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FTC Demands Tech Titans’ Details on Generative AI Deals Amid Antitrust Concerns

On Thursday, the U.S. Federal Trade Commission (FTC) announced that it had issued orders to OpenAI, Microsoft, Alphabet, Amazon, and Anthropic, requesting information on recent investments and partnerships involving generative AI companies and cloud service providers.

Generative AI, a technology that, like ChatGPT, uses data to generate new content, has become a focal point for lawmakers and regulators globally. Concerns have been raised about its potential misuse for national security threats, amplifying influence operations, or facilitating fraud.

The FTC’s orders aim to delve into the details of deals between major players such as Microsoft, Google, Amazon, and AI providers. This move follows growing antitrust concerns surrounding collaborations between these powerful entities and Big Tech, prompting the FTC to examine how these arrangements impact competition.

Former FTC chair William Kovacic emphasized that the orders signal the agency’s vigilance and readiness for potential future actions. The extensive document request seeks information on how partnerships with Big Tech influence strategic decisions, pricing, access to products and services, and personnel decisions.

The FTC has given the companies a 45-day deadline to respond to the orders. Microsoft expressed its commitment to providing the necessary information, highlighting that collaborations in AI propel the U.S. forward in innovation and competition.

Google expressed hope that the inquiry would shed light on companies that are less transparent and have a history of customer lock-in. Anthropic declined to comment, while Amazon and OpenAI had not responded to requests for comments at the time of reporting.

Last June, the FTC staff outlined potential anticompetitive concerns, emphasizing the importance of competition in areas such as data, talent, and computational resources. FTC Chair Lina Khan, during her Silicon Valley visit, indicated that the agency was studying the control of AI technology by a handful of companies.

Corporate investors, notably Microsoft and Amazon, have dominated AI funding, accounting for 90% of generative AI private fundraising in 2023, according to Morgan Stanley. Recent reports also suggest discussions between the U.S. Justice Department and the FTC regarding potential antitrust probes into OpenAI, including its partnership with Microsoft.

Antitrust scrutiny has surrounded Microsoft’s investment in OpenAI, with the U.S. software giant committing billions of dollars to the AI firm. Both OpenAI and Anthropic, known for developing foundation models, attracted substantial funding, collectively constituting over 10% of total U.S. venture funding in startups last year.

Startlingly, Anthropic secured agreements for substantial funding from Amazon and Alphabet, raising concerns within the venture and startup community, especially regarding the significant amounts provided by Big Tech, sometimes in the form of cloud credits.