Big Tech's AI Partnerships Under FTC Scrutiny

FTC investigates Big Tech and AI startups' partnerships, focusing on competition and anti-trust concerns.

Why is the FTC investigating Big Tech's AI partnerships?

The Federal Trade Commission (FTC) has initiated an inquiry into the burgeoning relationships between major technology companies like Google, Amazon, and Microsoft, and generative AI startups such as OpenAI and Anthropic. This investigation seeks to understand the dynamics of these multi-billion-dollar partnerships, focusing on competition regulation and the potential for anti-competitive risks.

FTC Launches Inquiry into Generative AI Investments and Partnerships
The Federal Trade Commission announced today that it issued orders to five companies requiring them to provide information regarding recent investments and partnerships involving generative AI comp

The Scope Of FTC's Information Demand

On Thursday, the FTC expressed its intent to delve deeper into the network of alliances and investments formed between these tech giants and AI startups. Central to this inquiry is Microsoft's notable $12 billion investment in OpenAI, alongside similar substantial commitments from Amazon and Google to Anthropic. The FTC's investigation aims to shed light on the operational aspects of these partnerships, examining factors like product release decisions, governance, and oversight rights.

Bar Chart
AI investments
Source: PitchBook

The Role Of Cloud Providers In AI Development

Cloud providers such as Google, Microsoft, and Amazon have become pivotal in the generative AI arena, leveraging their extensive financial and computing resources essential for AI development and deployment. Their collaborations typically involve AI startups utilizing their cloud infrastructure or AI chips. FTC Chair Lina Khan emphasized the need to safeguard against actions that might distort innovation or impede fair competition in this rapidly evolving field.

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Big Tech's Response And Broader Regulatory Landscape

The five companies involved have a 45-day deadline to respond to the FTC's order. This inquiry highlights broader concerns among competition regulators globally about the speed and scale of AI technology investments. The UK and EU are also examining Microsoft's investment in OpenAI, with recent website changes from OpenAI subtly altering its description of Microsoft's involvement. Microsoft and Google have publicly affirmed their commitment to promoting competition and innovation in response to the FTC's study.

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