U.S. to Probe AI Monopoly Concerns U.S. antitrust regulators to investigate AI giants Microsoft, Nvidia, and OpenAI

Jun 26, 2024
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2 min read
U.S. to Probe AI Monopoly Concerns: U.S. antitrust regulators to investigate AI giants Microsoft, Nvidia, and OpenAI

U.S. antitrust regulators are preparing to investigate a trio of AI giants.

What’s new: Two government agencies responsible for enforcing United States anti-monopoly laws agreed to investigate Microsoft, Nvidia, and OpenAI, The New York Times reported

How it works: The Department of Justice (DOJ) will investigate Nvidia, which dominates the market for chips that train and run neural networks. The Federal Trade Commission (FTC) will probe Microsoft and its relationship with OpenAI, which together control the distribution of OpenAI’s popular GPT-series models. In February, FTC chair Lina Khan said the agency would look for possible anti-competitive forces in the AI market. 

  • The DOJ is concerned that Nvidia may use unfair practices to maintain its market dominance. They may look into Nvidia’s CUDA software, which strengthens users’ reliance on its chips. They may also explore claims raised by French authorities that Nvidia favors some cloud computing firms over others.
  • The FTC worries that the partnership between OpenAI and Microsoft, which owns 49 percent of OpenAI and holds a non-voting seat on OpenAI’s board of directors, may work to limit consumer choice. Microsoft’s April agreement with Inflection AI to hire most of its staff in return for a $650 million payment, which resembled an acquisition but left Inflection’s corporate structure intact, raised suspicions that the deal had been structured to avoid automatic antitrust scrutiny. 
  • The FTC previously investigated investments in Anthropic by Amazon and Google as well as whether OpenAI gathered training data in ways that harmed consumers. 

Behind the news: Government attention to top AI companies is rising worldwide. Microsoft’s partnership with OpenAI faces additional scrutiny by European Union regulators, who are probing whether the relationship violates EU regulations that govern corporate mergers. U.K. regulators are investigating Amazon’s relationship with Anthropic and Microsoft’s relationship with Mistral and Inflection AI. Last year, French regulators raided an Nvidia office over suspected anti-competitive practices. In 2022, Nvidia withdrew a bid to acquire chip designer Arm Holdings after the proposal attracted international regulatory scrutiny including an FTC lawsuit.

Why it matters: Microsoft, Nvidia, and OpenAI have put tens of billions of dollars each into the AI market, and lawsuits, settlements, judgments, or other interventions could shape the fate of those investments. The FTC and DOJ similarly divided their jurisdictions in 2019, resulting in investigations into — and ongoing lawsuits against — Amazon, Apple, Google, and Meta for alleged anti-competitive practices in search, social media, and consumer electronics. Their inquiries into the AI market could have similar impacts. 

We’re thinking: Governments must limit unfair corporate behavior without stifling legitimate activities. Recently, in the U.S. and Europe, the pendulum has swung toward overly aggressive enforcement. For example, government opposition to Adobe’s purchase of Figma had a chilling effect on acquisitions that seems likely to hurt startups. The UK blocked Meta’s acquisition of Giphy, which didn’t seem especially anticompetitive. We appreciate antitrust regulators’ efforts to create a level playing field, and we hope they’ll take a balanced approach to antitrust.


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