US antitrust enforcers are launching an investigation into relationships between leading AI startups such as ChatGPT maker OpenAI and Anthropic and the tech giants that have invested billions of dollars in them.
“We are examining whether these ties allow dominant firms to exercise undue influence or gain privileged access in ways that undermine fair competition,” Lina Khan, head of the U.S. Federal Trade Commission (FTC), said in her opening remarks at the AI meeting on Thursday. Forum.
Khan said the market research will examine “investments and partnerships forming between AI developers and major cloud service providers.”
The FTC said Thursday it had issued “mandatory orders” to five companies — cloud providers Amazon, Google and Microsoft, and AI startups Anthropic and OpenAI — demanding they provide information about investments and partnerships.
Microsoft’s long-standing relationship with OpenAI is the best-known of the partnerships. Google and Amazon recently struck multibillion-dollar deals with Anthropic, another San Francisco-based AI startup founded by former leaders of OpenAI.
The European Union and the United Kingdom have already signaled that they may also examine relations with Microsoft and OpenAI. The EU’s executive body said in January it was checking whether the partnership could trigger an investigation under regulations covering mergers and acquisitions that would harm competition in the 27-nation bloc. Britain’s antitrust watchdog launched a similar investigation in December.
Antitrust advocates welcomed both the FTC’s and Europe’s actions on the deals, which some described as quasi-mergers.
“Big Tech firms know they can’t buy the best AI companies, so they’re finding ways to make an impact without formally calling it an acquisition,” said Matt Stoller, research director at the American Economic Liberties Project. “Enforcers need to step in, and they do.”
Microsoft has never publicly disclosed the total dollar amount of its investment in OpenAI, which CEO Satya Nadella described as “a complex thing.”
“We have a significant investment,” he said on a November podcast hosted by tech journalist Kara Swisher. “This doesn’t just come in the form of dollars, it comes in the form of computing and whatever.”
OpenAI’s governance and relationship with Microsoft came into question last year after the startup’s board abruptly fired CEO Sam Altman, who was then quickly reinstated, in an uproar that made global headlines. Behind-the-scenes maneuvering over the weekend and the threat of a mass exodus of employees backed by Nadella and other Microsoft leaders helped stabilize the startup and led to the resignation of most of the previous board.
The new arrangement gives Microsoft a non-voting board seat, but “we’re certainly not in control,” Nadella said in his speech in Davos. Some of the challenges that led to Altman’s temporary dismissal centered around the startup’s unconventional management structure. OpenAI began as a nonprofit research institute dedicated to the safe development of futuristic forms of artificial intelligence. It’s still run as a nonprofit, although most of its staff works for the for-profit arm it created a few years later.
Microsoft made its first $1 billion investment in San Francisco-based OpenAI in 2019, more than two years before the startup introduced ChatGPT and sparked global interest in AI developments.
As part of the deal, the Redmond, Washington, software giant will provide the computing power needed to train AI models on vast troves of human-written text and other media—for example, from one of its data centers in rural Iowa. In return, Microsoft will have exclusive rights to much of what OpenAI builds, allowing the technology to be applied to a variety of Microsoft products.
In January, Nadella compared this to Microsoft’s long-standing commercial partnerships such as chipmaker Intel. He told a Bloomberg reporter at the World Economic Forum in Davos, Switzerland, that Microsoft and OpenAI are “two different companies accountable to two different sets of stakeholders with different interests.”
“So we create the calculation. They then use the computer to perform the training. Then we take this and put it into the products. And in a sense, it’s a partnership based on what each of us really strengthens.