The US plans to open antitrust investigations against Nvidia, Microsoft and OpenAI over their increasing dominance and partnerships in the artificial intelligence sector.
The regulatory attempt to rein in the three high-flying technology companies is the latest aggressive measure by US President Joe Biden's administration against Big Tech's business practices.
The investigations will be split between two regulators, the New York Times reported on Thursday. The Justice Department will investigate Nvidia, while the Federal Trade Commission will probe Microsoft and OpenAI.
FTC chairwoman Lina Khan in January said the agency launched a “market inquiry” into companies such as Microsoft and OpenAI, as well as Amazon, Alphabet and Anthropic.
“At the FTC, the rapid development and deployment of AI is informing our efforts across the agency, as we work to promote fair competition and protect Americans from unfair or deceptive tactics,” she said at the FTC Tech Summit.
“There is no AI exemption from the laws on the books, and we’re looking closely at the ways companies may be using their power to thwart fair competition or trick the public.”
The agency is scrutinising Microsoft's $650 million deal with Inflection AI, the Wall Street Journal reported.
As part of the deal, Inflection's AI model would be hosted on Microsoft's cloud platform and much of its team would join Microsoft's Copilot programme.
In 2019, Microsoft first announced an investment in OpenAI, maker of the popular AI tool ChatGPT. The company has since increased investments in OpenAI and partnered with the company on several levels, including using ChatGPT in its offerings such as GitHub Copilot, Designer, Teams and BingChat.
Microsoft has also not been shy about its partnership with chipmaker Nvidia, which has had an unprecedented, meteoric rise as its AI chip technology continues to be in strong demand.
The regulatory and legal remedies sought by the US ultimately revolve around concerns that the partnerships between the three companies could lead to less choice, and ultimately drive up prices due to a lack of competition.
That notion, however, is not without scrutiny.
Alden Abbott, who served as the FTC's general counsel from 2018 to 2021, is cautious and somewhat critical of the recent regulatory attempts.
“I do not know the details of the antitrust investigations, but the antitrust enforcers should not take actions that will slow innovation in this space. Keep in mind that there is no big AI monopolist, and we are not talking about mergers among the big AI players,” he said.
“As a general matter, partnerships between AI innovators and large high-tech companies such as Microsoft and software/chips innovator Nvidia should be applauded,” he added.
Mr Abbott, who now works for the Mercatus Centre at George Mason University in Virginia, US, also reflected on the potential upside of technology company partnerships, saying that competition might actually be enhanced, rather than stifled.
“By bringing complementary technologies on board, the two large established companies [Microsoft and Nvidia] may be able to enhance their competition with the other big leading competitors in [the] AI space, including Google, Meta and IBM,” he added.
Microsoft, unlike Nvidia and OpenAI, is not new to US federal regulatory scrutiny.
In 1998, the technology giant, based in Redmond, Washington, found itself accused by the Justice Department of unfairly stifling competition from rival companies, in particular, Netscape, which at the time had a popular web-browser on both Windows and Macintosh computer platforms.
Microsoft was later found guilty of monopolistic behaviour, but a successful appeal made if difficult for the Justice Department to break up the company.
Ultimately, Microsoft reached a settlement with the US.
Most recently, in an effort to blunt potential regulatory scrutiny and an EU antitrust fine, Microsoft announced that it would begin selling its chat and video app, Teams, separately from its Office software offering.
Rival companies alleged that Microsoft's bundling of Teams with Office gave the company an unfair competitive advantage, and made it difficult for their video-conference products to make inroads on the Windows platform.
