US Antitrust Inquiry Focuses on OpenAI and Anthropic's Agreements with Big Tech

The U.S. Federal Trade Commission (FTC) has issued orders to OpenAI, Microsoft, Alphabet, Amazon, and Anthropic, demanding information about their AI-related investments and partnerships.

These companies are under scrutiny due to concerns that their deals with generative AI technology could compromise national security, increase fraudulent activities, or disrupt market competition.

The FTC's investigation aims to understand the impact of these agreements on prices, access to products, services, and personnel decisions, along with exclusivity terms.

The companies have 45 days to comply. The inquiry highlights the FTC's vigilance over the market and readiness to act against anti-competitive practices. Former FTC Chair William Kovacic noted the agency's intent to keep a watchful eye on the sector.

Microsoft has stated that its collaboration with OpenAI promotes competition and innovation, while Google expects the probe to reveal the lesser transparency of other firms. Anthropic and Amazon have chosen not to comment, and OpenAI has not provided an immediate response.

The FTC has previously expressed concerns about potential anti-competitive issues, particularly in the fields of data, talent, and computational resources. FTC Chair Lina Khan emphasized the importance of scrutinizing AI's concentrated control during her first trip to Silicon Valley.

Corporate investors, especially Microsoft and Amazon, are primary backers of AI funding. They represented 90% of generative AI's private fundraising in 2023. OpenAI and Anthropic, startups working on foundational AI models, received significant funding, comprising over 10% of total U.S. startup venture funding last year.

A report by Politico indicated that the U.S. Justice Department and the FTC were debating jurisdiction over an antitrust investigation into OpenAI and its partnership with Microsoft. Microsoft's multi-billion-dollar investment in OpenAI last year has particularly drawn antitrust attention.

With Big Tech companies investing heavily, sometimes through cloud credits, both the venture capital community and antitrust regulators are raising concerns over the potential implications for market competition and innovation.