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June 6, 2024updated 07 Jun 2024 9:16am

US FTC and DoJ to launch antitrust investigation into OpenAI, Nvidia and Microsoft 

It is understood that the Department of Justice (DoJ) and the Federal Trade Commission (FTC) will investigate whether any of the three firms have broken US antitrust laws.

By Greg Noone

The US Federal Trade Commission (FTC) and the Department of Justice (DoJ) have opened an antitrust investigation into Nvidia, OpenAI and Microsoft. Though the full extent of the probe is not yet clear, it appears that at least one major deal – Microsoft’s recent licensing agreement with AI startup Inflection – will be scrutinised. The Redmond-based software giant and the AI startup agreed as part of a $620m deal to hire the latter’s co-founders Mustafa Suleyman and Karén Simonyan and sell its models through Microsoft’s Azure cloud platform.

Neither federal agency has yet commented on their wider antitrust investigation (Tech Monitor has reached out to both agencies and the aforementioned companies for statements.) A spokesperson from Nvidia, too, declined to comment. Microsoft, meanwhile, told this publication that it stood by the fundamentals of its licensing deal with Inflection. The partnership, a spokesperson said, “gave us the opportunity to recruit individuals at Inflection AI and build a team capable of accelerating Microsoft Copilot, while enabling Inflection to continue pursuing its independent business and ambition as an AI studio. We take our legal obligations to report transactions under the HSR Act seriously and are confident that we have complied with those obligations.” 

The logo of OpenAI on a smartphone, backgrounded by the logo of the US Federal Trade Commission (FTC).
The US Federal Trade Commission and the Department of Justice are said to have started collaborating on a large-scale investigation into OpenAI, Microsoft and Nvidia to ascertain if any of the companies broke antitrust laws. (Photo by Shutterstock)

FTC already displaying keen interest in AI

The announcement of the FTC and DoJ’s antitrust investigation echoes a similar probe launched by the UK’s Competition and Markets Authority (CMA) earlier this year. In that inquiry, the CMA said it had identified an “interconnected web” of 90 investments and partnerships with AI startups clustered around just six big tech firms: Google, Amazon, Microsoft, Meta, Apple and Nvidia. 

Those companies, pronounced CMA chief executive Sarah Cardell, “already hold positions of market power in many of today’s most important digital markets [and] could profoundly shape these new markets to the detriment of fair, open and effective competition, ultimately harming businesses and consumers.”

For their part, the FTC and the DoJ have already displayed a keen interest in AI, for good and ill. In January, the former launched an inquiry into the AI partnerships of Google parent company Alphabet, Microsoft and Amazon. The FTC has also announced an enforcement action against at least one firm for misusing facial recognition technology, launched a “Voice Cloning Challenge” to promote awareness of deepfake audio, launched an investigation into Reddit for its decision to open up user-generated content to AI training sets and strongly warned against companies using location or health data to develop new models. 

The DoJ has been just as active as the FTC. In February, deputy attorney general Lisa Monaco said that prosecutors from the agency would “seek stiffer sentences for offences made significantly more dangerous by the misuse of AI.” DoJ antitrust tsar Jonathan Kanter also warned firms to compensate artists when they used their work to train new AI models and from entering into partnership arrangements with startups where the former exercised monopsony power – a dynamic, he said, that would not be acceptable under US law. 

Not all competition investigations into AI deals fruitful

The Mistral AI logo on a smartphone, used to illustrate an article featuring the US FTC's antitrust investigation into a Microsoft deal.
Though the FTC has begun scrutinising Microsoft’s deal with Inflection, another investigation by the CMA into Redmond’s alliance with Mistral AI was unexpectedly dropped earlier this year. (Photo by Shutterstock)

Not every AI partnership initially identified by regulators as worthy of investigation has resulted in sanctions. Last month, the CMA said that it would discontinue its sub-probe into the alliance between Microsoft and French startup Mistral AI. The decision was welcomed by the latter’s US patron. “Investment and partnership are essential to new players in the AI economy,” a company spokesperson told Reuters. “We welcome the CMA’s determination that our fractional investment and partnership with Mistral AI does not qualify as a merger or acquisition.” 

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Meanwhile, other CMA investigations proceed apace. Earlier today the competition watchdog issued an update about its thinking so far about Microsoft Azure’s role in shaping competition within the UK cloud market through its licensing practices. These, said the CMA, could potentially act as a source of friction for competition in the space, with the agency proposing several provisional remedies – including boosting the transparency of Azure’s pricing. 

The former head of ICT strategy delivery for the UK Cabinet Office, Nicky Stewart, welcomed the update. “The emerging thinking around unfair software licensing, while by no means set in stone, seems pretty cut-dried: Microsoft is wielding market power,” Stewart told Tech Monitor. “It remains to be seen if the CMA will translate this into an actionable harm to the market.”

Read more: How KServe powers Bloomberg’s adventures in AI

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