- FTC has initiated an investigation into the multi-billion-dollar investments made by tech giants Microsoft, Amazon, and Google in AI startups OpenAI and Anthropic.
- This inquiry focuses on the market dynamics of investment and collaboration between AI developers and major cloud service providers.
- The investigation aims to assess potential risks to innovation and fair competition.
On Thursday, January 25, the Federal Trade Commission (FTC) announced its investigation into the multi-billion-dollar investments by tech giants Microsoft, Amazon, and Google in artificial intelligence startups OpenAI and Anthropic.
Examining ties, risks, and innovation
FTC Chair Lina Khan disclosed the decision at the FTC Tech Summit, characterising it as a market inquiry into the investment and partnership relationships between AI developers and major cloud service providers. The investigation will require the tech giants to describe the impact on their partners and the decision-making processes, demanding internal documents to clarify these investments. Analysts suggest that the close ties between these tech giants and startups may circumvent substantial government scrutiny, posing potential risks to innovation and fair competition. The FTC aims to determine whether these dominant companies pose a risk of distorting innovation and disrupting fair competition, particularly in the rapidly growing field of generative AI.
The regulatory scrutiny comes as Microsoft, Amazon, and Google have intensified their focus on generative AI since early 2023. Microsoft, for instance, introduced Azure OpenAI services, allowing developers to build AI applications using OpenAI models supported by Azure’s trusted enterprise-level infrastructure and AI-optimized tools. The increased revenue from Microsoft’s cloud services driven by AI has attracted regulatory attention. In recent months, both UK and EU antitrust authorities have announced investigations into agreements between tech giants and AI developers. The EU Commission mentioned investigating Microsoft’s investment in OpenAI under EU merger regulations.
Microsoft’s $13 billion investment in OpenAI
Media reports indicate that Microsoft, as a major investor in OpenAI since their collaboration began in 2019, has invested at least $13 billion. The investigation includes requests for detailed information on whether there are board seats or other supervisory rights involved. An FTC spokesperson noted that the study would be a crucial first step in understanding the dynamics of the new technology market, and the results could be utilised by other agencies. Lina Khan emphasised that the evolving nature of AI accountability remains an unresolved question, and the FTC’s enforcement experience in other areas will significantly influence how they handle this work.
Also read: OpenAI CEO Sam Altman and U.S. House Speaker navigate AI regulation challenges on capitol hill
