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Federal Trade Commission launches investigation into tech giants' AI deals| GuyWhoKnowsThings

The Federal Trade Commission on Thursday launched an investigation into Microsoft, Amazon and Google's multibillion-dollar investments in artificial intelligence startups OpenAI and Anthropic, expanding the regulator's efforts to corral the power the tech giants can have over AI.

These agreements have allowed large companies to form deep ties with their smaller rivals, while avoiding most government scrutiny. Microsoft has invested billions of dollars in OpenAI, the maker of ChatGPT, while Amazon and Google have each committed billions of dollars to Anthropic, another leading artificial intelligence startup.

Regulators have generally focused on bringing antitrust lawsuits against deals in which tech giants buy rivals directly or use acquisitions to expand into new businesses, leading to price increases and other harms, and have not regularly questioned the stakes they companies buy from new companies. The FTC investigation will examine how these investment deals alter the competitive landscape and could inform any investigation by federal antitrust regulators into whether the deals have violated laws.

The FTC said it would ask Microsoft, OpenAI, Amazon, Google and Anthropic to describe their influence over their partners and how they worked together to make decisions. He also said he would require them to provide any internal documents that could shed light on the deals and their potential impact on competition.

“Our study will shed light on whether investments and partnerships made by dominant companies risk distorting innovation and undermining fair competition.” Lina Khanthe FTC chairman said in a statement.

The research is the agency's first major effort to understand how companies are using partnerships and investments to rapidly expand their influence in AI. Ms. Khan, who was appointed in 2021, has long pushed to modernize the way the government implements antitrust law. . That includes her agency filing an antitrust lawsuit against Amazon last year for artificially raising prices and asking courts to adopt newer theories about how corporations can harm the economy.

Other regulators internationally are also scrutinizing some of Big Tech's investments in AI startups. The Competition and Markets Authority, a British regulator, said last month it was reviewing whether Microsoft's deal with OpenAI was a merger that fell within its remit and would harm competition in the economy. The European Commission also said it was analyzing whether its antitrust laws could be enforced.

Microsoft, Amazon, Google, OpenAI and Anthropic did not immediately respond to requests for comment.

Brad Smith, president of Microsoft, he said in a social media post in December that the company had “forged a partnership with OpenAI that has fostered greater innovation and competition in AI, while preserving the independence of both companies.” He said the deal was “very different from an acquisition.”

The FTC and the Justice Department, which scrutinize corporate mergers and analyze whether they could harm competition, have in recent years divided responsibility for investigating whether tech giants violated antitrust laws. The FTC has filed antitrust lawsuits against Amazon and Meta, while the Department of Justice sued Google and is investigating Apple's behavior.

The FTC has additional powers to produce public studies that analyze specific corporate conduct and its effect on the economy. In 2021, for example, it published a report that analyzed acquisitions of tech giants. determining that many of them were not large enough to meet the standard of mandatory government scrutiny. More recently the agency carried out an investigation about how social media companies and video platforms handle misleading advertising.

Links between tech giants and AI startups have faced increased scrutiny since November, when OpenAI's board of directors dismissed its CEO, Sam Altman. In the chaotic days that followed, Microsoft CEO Satya Nadella advised Altman and then offered to hire him and his team directly, raising questions about the influence Microsoft had over the new company's operations. company. Mr. Altman finally returned to OpenAI.

As part of Thursday's investigation, the FTC said, it will ask Microsoft, Amazon, Alphabet, OpenAI and Anthropic for details, including whether the agreements between the giants and the startups involved rights to board seats or other oversight. mutual. microsoft obtained a seat on OpenAI's board of directors in November, but does not have the right to vote on its decisions.

Microsoft has committed $13 billion for what is effectively a 49 percent stake in the new company. The company worked to keep its stake below 50 percent due to antitrust concerns, The New York Times previously reported. Amazon said it would invest up to $4 billion in Anthropic. Google has committed to investing more than $2 billion in Anthropic.

The study could be followed by a more formal investigation into whether agreements between the companies violate antitrust laws. FTC and Justice Department officials have been in talks about which agency will review the deal between Microsoft and OpenAI, according to a person familiar with the matter who spoke on condition of anonymity because the discussions are confidential.

An FTC spokesperson said the study was a first step in understanding a new technology market and that any of the agencies could use the findings.

Furthermore, last year the FTC opened an investigation on whether ChatGPT has harmed consumers, with a broader focus on whether the technology can be used to commit fraud. (The times has sued Microsoft and OpenAI on the use of works protected by copyright).

“America's long-standing national commitment to fostering fair and open competition has been an essential part of what has made this nation an economic powerhouse and a laboratory of innovation,” Ms. Khan said in a Times. guest essay last year. “Once again we find ourselves at a key decision point.”

Tripp Mickle contributed reporting from San Francisco, and Karen Weiss from Seattle.

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