FTC to investigate deals made by Google, Amazon, and Microsoft with AI start-ups

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What you need to know

  • The FTC has reportedly launched an inquiry into the AI deals made by Google, Amazon, and Microsoft with AI companies like OpenAI and Anthropic.
  • The study's purpose is to determine if such deals break the law, thus breaching antitrust policies.
  • All three tech giants have sunk billions of dollars into OpenAI and Anthropic, respectively, as they use their software to progress their own AI visions.

The Federal Trade Commission is beginning to dig deeper into AI deals made by Google, Amazon, and Microsoft out of fear of antitrust practices. According to the New York Times, the inquiry was launched today (Jan. 25), which involves the "multibillion-dollar" investments put into AI companies like OpenAI and Anthropic by the previously named big tech organizations.

The FTC's inquiry is to determine the effects of these companies' investments from a healthy, competitive standpoint. If it appears as though laws are broken, such information could be used to form an investigation spear-headed by federal antitrust regulators.

Lina Khan, the FTC chair, stated, "Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

The FTC is early in its inquiry, however, it stated it would reach out to Amazon and Google for more information about their interactions with OpenAI and how deals were agreed upon. Similarly, the FTC will do the same with Microsoft and OpenAI.

Meanwhile, according to a person close to the matter, the FTC and Justice Department are in talks to decide who should examine the deals between Microsoft and OpenAI. Microsoft is already in the hot seat in the EU as the publication adds the CMA (Competition and Markets Act) started looking into its dealings with OpenAI and whether it could negatively impact the economy in December.

Moreover, the FTC's inquiry into these companies will also seek to learn if the deals involved "rights to board seats or other oversight over each other."

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Microsoft has become the world's largest investor in OpenAI with over $13 billion placed into the company since 2019. The NY Times adds that Microsoft holds 49% of OpenAI's stocks, one percent shy of what could be deemed a breach in antitrust policies. On the other hand, we have Amazon and Google who've invested $4 billion and $2 billion into Anthropic, respectively.

However, a microscope was placed on big tech companies since Microsoft attempted to hire ChatGPT's Sam Altman in November. The company planned to create its own AI division with Altman, though the days to follow held his return to OpenAI, putting a stranglehold on Microsoft's plans.

The FTC's newfound inquiry and the EU's pre-existing one appear as an extension of government organizations' views on AI. With things trending toward potential antitrust practices, AI regulations started with the EU's proposed "AI Pact" in May 2023. The purpose was to create a set of guidelines that companies needed to adhere to.

The European Union wanted to draft the rule set by the end of the year — which it did — ushering in rules to curb potential risks related to AI.

In the U.S., several big tech companies and AI start-ups have come together to progress AI safety practices, such as ways to earn the public's trust and identify the risks to society AI systems pose.

Nickolas Diaz
News Writer

Nickolas is always excited about tech and getting his hands on it. Writing for him can vary from delivering the latest tech story to scribbling in his journal. When Nickolas isn't hitting a story, he's often grinding away at a game or chilling with a book in his hand.