Technology
Thursday, June 6th, 2024 3:16 pm EDT
Key Points
- The FTC and DOJ are launching antitrust investigations into Microsoft, OpenAI, and Nvidia to scrutinize their influence in the AI industry, with the FTC focusing on Microsoft and OpenAI and the DOJ on Nvidia.
- These investigations are motivated by concerns over the companies’ conduct in the AI sector, amidst significant investments and rapid technological advancements, particularly with Microsoft’s substantial investment in OpenAI and Nvidia’s dominance in AI chip supplies.
- The investigations follow broader regulatory concerns, including an open letter from current and former OpenAI employees about the lack of oversight in the AI industry and the FTC’s earlier decision to study AI industry practices involving major players like Amazon, Alphabet, and Anthropic.
The Federal Trade Commission (FTC) and the Justice Department (DOJ) are poised to launch antitrust investigations into Microsoft, OpenAI, and Nvidia, scrutinizing the companies’ influence in the burgeoning artificial intelligence (AI) industry. According to a source familiar with the matter, the FTC will lead the probe into Microsoft and OpenAI, while the DOJ will focus on Nvidia. The investigations will concentrate on the companies’ business practices rather than their merger and acquisition activities. This development, first reported by The New York Times, highlights the growing concerns about the dominance of tech giants in the AI sector, which is expected to generate over $1 trillion in revenue within the next decade.
Startups like OpenAI, known for its ChatGPT chatbot, and Anthropic, behind the Claude chatbot, are rapidly advancing in the generative AI market. In response, established tech companies such as Google, Microsoft, Amazon, and Meta are fiercely competing to integrate AI technologies to maintain their market positions. Microsoft, in particular, has significantly increased its investment in OpenAI from $1 billion in 2019 to approximately $13 billion, utilizing OpenAI’s model for its Copilot chatbot and offering open-source models via its Azure cloud platform.
AI models are notoriously costly to develop and train, requiring extensive computational power provided by specialized chips predominantly supplied by Nvidia. Meta, which is developing its AI model called Llama, has disclosed expenditures of billions of dollars on Nvidia’s graphics processing units, contributing to Nvidia’s impressive revenue growth of over 250% year-over-year.
The announcement of these antitrust investigations comes on the heels of an open letter published by current and former OpenAI employees. The letter expressed concerns about the rapid advancement of the AI industry amidst insufficient oversight and the lack of whistleblower protections. The employees argued that AI companies have significant financial incentives to resist effective oversight and that current corporate governance structures are inadequate for ensuring transparency and accountability. They emphasized the necessity for stronger obligations for AI companies to share information with governments and civil society, noting that voluntary disclosures are unreliable.
Additionally, this news follows the FTC’s January decision to undertake an extensive study of major AI industry players, including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI. FTC Chair Lina Khan announced this inquiry at the agency’s tech summit on AI, framing it as a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.” Utilizing its authority under Section 6(b) of the FTC Act, the agency can investigate AI companies independently from its enforcement division, compelling them to provide detailed reports and answer questions about their operations.
At the summit, Khan underscored that AI’s rapid development and deployment are critical issues for the FTC, asserting that AI companies are not exempt from existing laws and emphasizing the agency’s vigilance against potential anti-competitive practices and public deception. Despite these impending investigations, Microsoft and OpenAI have not yet commented, and Nvidia has declined to comment. This investigation reflects the broader regulatory efforts to ensure fair competition and accountability in the rapidly evolving AI industry.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/06/us-regulators-to-open-antitrust-probes-into-nvidia-microsoft-and-openai.html
