FTC Investigates the World’s Largest Tech Companies and Their Huge Investments in AI

• ‘The US has taken the lead in the world of AI as major American companies work together’
• FTC is interested in contracts and strategic justifications for investments and partnerships, implications thereof…
• Anthropic has ‘committed long-term’ to provide AWS users with ‘future generations’ of its core models
• The long-standing collaboration between Google and Anthropic continues with significant investments

In one of the first significant actions regarding competitive practices related to generative artificial intelligence, the Federal Trade Commission (FTC) has launched investigations against five tech giants.

The FTC has issued orders to Amazon, Microsoft, OpenAI, Anthropic, and Alphabet, requiring the companies to provide information about recent investments and partnerships worth billions of dollars. The investigation will ‘closely examine’ these relationships and actions so that the FTC can better understand their impact on the competitive landscape.

Companies have 45 days to respond, and the Commission is moving quickly after initially expressing concerns about competition in generative artificial intelligence last June.

– History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that exclude this opportunity – said FTC Chair Lina M. Khan.

Microsoft also provided its stance on the initiation of the investigation.

– The US has taken the lead in the world of AI as major American companies work together. Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, promote competition and accelerate innovation. We look forward to providing the FTC with the information it needs to complete its study – said Rima Alaily, Corporate Vice President for Market Competition and Regulatory Affairs.

Investigation of Multi-Billion Dollar Investments

Specifically, today’s orders were sent to those involved in three recent investments worth billions of dollars, namely the expanded partnership between Microsoft and OpenAI announced on January 23, 2023, the strategic collaboration between Amazon and Anthropic announced on September 25, 2023, and Google’s AI partnership with Anthropic, announced on November 8, 2023.

In this context, the FTC is interested in contracts and strategic justifications for investments and partnerships, implications thereof, analysis of the impact on competition, including market share, competitors, markets, potential for sales growth, and expansion into production or geographical markets. The Commission also requires context around competition for input and artificial intelligence resources, including competitive dynamics around products and services critical to generative artificial intelligence, as well as information about governmental bodies (including foreign governments) regarding any current investigations, requests for information, and other inquiries of that nature.

Among many other requests, tech companies must provide all documents related to the nature and scope of interactions and any impact of the company, engagement in decision-making (e.g., planning trips, discontinuing products and services, staffing decisions) as well as all analyses, reports, studies, and surveys around the transaction.

They must also disclose all contracts regarding expectations of inclusivity or preferential access and any restrictions or conditions placed on pricing or terms or granting access.

– Our study will shed light on whether there is a risk that investments and partnerships of dominant companies undermine innovation and compromise fair market competition – said Khan.

Microsoft-OpenAI Partnership in ‘Phase Three’

Microsoft, which recently reached a valuation of three trillion dollars, has invested around ten billion dollars in OpenAI, and the two companies are now in what they call ‘Phase Three’ of their collaboration. Specifically, Microsoft is the exclusive cloud provider for OpenAI. The tech giant has also pledged to increase investments in the development and implementation of specialized supercomputing systems to ‘accelerate OpenAI’s groundbreaking independent research in artificial intelligence.’

The tech giant continues to implement OpenAI models into its products and ‘will introduce new categories of digital experiences built on OpenAI technology,’ including the newly emerging Azure.

– In this next phase of our partnership, developers and organizations across all industries will have access to the best AI infrastructure, models, and toolchain with Azure to build and deploy their applications – said Microsoft President and CEO Satya Nadella in a recent statement.

Amazon’s Billions and Anthropic

Anthropic has been an AWS user since its inception, and their collaboration has since significantly expanded. Specifically, Amazon is investing up to four billion dollars in Anthropic and will have a minority stake in the company.

Anthropic has ‘committed long-term’ to provide AWS users with ‘future generations’ of its core models through Amazon Bedrock, where Amazon developers and engineers can also build with Anthropic models.

Additionally, Anthropic will provide AWS users with early access to unique features for model customization and ‘fine-tuning’ capabilities, the companies announced.

– By significantly expanding our partnership, we can unlock new opportunities for organizations of all sizes as they implement Anthropic’s safe, state-of-the-art AI systems alongside AWS’s leading cloud technology – said Anthropic co-founder and CEO Dario Amodei.

Google in a Love Triangle

New investments in OpenAI’s rival Anthropic are coming week by week, and Google and its parent company Alphabet have collaborated with the startup since its founding in 2021.

Through their partnership, Anthropic utilizes Google Cloud security services, including Chronicle Security Operations, Secure Enterprise Browsing, and Security Command Center. The startup has also implemented Google’s TPU v5e for its Claude large language model (LLM).

Anthropic also uses Google’s AlloyDB database compatible with PostgreSQL for processing transactional data, as well as Google’s BigQuery data warehouse.

– Our long-standing partnership with Google is based on a shared commitment to the responsible development of artificial intelligence and its implementation in a way that benefits society. We look forward to continuing our collaboration as we work to make manageable, reliable, and interpretable AI systems available to a greater number of companies around the world – said Amodei in a press release.