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January 29, 2024
The U.S. Federal Trade Commission has launched an inquiry into startups OpenAI and Anthropic over any potential anti-competitive impact stemming from their multibillion-dollar partnerships with and investments from hyperscalers Microsoft, Google and Amazon.
“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.
OpenAI enjoys a strategic partnership with Microsoft, which has seen the latter invest a reported $13 billion in the ChatGPT maker. Amazon and Google invested $4 billion and $2 billion in Anthropic, respectively. Anthropic uses AWS as its main cloud provider.
Under their agreements, OpenAI and Anthropic have given exclusive access to their models to their respective cloud provider partners. The FTC’s investigation will look at the impact these deals will have on the competitive generative AI landscape.
The FTC is specifically wanting information on the following:
Specific agreements and the strategic rationale of an investment/partnership
Practical implications of partnership or investments – including decisions around new product releases, governance or oversight rights and topics of regular meetings
Any figures or analysis of potential competitive impact, including information related to competition, competitors’ potential for sales growth and expansion into expansion into product or geographic markets.
Under Section 6(b) of the FTC Act, the agency can obtain information from businesses to conduct studies on market trends and business practices.
The quintet has 45 days from the date of the order to submit relevant materials.
This is the second investigation into OpenAI’s deal with Microsoft. The U.K.'s Competition Authority started a probe last December into their partnership’s impact on market dynamics.
The U.K. authority is specifically looking at whether the pair engages in a “relevant merger situation” – in which a company has not been merged outright but certain transactions and arrangements may impact operations, like commercial arrangements or the acquisition of a minority stake.
The FTC probe is the first such investigation into Anthropic, which thus far has not garnered the same level of scrutiny as OpenAI.
Alongside regulatory probes into its partnerships, OpenAI currently faces legal headaches as well: a libel lawsuit in Georgia and a copyright infringement suit brought by The New York Times. In the libel case, OpenAI argues its chatbot’s output was not published and therefore could not libel the plaintiff. OpenAI also rebuts the Times’ claims, adding that it does not need to train on its news content.
Ben Wodecki is the Jr. Editor of AI Business, covering a wide range of AI content. Ben joined the team in March 2021 as assistant editor and was promoted to Jr. Editor. He has written for The New Statesman, Intellectual Property Magazine, and The Telegraph India, among others. He holds an MSc in Digital Journalism from Middlesex University.
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