsoft and OpenAI’s partnership in December.

(With inputs from agencies)

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