FTC To Look Into Tech Giants' AI Partnerships

(RTTNews) - Competition regulator, Federal Trade Commission has launched an investigation into the partnerships between generative AI startups - OpenAI, Anthropic and technology giants - Alphabet's Google (GOOG), Amazon (AMZN) and Microsoft (MSFT), in order to build a better understanding about the investments.

At present, Microsoft's investments in OpenAI amount to $13 billion, whereas Amazon and Google have pledged to invest $4 billion and over $2 billion, respectively, in Anthropic.

According to a Morgan Stanley report, tech companies like Microsoft and Amazon accounted for 90 percent of investment in generative AI companies in 2023, whereas in the prior years it accounted for 40 percent.

The FTC said that through the inquiry it seeks to understand the implications of their partnerships on different aspects such as product pricing, services, employment, and oversight rights.

"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 five companies have a time limit of 45 days to respond to the FTC's orders.

The UK and EU competition regulators are also looking into the Microsoft's investments in OpenAI. After the announcement of inquiry, OpenAI had made certain changes in its website about the deal. It now reads that Microsoft has a "minority economic interest" in the start-up, whereas earlier it called Microsoft as a "minority owner" of the start-up.

Responding to the FTC's inquiry, Rima Alaily, vice-president for Microsoft's competition and market regulation group, said that the company's partnership with OpenAI is meant for "promoting competition and accelerating innovation". She further added, "We look forward to providing the FTC with the information it needs to complete its study."

Google stated that, "We hope the FTC's study 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."