US examines AI deals: Microsoft, OpenAI, Google, Amazon

FTC to scrutinize the impact of tech giants’ AI investments on competition and conferred rights

The U.S. trade regulator initiated an investigation on Thursday into investments and partnerships of major companies in the field of generative artificial intelligence.

The Federal Trade Commission (FTC) issued orders to five companies, including Google parent company Alphabet, Amazon, Anthropic, Microsoft, and OpenAI (maker of ChatGPT), requiring information on their investments and partnerships in the generative artificial intelligence space, as stated in an official release. The investigation aims to scrutinize the authority and rights conferred by tech giants’ investments in emerging AI companies and assess whether such deals pose a threat to competition, according to the agency’s statement.

FTC Chair Lina Khan commented, “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” emphasizing the inquiry’s focus on potential distortions in innovation and competition. The British Competition and Markets Authority is also conducting a parallel examination.

This investigation marks the first substantial effort by the agency to scrutinize AI firms and their utilization of partnerships for expanding influence in the rapidly growing industry.

The long-standing partnership between Microsoft and OpenAI is among the most prominent collaborations. More recently, Google and Amazon have entered multibillion-dollar agreements with Anthropic, an AI startup in San Francisco founded by former OpenAI leaders.

Rima Alaily, Microsoft’s Vice President of the Competition Law Group, stated, “The U.S. has taken a leading global position in AI because significant American companies are collaborating. Partnerships between independent companies, such as Microsoft and OpenAI, among others, foster competition and accelerate innovation. We look forward to providing the FTC with the necessary information for its study.” Microsoft has clarified that OpenAI is not a subsidiary under its control, despite being its largest shareholder following a $10 billion investment. Microsoft holds an observer, non-voting seat on OpenAI’s board.

Anthropic and Amazon opted not to provide comments. Amazon, Google, and OpenAI did not respond immediately to a request for comment.

Khan, an antitrust scholar advocating for increased enforcement against monopolies, has posed a challenge to the power of big tech since assuming her role at the FTC in 2021.

Under her leadership, the FTC imposed a successful fine on Amazon for privacy breaches related to its Ring doorbell camera. Additionally, in May 2023, a separate settlement with the company was announced, addressing allegations of violations of children’s privacy rights by not deleting recordings made by the virtual assistant Alexa.

In previous complaints, as seen in the FTC’s 2021 case against Meta, the agency has accused tech giants of anti-competitive behavior related to the acquisition of competitors. With the recent announcement on Thursday, the FTC has shifted its focus to the AI space, where companies are increasingly choosing to invest in smaller firms rather than acquiring them outright.

“We’re examining whether these affiliations allow dominant firms to exert unwarranted influence or secure preferential access in manners that might compromise fair competition,” Khan stated during opening remarks at an AI forum on Thursday.