Updated Jan 25, 2024 - Technology

FTC opens inquiry into Big Tech AI investments

Photo illustration of FTC Commissioner Lina M. Khan with a podium and a scale

Photo illustration: Sarah Grillo/Axios. Photo: Graeme Jennings-Pool/Getty Images

The Federal Trade Commission opened a broad new investigation of competition in the nascent AI industry by issuing orders to five key companies that they provide it with private information about their investment deals.

Why it matters: The inquiry, aimed at Alphabet/Google, Microsoft, Amazon, OpenAI and Anthropic, could lead to action by the regulator, which under chair Lina Khan has sought to pursue anti-monopoly measures in emerging tech markets.

What's happening: The FTC said in a statement that it "will scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape."

  • Microsoft's multibillion-dollar investments in Open AI, and Google's and Amazon's similar stakes in Anthropic, have not previously faced regulatory scrutiny the way deals to outright acquire such startups might have.

Between the lines: The FTC wants to make sure tech giants aren't bypassing traditional reviews while making huge investments that let them neutralize or absorb smaller potential rivals.

What they're saying: "As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity," Khan said in a statement. "Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

  • "We hope the FTC's study will shine a bright light on companies that don't offer the openness of Google Cloud or have a long history of locking-in customers — and who are bringing that same approach to AI services," a Google spokesperson said in a statement, taking a dig at cloud competitors Microsoft and Amazon.

The big picture: For decades, federal antitrust regulators have preferred a light touch toward early-stage technologies, but critics have argued that allowed Big Tech giants to gather too much market power.

  • Khan and the Biden administration have taken a harder line, launching a series of antitrust lawsuits.

Yes, but: So far, these cases have not been winning in court.

Details: The FTC is using Section 6(b) of the FTC Act, which allows the agency to conduct studies and gather information about business practices without a specific law enforcement purpose.

What's next: The companies have 45 days to respond to the agency's order.

Editor's note: This story has been updated with additional comment from Google.

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