AI Giants OpenAI and Microsoft Routed By FTC, DOJ On Antitrust Concerns
Highlights
- FTC and DOJ to investigate Microsoft, OpenAI, and Nvidia for potential antitrust violations.
- Nvidia controls 80% of the AI chip market, prompting DOJ scrutiny.
- Microsoft's $13 billion investment in OpenAI sparks FTC antitrust probe.
The US Federal Trade Commission (FTC) and the Department of Justice (DOJ) are expected to open antitrust probes into Microsoft and OpenAI as well as a review of Nvidia to combat their dominance in the artificial intelligence (AI) market.
As per the recent report, the examination will concern these companies’ behavior in the AI field.
Microsoft, OpenAI, Nvidia Face DOJ and FTC Investigation
These researches mainly focus on the activities of these technology companies especially their behaviors and actions more than the mergers and acquisitions. The FTC will lead the investigation of Microsoft and OpenAI, while the DOJ will focus on Nvidia.
This action points to increasing concerns from the regulators on the possibility of market power abuse that may lead to the stifling of competition in the emerging AI market.
Among the companies, Microsoft has been also receiving much attention in this regard due to its huge investment around $13 billion in OpenAI since 2019 as well as cooperation in many AI projects including Microsoft Copilot. The FTC is also investigating Microsoft’s recent $650 million acquisition of AI startup Inflection AI that initially did not meet merger disclosure requirements.
Regulatory Scrutiny Intensifies Amid AI Expansion
The announcement comes after the FTC’s initiative in January to conduct a sweeping probe into AI practices involving some of the world’s largest firms, including Amazon, Alphabet, Anthropic, Microsoft, and OpenAI.
FTC Chair Lina Khan emphasized the significance of this initiative during the agency’s tech summit, noting that no company is above the law regarding competition and consumer protection.
Such regulatory interest stems from concerns about market power concentration in the AI industry, where Nvidia has about 80% of the AI chip market. Due to its dominance, Nvidia has been able to command high gross margins of between 70 and 80%.
Continued Investigations and Corporate Responses
The planned investigations are consistent with the current trend of ramping up regulatory pressure on big technology companies.
Similar measures concerning market conduct and competitive behavior have been adopted in previous years against other big technology companies, including Google and Apple.
These investigations are conducted against the background of a general industry debate on AI’s ethical and societal impact.
An open letter published by the OpenAI employees on this week pointed out that the development of AI is too fast and there needs to be proper regulation mechanisms in place. These remarks highlight the increasing demand for regulation in an industry projected to generate more than $1 trillion in revenue within the next ten years.
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