US: FTC launches inquiry into Generative AI, Microsoft, Amazon investments and partnerships

US: The Federal Trade Commission (FTC) has taken a bold step to scrutinize the growing influence of Big Tech in the rapidly evolving field of generative artificial intelligence (AI). The agency has issued orders to five leading companies, including OpenAI, Microsoft, Alphabet, Amazon, and Anthropic, demanding detailed information regarding their recent investments and partnerships in this cutting-edge technology.

Generative AI, which has the ability to create new content and applications, has drawn attention and scrutiny from lawmakers and regulators worldwide. Concerns have been raised about its potential misuse for national security threats, influence operations, or fraudulent activities. The FTC's inquiry centers on deals between Big Tech companies and AI providers, aiming to assess their impact on competition and consumer protection.

Investigating Big Tech's Influence on Pricing, Access, and Personnel

The FTC's orders seek extensive documentation, shedding light on how these partnerships shape the companies' strategies regarding the pricing of products and services. It will also evaluate the allowance of access to these offerings, and decisions related to personnel. The agency has also requested information on exclusivity agreements, signaling its intent to examine potential anti-competitive practices. The companies have 45 days to respond to the orders.

Industry Reactions: Embracing Collaboration vs Criticizing Secrecy

Microsoft has expressed its willingness to cooperate with the FTC, highlighting the importance of collaboration among American companies to advance AI innovation. 

Microsoft's corporate vice president for its competition and market regulation group, Rima Alaily said, "Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation." 

On the other hand, Google has expressed hope that the inquiry will expose less transparent companies with a history of 'locking-in customers.' Anthropic, OpenAI, and Amazon haven't released any official statement.

Big investments by the tech giants in 2023

In 2023, Microsoft's collaboration with OpenAI raised antitrust scrutiny after the U.S. software giant expressed to invest billions of dollars into OpenAI.

According to PitchBook data, OpenAI and Anthropic are known as foundation models to develop AI, which is trained on large quantities of data. The big investments in the two AI companies accounted for over 10% of total United States venture funding in startups last year. Meanwhile, Anthropic has agreed to raise $4 billion from Amazon and over $2 billion from Alphabet.