The US Federal Trade Commission (FTC) has launched an investigation into the AI deals made by the likes of OpenAI, Microsoft, Google, Amazon, and Anthropic.
Announced on January 25, the inquiry will be investigating how these deals may impact competition in the market, with concerns that the AI boom is deepening the power of a handful of companies.
The agency has sent compulsory orders to all five companies, stating that the inquiry will "scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape."
“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity,“ said FTC chair Lina Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."
The investigation will particularly focus on the Microsoft/OpenAI investment, Amazon/Anthropic, and Google/Anthropic, all of which were multi-billion-dollar deals.
The FTC is looking for information including the strategic rationale behind the agreements; the practical implications, including "decisions around new product releases, governance or oversight rights, and the topic of regular meetings;" an analysis of the transactions' competitive impact in regards to market share, competition, potential for sales growth, etc; competitive dynamics for "key products and services needed for AI;" and information provided to government entities concerning the investigation.
The five companies have 45 days to respond.
The Microsoft/OpenAI deal was finalized in January 2023 and saw Microsoft committing to a "multiyear, multi-billion-dollar investment" in the company. The exact terms of the deal were never disclosed but some reports suggested Microsoft would invest $10bn to get a 49 percent stake in the businesses as well as 75 percent of OpenAI's profits. The company is OpenAI's exclusive cloud provider.
The Anthropic deals occurred later in the year. In September, Amazon stated it would invest up to $4bn in the generative AI startup in return for being the company's "primary cloud provider." An initial $1.25bn was invested for a minority stake in the company, and the two stated they would collaborate on the future development of Tranium and Inferentia chips.
The following month, Google stated its intention to invest up to $2bn in Anthropic, having previously acquired a 10 percent stake for $300m. It is unclear if any cloud computing credits were to be associated with the investment.
The big three cloud providers are also the target of a UK Competition and Markets Authority (CMA) investigation, as of October 2023, though this investigation is focused on the cloud computing market.
Previous inquiries into the competitive practices of the companies include a 2022 antitrust campaign against Microsoft. Led by OVHcloud and backed by the cloud trade association CISPE which includes Amazon, it resulted in a complaint being filed with the European Competition watchdog. In May 2022, Microsoft agreed to adjust the terms of its cloud computing service to avoid a full antitrust investigation.
The following year, in June 2023, Google accused Microsoft and Oracle of anti-competitive practices in a letter to the FTC in the US. At the same time, Oracle accused AWS of similar practices.
