US launches inquiry into AI deals by Microsoft, OpenAI, Google and Amazon

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The United States trade regulator launched an inquiry on Thursday into investments and partnerships made by some of the biggest companies in the generative artificial intelligence space.

The Federal Trade Commission (FTC) said in a statement that it issued orders to five companies requiring them to provide information on the matter, including Google parent company Alphabet, Amazon, Anthropic, Microsoft and ChatGPT maker OpenAI.

The inquiry will focus on what authority and rights the tech giants’ investments in the fledgling AI companies have conferred and whether those deals harm competition, the agency’s statement said.

“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” the FTC’s chair, Lina Khan, said in a statement. The British Competition and Markets Authority is conducting a similar examination.

The inquiry represents the first concrete effort from the agency to scrutinize AI firms and their use of partnerships to expand reach and influence in the rapidly growing industry.

Microsoft’s years-long relationship with OpenAI is the best known of the partnerships. Google and Amazon have more recently made multibillion-dollar deals with Anthropic, another San Francisco-based AI startup formed by former OpenAI leaders.

Microsoft’s Rima Alaily, vice-president of its competition law group, said in a statement: “The US has assumed a global AI leadership position because important American companies are working together. Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation. We look forward to providing the FTC with the information it needs to complete its study.” The company has said in the past that OpenAI is not a subsidiary under its control, though it is OpenAI’s largest shareholder after a $10bn investment. Microsoft holds an observer, non-voting seat on OpenAI’s board.

Anthropic and Amazon declined to comment. Amazon and Google and OpenAI did not immediately respond to a request for comment.

Khan, an antitrust scholar who has long argued for renewed enforcement against monopolies, has represented a threat to big tech’s power since her appointment to the FTC in 2021.

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Under her direction, the FTC successfully fined Amazon for privacy violations involving its Ring doorbell camera and in May 2023 announced a separate settlement with the company over allegations it violated children’s privacy rights by failing to delete recordings by virtual assistant Alexa.

In past complaints, such as the FTC’s case against Meta in 2021, the agency has targeted tech giants with allegations of anti-competitive behavior over acquisitions of competitors. With Thursday’s announcement, the FTC has turned its attention to the AI space, where companies have opted to increase investments in smaller firms rather than acquire companies outright.

“We’re scrutinizing whether these ties enable dominant firms to exert undue influence or gain privileged access in ways that could undermine fair competition,” Khan said on Thursday in opening remarks at an AI forum.

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