US Antitrust Probe Targets OpenAI’s Big Tech Deals

• FTC investigates AI partnerships for security concerns.
• Companies face data requests with a 45-day deadline.
• Tech collaborations prompt investor scrutiny.

In a significant move, the U.S. Federal Trade Commission (FTC) has initiated an antitrust investigation targeting major technology companies, including OpenAI, Microsoft, Alphabet, Amazon, and Anthropic. The focus of the inquiry is on recent investments and partnerships involving generative AI companies and cloud service providers, with concerns raised about the potential threats to national security, influence operations, and fraudulent activities associated with generative AI technology.

Generative AI, similar to OpenAI’s ChatGPT, utilizes data to create new content, and its growing influence has prompted global regulators to scrutinize the industry. The FTC orders specifically target Microsoft, Google, and Amazon, seeking information on how their partnerships with AI providers affect competition, pricing strategies, access to products and services, and personnel decisions. The agency also requests details on exclusivity agreements.

Former FTC chair William Kovacic emphasized that the orders signal the agency’s commitment to closely monitor the industry, stating, “we’re watching, we’re learning, and we will continue to observe.” The investigation aims to provide the FTC with insights into the inner workings of deals between major tech players and AI providers, addressing potential antitrust and consumer protection issues.

The companies involved, including Microsoft, expressed their cooperation with the FTC’s review. Microsoft’s corporate vice president, Rima Alaily, highlighted that partnerships in AI between independent companies foster competition and innovation, positioning the U.S. ahead in the field.

Google welcomed the inquiry, expressing hope that it would expose companies with less transparency and a history of customer lock-ins. Meanwhile, Anthropic and Amazon declined to comment, and OpenAI had not responded to requests for comment at the time of reporting.

This antitrust probe follows a broader trend of regulatory scrutiny on the tech industry, particularly regarding AI investments and partnerships. The FTC’s extensive document request reflects a keen interest in understanding the impact of these deals on competition, signaling potential future actions by the regulatory body.

Additionally, the investigation sheds light on the dominance of corporate investors, particularly Microsoft and Amazon, in AI funding. Corporate investors accounted for a significant 90% of generative AI private fundraising in 2023, a substantial increase from previous years, according to Morgan Stanley.

The development comes amid ongoing discussions between the U.S. Justice Department and the FTC regarding which agency should investigate OpenAI, particularly its partnership with Microsoft. The collaboration has drawn antitrust scrutiny following Microsoft’s substantial investment in OpenAI.

OpenAI and Anthropic, both known for developing foundation models, have garnered outsized investments, contributing to over 10% of total U.S. venture funding in startups last year. The involvement of Big Tech in funding, often in the form of cloud credits, has raised concerns within the venture and startup community.

As the investigation unfolds, the tech industry awaits further developments, and the outcome could have far-reaching implications for the future of AI collaborations and investments.

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