06 June 2024 , 20:17
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US regulators open inquiry into AI firms over antitrust laws that oversee fair competition
Microsoft, OpenAI and Nvidia face increased antitrust scrutiny of their roles in the artificial intelligence industry after US regulators reportedly reached an agreement on investigating the companies.
The US Department of Justice (DoJ) and the Federal Trade Commission (FTC) have struck a deal on investigations into the main protagonists in the AI market, the New York Times reported, with the agreement expected to be completed in the coming days.
The DoJ will lead on investigating whether Nvidia, the leading maker of chips that train and operate AI systems, has broken antitrust laws that oversee fair competition in business and aim to prevent monopolies, the NYT said on Wednesday.
Meanwhile, the FTC will scrutinise OpenAI, the company behind the ChatGPT chatbot, and Microsoft, OpenAI’s biggest investor and a considerable financial backer of other AI companies.
The Wall Street Journal also reported on Thursday that the FTC is investigating whether Microsoft structured a recent deal with startup Inflection AI to avoid an antitrust inquiry.
In March, Microsoft hired Inflection’s CEO and co-founder, UK entrepreneur Mustafa Suleyman, as the boss of a new AI division and agreed to pay his company $650m (£508m) to license its AI software.
The FTC has already signalled interest in the AI market. In January, it ordered OpenAI, Microsoft, Google owner Alphabet, Amazon, and startup Anthropic to provide information on recent investments and partnerships involving generative AI companies and cloud service providers.
Last year, it opened an investigation into OpenAI on claims it had run afoul of consumer protection laws by putting personal reputations and data at risk.
The head of the DoJ’s antitrust division, Jonathan Kanter, told the Financial Times on Thursday that the organisation would look “with urgency” at the AI sector and would examine “monopoly choke points and the competitive landscape” in the technology.
Kanter said regulators must act quickly to ensure that powerful tech companies do not control the market.
The reports came as Nvidia’s valuation reached $3tn for the first time on Wednesday, edging ahead of Apple.
Rebecca Haw Allensworth, a professor at Vanderbilt law school, said the reported collaboration between the DoJ and FTC reflected a relationship that has grown more collaborative under the Biden administration.
“It used to be that the agencies divided the cases according to industry, but with this market being so large and important for antitrust enforcement, they are sharing responsibility and working hand-in-glove,” she said. “There is no doubt that the agencies see AI as the next frontier of anticompetitive conduct by firms already seen as avoiding and suppressing competition.”
Microsoft said it was “confident” it had complied with antitrust obligations regarding the Inflection agreement. The FTC, DoJ, Nvidia and OpenAI declined to comment.