US antitrust enforcers are opening an investigation into the relationships between leading artificial intelligence startups, such as ChatGPT maker OpenAI and Anthropic, and the tech giants that have invested billions of dollars in them.
“We are investigating whether these ties allow dominant companies to exert undue influence or gain privileged access in ways that could undermine fair competition,” said Lina Khan, chair of the U.S. Federal Trade Commission, in opening remarks at a AI forum on Thursday.
Khan said the market research would assess “the investments and partnerships being formed between AI developers and major cloud service providers.”
The FTC said Thursday it has issued “mandatory orders” to five companies — cloud providers Amazon, Google and Microsoft, and AI startups Anthropic and OpenAI — requiring them to provide information about investments and partnerships.
Microsoft’s long-standing relationship with OpenAI is the best-known of the partnerships. Google and Amazon recently signed multibillion-dollar contracts with Anthropic, another San Francisco-based AI startup formed by former leaders of OpenAI.
Amazon, Google, Microsoft and OpenAI did not immediately respond to requests for comment. Anthropic declined comment.
The European Union and the United Kingdom have already indicated that they may also examine the relationship with Microsoft and OpenAI. The EU’s executive branch said in January it was examining whether the partnership could trigger a regulatory investigation into mergers and acquisitions that would harm competition in the 27-nation bloc. Britain’s antitrust watchdog opened a similar investigation in December.
Antitrust advocates welcomed the actions of both the FTC and Europe in the deals that some have dismissed as quasi-mergers.
“Big Tech companies know they can’t buy the best AI companies, so instead they look for ways to exert influence without formally calling it an acquisition,” said a written statement from Matt Stoller, research director at the American Economic Liberties Project. “Enforcers must intervene, and they do.”
Microsoft has never publicly disclosed the total dollar amount of its investment in OpenAI, which CEO Satya Nadella has described as a “complicated matter.”
“We’ve made a significant investment,” he said on a November podcast hosted by technology journalist Kara Swisher. “It comes not only in the form of dollars, but also in the form of computers and whatnot.”
OpenAI’s governance and relationship with Microsoft came into question last year after the startup’s board suddenly fired CEO Sam Altman, who was then quickly reinstated, in unrest that made headlines around the world. A weekend of behind-the-scenes maneuvering and a threatened mass exodus of employees, championed by Nadella and other Microsoft leaders, helped stabilize the startup and led to the resignation of most of the previous board.
The new arrangement gave Microsoft a non-voting board seat, although “we have absolutely no control,” Nadella said in Davos. Part of the complications that led to Altman’s temporary ouster have to do with the startup’s unusual governance structure. OpenAI started as a non-profit research institute dedicated to the safe development of futuristic forms of AI. It is still run as a non-profit organization, although most of the staff works for the for-profit division it created several years later.
Microsoft made its first $1 billion investment in San Francisco-based OpenAI in 2019, more than two years before the startup introduced ChatGPT and sparked global fascination with AI developments.
As part of the deal, the Redmond, Washington-based software giant would provide the computing power — for example from one of its data centers in rural Iowa — needed to train its AI models on massive amounts of human-written text and other media. In turn, Microsoft would gain exclusive rights to much of what OpenAI has built, allowing the technology to be integrated into a variety of Microsoft products.
Nadella compared it in January to a number of Microsoft’s long-term commercial partnerships, such as with chip maker Intel. Microsoft and OpenAI “are two different companies, answerable to two groups of different stakeholders with different interests,” he told a Bloomberg reporter at the World Economic Forum in Davos, Switzerland.
“So we build the computer. They then use the computer to perform the training. We then transfer that into products. And so in a sense it’s a partnership based on each of us really amplifying what … each other is doing, and ultimately being competitive in the marketplace.”
The FTC has indicated for almost a year that it is working to detect and stop illegal behavior in the use and development of AI tools. Khan said in April that the US government “will not hesitate to crack down” on harmful business practices involving AI. One target of great concern is the use of AI-generated voices and images to boost fraud and phone scams.
But increasingly, Khan also made clear that it is not just the malicious applications, but also the broader consolidation of market power in a handful of AI leaders that deserves critical government scrutiny. “Companies can use this inflection point in the marketplace to use anticompetitive tactics to maintain their dominance and block competition,” the FTC said in a preview of Thursday’s forum.
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AP business writer Kelvin Chan in London contributed to this report.