FTC drills into Amazon, Microsoft, Google over billions pledged to OpenAI, Anthropic
Updated The FTC today stuck a probe into five Big Tech players about their generative AI investments and partnerships.
The US trade watchdog is using its authority under Section 6(b) of the FTC Act to assess how multi-billion dollar deals between Microsoft and OpenAI, Amazon and Anthropic, and Google and Anthropic, affect competition and availability of products in the AI and cloud service provider world.
OpenAI being the maker of ChatGPT and other content-emitting neural networks, and Anthropic being a rival startup co-founded by ex-OpenAI staff that offers competing services and tech.
"History shows that new technologies can create new markets and healthy competition," said FTC boss Lina Khan in a statement. "As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."
The FTC is asking the named businesses to provide copies of financial agreements, strategic rationales, market studies, and communications, among other things, about their AI partnerships.
The agency, which usually consists of five commissioners, voted 3-0 to approve the inquiry. The three participating commissioners are all Democratic appointees. The two Republican nominees have not been confirmed due to "GOP Senate dysfunction" and thus did not take part in the vote.
Under Khan – a noted Big Tech critic – the commission has become more assertive, to the point that Meta, usually resistant to privacy requirements, recently launched a bid to challenge the agency's legal basis for regulating.
The major cloud providers – Amazon, Microsoft, and Google – have each invested substantial amounts of money in OpenAI, Anthropic, and others to gain access to generative AI technology for chat bots, coding assistance, text-to-image capabilities, image recognition, and other services that might benefit from unreliable but convincing automation.
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Some of this funding takes the form of cloud service credits and calls for platform exclusivity – for example, Microsoft Azure is OpenAI's "exclusive cloud provider." Anthropic meanwhile relies on Google Cloud Platform and Amazon Web Services.
To date, these deals look like they are aimed to help drive cloud platform revenue. For Q1 FY2024, Microsoft last October reported that Azure revenue was up 29 percent, which analysts attributed to growth in AI services. Nonetheless, the business case for AI services isn't always clear – Microsoft is said to be running GitHub Copilot at a loss.
Outside the US, regulators have already started sniffing around. Earlier this month, the European Commission announced an inquiry into Microsoft's OpenAI investment.
Even in the laissez-faire US, there's been some scrutiny, now that the bloom has gone off the Big Tech rose. In July 2023, for example, the FTC opened an investigation into OpenAI's data security and model training practices. And that's to say nothing of all the other competition-related inquiries faced by these tech giants.
Amazon, Anthropic, and OpenAI declined to opine on the issue. Google and Microsoft did not immediately respond to requests for comment. ®
Updated to add
In a statement provided to The Register after this story was published, a Google spokesperson took a jab at what we presume is Microsoft:
"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."
Google formally complains about Microsoft cloud licensingCONTEXT
Microsoft corporate VP Rima Alaily, meanwhile, added, "The US has assumed a global AI leadership position because important American companies are working together. Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation. We look forward to providing the FTC with the information it needs to complete its study."