FTC Launches Probe Into Big Tech AI Investments, Partnerships

Big Tech required to hand over information regarding recent investments and partnerships involving generative AI companies and major cloud service providers.
FTC Launches Probe Into Big Tech AI Investments, Partnerships
People check their phones as AMECA, an AI robot, looks on at the All In artificial intelligence conference in Montreal on Sept. 28, 2023. Ryan Remiorz /The Canadian Press
Katabella Roberts
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The U.S. Federal Trade Commission (FTC) is launching an investigation into multiple Big Tech firms and their recent investments and partnerships involving the rapidly growing generative artificial intelligence (AI) industry, officials have announced.

The regulatory agency’s probe targets Alphabet, Inc., Amazon.com, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc.

All of the tech firms have been issued compulsory orders requiring them to hand over information regarding recent investments and partnerships involving generative AI companies and major cloud service providers, including the decision-making process behind such investments, the FTC said in a Jan. 25 press release.

The agency said it plans to examine whether any of those deals harms or undermines fair competition.

As part of the probe, officials will “scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape,”

The FTC is using Section 6(b) of the FTC Act, which allows the agency to conduct studies to better understand market trends and business practices, and help it inform future Commission actions, it said.

Probe Focusing on Fair Competition

“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 M. Khan in a statement.

“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” Ms. Khan added.

Specifically, the FTC is seeking information regarding the “agreements and the strategic rationale” of the investments and partnerships, the “practical implications” of the investments and partnerships, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings.

Officials are also analyzing the investments’ competitive impact, including “information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets,” among other things, the agency said.

The agency said the companies will have 45 days from the date they receive the order to respond.

Tech Firms Invest Billions in AI

One year ago, Microsoft announced its partnership and $10 billion investment in OpenAI, the makers of artificial intelligence chatbot ChatGPT. The tech giant has also taken a non-voting observer position on OpenAI’s board following the failed ousting of CEO Sam Altman last year.
Amazon unveiled its $4 billion investment in startup Anthropic in September last year.
Meanwhile, Google holds a 10 percent stake in Anthropic following its $300 million investment in February, according to The Financial Times.

In a statement following the FTC’s announcement, Microsoft said it welcomed the probe.

“The US has assumed a global AI leadership position because important American companies are working together,” Microsoft corporate vice president, competition and market regulation group, Rima Alalily said in a statement to The Verge.

“Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation. We look forward to providing the FTC with the information it needs to complete its study.”

A Google spokesperson said in a separate statement: “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.”

Amazon, Anthropic, and OpenAI declined to comment.

The Associated Press contributed to this report.
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