The Federal Trade Commission promptly initiated an inquiry into five prominent technology firms concerning their strategic AI investments and collaborations.
Under Section 6 (b) of the FTC Act, the US regulatory body is scrutinizing the impact of multi-billion dollar agreements between Google and Anthropic, Amazon and OpenAI, and Microsoft on competition and product accessibility within the AI and cloud service sectors.
OpenAI, the developer of ChatGPT and other content-generating neural networks, faces competition from Anthropic, a rival firm established by former OpenAI personnel, in the provision of AI solutions and technologies.
FTC’s CEO Lina Khan emphasized the importance of fostering healthy competition and innovative marketplaces through new technologies. The investigation aims to assess whether the investments and partnerships of dominant corporations could stifle creativity and hinder fair competition.
In line with the investigation, the FTC has requested financial contracts, corporate justifications, market analyses, and communications related to the AI partnerships from the aforementioned companies.
Despite facing challenges such as delays in confirming Democratic nominees due to “GOP Senate dysfunction,” the FTC commission, comprising three Democratic officials out of five, voted unanimously (3–0) in favor of the investigation.
Under Khan’s leadership, the FTC has taken a more proactive stance, prompting Meta, known for its lax attitude towards privacy regulations, to challenge the agency’s regulatory authority.
Major cloud service providers like Amazon, Microsoft, and Google have invested significantly in OpenAI, Anthropic, and similar firms to access advanced AI technologies for chatbots, coding support, image recognition, and other services with potential for automation.
Notably, Microsoft has injected \(13 billion into OpenAI, Amazon has committed \)4 billion to the startup, and Google has agreed to a $2 billion investment in Anthropic.
These partnerships often involve revenue in the form of cloud service credits and may entail platform exclusivity agreements. For instance, Microsoft Azure serves as the exclusive cloud provider for OpenAI, while Anthropic relies on the Google Cloud Platform and Amazon Web Services.
While these collaborations have contributed to increased software revenue, the business case for AI services remains somewhat ambiguous, with reports of challenges like Microsoft’s alleged struggles with GitHub Copilot.
Beyond US borders, regulatory bodies like the European Commission have also started investigating tech giants like Microsoft for their involvement with OpenAI.
In response to inquiries, OpenAI, Amazon, and Anthropic have opted not to comment, while Microsoft and Google have yet to provide a response.
In a recent development, a Google executive appeared to mock Microsoft in a statement to The Register, highlighting concerns about consumer lock-ins and the lack of flexibility in certain cloud services.
As global AI leadership shifts, collaborations between major players and emerging firms like Microsoft and OpenAI are seen as vital for fostering competition and driving technological advancements. These partnerships aim to provide the necessary information to the FTC for the successful completion of its investigation.
