The Federal Trade Commission (FTC) is taking a look into OpenAI’s partnership with Microsoft and Anthropic’s collaborations with Google’s parent Alphabet and Amazon to determine their impact on the rapidly emerging generative AI market.
FTC chair, Lina Khan, recently announced the inquiry at an AI tech summit hosted by the antirust agency, saying in a statement that “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.”
Khan added that the FTC’s study will “shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”
The development of generative AI has continued to accelerate since OpenAI’s release of its ChatGPT chatbot in late November 2022, and analysts with market research Statista expect the global market for the technology will jump from $44.89 billion last year to $207 billion by 2030, averaging more than 20% growth per year during that time.
IT heavyweights Microsoft, Google and Amazon – and the world’s top three cloud services providers – have turned to smaller pure-plays to establish themselves in the space. Microsoft has invested more than $10 billion in OpenAI, an amount that also has drawn the attention of the European Commission, which earlier this month said it may investigate whether the investment violates the European Union’s merger rules.
Meanwhile, Amazon has invested $4 billion an Anthropic, while Google’s put $2 billion into the startup.
Tech Giants Push Back at Concerns
In a statement to the media, Rima Alaily, corporate vice president and deputy general counsel for Microsoft’s competition and market regulation group, said that the United States “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.”
Google in a statement said it hopes the FTC’s inquiry “will shine a bright light on companies that don’t offer the openness of Google Cloud or have a long history of locking-in customers – and who are bringing that same approach to AI services.”
The agency’s study is a 6(b) inquiry, which is used to review enforcement situations, promote competition and protect consumers. According to a 14-page letter the FTC sent to the companies last week, they have 45 days to file a report with the agency that includes information about the specific investment or partnership, details of how decisions within the partnerships are made, and analyses of how they may affect the competitive landscape, including information about market share, competitors and sales growth.
Other required information includes documents that touch on the dynamics around products and services needed for generative AI and any materials given to domestic or foreign governments in connection with investigations or requests for information.
Praising the FTC’s Action
The Open Markets Institute, a nonprofit that opposes monopolies and works for stronger antitrust laws, applauded the FTC’s announcement.
“This action makes clear that regulatory authorities in the U.S. – as well as in Europe and the UK – are paying attention to our warnings and those of other leading public interest groups that Microsoft, Google, and Amazon are already positioned to dominate AI technology and services up and down the tech stack,” Barry Lynn, the group’s executive director, said in a statement. “We must learn from the key lesson of monopoly power in the digital age. The best way to avoid fundamental threats to our democracy and our economic wellbeing is to strike at the root. If we want the future of AI to be in the public interest, then it is the public that must set the rules.”
The institute, with the Center for Journalism and Liberty, in November 2023 released a report about what it said is the threat of the AI industry falling into the hands of a few large companies.
“The report shows how just a handful of Big Tech companies – by exploiting existing monopoly power and aggressively co-opting other actors – have already positioned themselves to control the future of artificial intelligence and magnify many of the worst problems of the digital age,” the authors wrote in introducing the report.
The European Commission echoed the FTC’s concerns this month when officials said the agency was reviewing some agreements between large tech companies and smaller generative AI developers and how those affect the market.
“We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics,” Margrethe Vestager, the EC’s executive vice president in charge of competition policy, said in a statement at the time.