Signalling increased scrutiny over generative AI, the Federal Trade Commission (FTC) has issued compulsory orders for leading generative AI firms to provide details about their investments and partnerships. As a part of Section 6(b) of the FTC Act Alphabet (Google’s parent company), Amazon, Anthropic, Microsoft, and OpenAI are the companies under inquiry.
The focus of this investigation is to understand how the recent developments involving major cloud service providers and generative AI companies will potentially impact competition and innovation.
FTC Chair Lina M. Khan emphasized the importance of understanding the dynamics between major corporations and AI providers, stating, “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.” This inquiry comes at a time when the race to develop and monetize AI is accelerating, and regulatory bodies are increasingly vigilant about anticompetitive practices.
These orders empower the Commission to conduct in-depth studies to understand market trends and business practices. The findings from this investigation could be important for future regulatory actions.
The companies under investigation, including tech giants Microsoft, Amazon, and Alphabet, have been involved in multi-billion-dollar investments with generative AI developers, such as OpenAI and Anthropic. The FTC’s inquiry will detail the specifics of these investments, seeking information on agreements, strategic rationales, and the practical implications of these partnerships, including decisions on product releases, governance, and oversight rights.
Furthermore, the Commission is keen on understanding the competitive impact of these transactions, examining aspects such as market share, competition dynamics, potential for sales growth, and expansion into new product or geographic markets. With a specific focus on the competition for AI inputs and resources, the inquiry will be regarding key products and services needed for generative AI development.
Companies involved in the inquiry have 45 days to respond to the orders, providing detailed information on the various aspects under investigation.
