The FTC orders will allow the agency to scrutinise the inner workings of deals between Microsoft, Google and Amazon and AI providers to help the antitrust and consumer protection agency understand how these deals have affected competition.
It also signals to the industry that “we’re watching, we’re learning and we will continue to observe” and that if the time comes for future action, the agency will be fully prepared, said former FTC chair William Kovacic, who teaches at George Washington University law school.
The extensive document request seeks details on how the partnerships with Big Tech influence strategy and “decisions around the pricing of products and services; decisions around the granting of access to products and services; and decisions around personnel”.
The agency, which also wants information on exclusivity agreements, said the companies have 45 days to respond to the orders.
In a statement, Microsoft said it would provide the FTC information to complete its review and that collaboration by American companies put the US ahead in AI.
“Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation,” said Rima Alaily, Microsoft’s corporate vice-president for its competition and market regulation group.
Google said it hoped the inquiry would “shine a bright light on companies” that are less open than it is and that have a “long history of locking-in customers”.
Spokespeople for Anthropic and Amazon declined to comment. OpenAI did not immediately respond to requests for comment.
China’s AI push feels the heat from US ban on venture capital funding
China’s AI push feels the heat from US ban on venture capital funding
Last June, FTC staff published a blog post laying out areas of potential anti-competitiveness, adding they would use the “full range of tools to identify and address unfair methods of competition”. It said competition was especially important in the three areas of data, talent and computational resources.
During her first visit to Silicon Valley as FTC chair, Lina Khan said AI is a theme the agency was studying to determine if the technology has been controlled by a handful of companies.
Corporate investors such as Microsoft and Amazon have dominated AI funding. Corporate investors accounted for 90 per cent of generative AI private fundraising in 2023, up from about 40 per cent on average in prior years, according to an analyst note from Morgan Stanley.
This month, Politico reported the US Justice Department and the FTC were in discussions over which agency can probe ChatGPT maker OpenAI on antitrust grounds, including the AI firm’s partnership with Microsoft.
Alibaba and Tencent lead US$342 million total investment this year in Zhipu AI
Alibaba and Tencent lead US$342 million total investment this year in Zhipu AI
OpenAI and Anthropic, start-ups building what are known as foundation models, develop AI trained on large quantities of data. The outsize investments in the two AI companies accounted for over 10 per cent of total US venture funding in start-ups last year, PitchBook data showed.
The large amount of funding by Big Tech, sometimes in the form of cloud credits instead of cash, has raised eyebrows from the venture and start-up community.
