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Microsoft, Amazon and Google face FTC inquiry over AI deals

Microsoft, Amazon and Google face FTC inquiry over AI deals

The Federal Trade Commission on Thursday launched an investigation into the billion-dollar investments made by Microsoft, Amazon and Google in artificial intelligence start-ups OpenAI and Anthropic, expanding the regulator's efforts to rein in the power of tech giants over AI. .

These deals have allowed larger companies to form deeper relationships with their smaller rivals while avoiding most government scrutiny. Microsoft has invested billions of dollars in OpenAI, the creator of ChatGPT, while Amazon and Google have invested billions of dollars in Anthropic, another leading AI start-up.

Regulators have typically focused on bringing antitrust lawsuits against deals where tech giants are buying rivals outright or using acquisitions to expand into new businesses, thereby raising prices and other losses. are, and have not routinely challenged the stakes that companies buy in start-ups. The FTC's investigation will examine how these investment deals change the competitive landscape and could inform any investigation by federal antitrust regulators into whether the deals broke laws.

The FTC said it would ask Microsoft, OpenAI, Amazon, Google and Anthropic to describe their impact on their partners and how they work together to make decisions. It also said it would be demanded that they provide any internal documents that could shed light on the deals and their potential impact on competition.

“Our study will shed light on whether investments and partnerships made by major companies risk distorting innovation and undermining fair competition,” FTC Chairwoman Lina Khan said in a statement.

The investigation is the first major effort by the agency to understand how companies are using partnerships and investments in AI to rapidly expand their impact. Ms Khan, who was appointed in 2021, has long pushed for modernizing the way the government enforces antitrust laws. , This includes his agency filing an antitrust lawsuit last year against Amazon for artificially raising prices and asking courts to adopt more innovative principles about how corporations can harm the economy.

Other regulators internationally are also investigating the investments of some big tech companies in AI start-ups. The Competition and Markets Authority, a British regulator, said last month it was reviewing whether Microsoft's deal with OpenAI was a merger that falls within its scope and would harm competition in the economy. The European Commission also said it was considering whether its antitrust laws could apply.

Microsoft, Amazon, Google, OpenAI and Anthropic did not immediately respond to requests for comment.

Brad Smith, President of Microsoft, said in a social media post in December The company has entered into a “partnership with OpenAI that has fostered greater AI innovation and competition while preserving independence for both companies.” He said the arrangement was “very different from a takeover.”

The FTC and the Justice Department, which investigate corporate mergers and see whether they could harm competition, have in recent years divided responsibility for investigating whether tech giants broke antitrust laws. The FTC has filed antitrust lawsuits against Amazon and Meta while the Justice Department has sued Google and is investigating Apple's behavior.

The FTC has additional powers to prepare public studies that look at specific corporate conduct and its impact on the economy. For example, in 2021, it released a report that looked at acquisitions by tech giants, Determination Many of them were not large enough to meet the standard of mandatory government scrutiny. recently agency did an investigation Information will be provided on how social media companies and video platforms handle deceptive advertising.

Relations between tech giants and AI start-ups have faced increased scrutiny since November, when OpenAI's board ousted its chief executive Sam Altman. In the chaotic days that followed, Satya Nadella, Microsoft's chief executive, mentored Mr. Altman and later offered to hire him and his team directly, raising questions about Microsoft's influence over the startup's operations. Mr. Altman eventually returned to OpenAI.

As part of Thursday's investigation, the FTC said it would seek details from Microsoft, Amazon, Alphabet, OpenAI and Anthropic, including whether deals between the giants and start-ups included rights to board seats or a The second involved other surveillance. Microsoft gained a seat on OpenAI's board in November, but does not have the right to vote on its decisions.

Microsoft has pledged $13 billion for effectively a 49 percent stake in the startup. The New York Times previously reported that the company had worked to keep its stake below 50 percent due to antitrust concerns. Amazon said it would invest up to $4 billion in Anthropic. Google has committed to invest more than $2 billion in Anthropic.

The study could then lead to a more formal investigation into whether deals between the companies violate antitrust laws. FTC and Justice Department officials are discussing which agency will investigate the deal between Microsoft and OpenAI, a person familiar with the matter said on condition of anonymity because the discussions are confidential.

An FTC spokesperson said the study was a first step in understanding a new market for the technology and that the findings could be used by any agency.

Separately, the FTC last year launched an investigation into whether ChatGPT harmed consumers, with a greater focus on whether the technology could be used to commit fraud. (The Times has sued Microsoft and OpenAI over its use of the copyrighted work.)

“America’s longstanding national commitment to promoting fair and open competition has been an essential part of what made this country an economic powerhouse and laboratory of innovation,” Ms. Khan said in a Times guest essay last year. “We once again find ourselves at an important decision point.”

Trip Mickle And Karen Weiss Contributed to the reporting.



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