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Federal Trading Commission to Probe Big Tech’s AI Investments

The Federal Trade Commission (FTC), the antitrust watchdog of the US, says it would like to review the AI investments of BigTech. There seems to be an arms race to ideate, operationalize and commercialise AI.


The FTC seeks more information about their AI investments from Alphabet, Open AI, Microsoft, Anthropic, and AI with its blockbuster ChatGPT, an AI chatbot released in November 2022, has versions modified for businesses to use now.


Lina Khan, the chair of the  Federal Trade Commission is worried whether the Big Tech companies will dominate the expanding field of generative AI. These are systems with human-like abilities to write code, create media, converse, and more.


The Federal Trade Commission has the authority to regulate antitrust or anti-competitive practices. This study will be done to determine how the companies’ innovations, investments, and partnerships will structure the landscape of competition for AI.


Microsoft’s 13 billion investment in OpenAI since 2019 in return for 49% future profit. Open AI says that Microsoft is a minority shareholder in OpenAI for-profit company.FTC is worried about why they were not informed in advance about the various AI investments.  The regulators began to look informally at whether OpenAI and Microsoft’s transaction model are in use for not detecting antitrust possibilities of AI investments. Amazon and Alphabet are investors in Anthropic, an OpenAI rival.


Google gave an opinion that Anthropic’s AI tech is not exclusive to it and its investments are to work with competitors. The EU and UK too have been scrutinizing Microsoft’s Open AI investments. The executive branch of the EU is looking to investigate Microsoft-Open AI partnerships looking at antitrust regulations of M&A harming competition in the EU.


A similar review was done by Britain’s regulator in December. FTC and European antitrust advocates have pejoratively called these “quasi-mergers.”Microsoft’s total investment in OpenAI is unknown. BigTech has already dominated the internet-economy 


Also under scrutiny is Meta’s acquisition of VR company Within. BigTech has sidestepped regulations by investing in the younger AI rivals and struck deals to make them give preference to their computing and cloud services


The opaque governance of OpenAI came into question last year when the startup's board fired CEO Sam Altman and was suddenly reinstated. These made headlines globally. After a weekend of behind-the-scenes operations and threatened mass resignations., Microsoft stabilized the startup and the previous board resigned.


The new arrangement gave a non-voting board seat. Microsoft reiterates it did not have control. OpenAI began as a non-profit research institute for safe forms of AI. Governed as a non-profit, most employees work for the for-profit arm formed later.


The companies have 45 days to respond to FTC’s request.

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