FTC Launches Investigation into Generative AI Investments

2024-01-29

The Federal Trade Commission (FTC) has issued a mandatory order requiring leading generative artificial intelligence companies to provide detailed information about their investments and partnerships, marking an increase in scrutiny of generative AI. Alphabet (Google's parent company), Amazon, Anthropic, Microsoft, and OpenAI are the subjects of the investigation. The focus of this investigation is to understand how recent developments in major cloud service providers and generative AI companies could potentially impact competition and innovation. FTC Chair Lina M. Khan emphasized the importance of understanding the dynamics between large corporations and AI providers, stating, "Our research will shed light on whether the investment and partnership relationships pursued by dominant companies pose risks of distorting innovation and undermining fair competition." Regulatory agencies are becoming increasingly vigilant about anti-competitive behavior. These orders authorize the commission to conduct in-depth research to understand market trends and business practices. The findings of this investigation could have significant implications for future regulatory actions. The companies under investigation include tech giants Microsoft, Amazon, and Alphabet, as well as companies that have invested billions of dollars in generative AI developers such as OpenAI and Anthropic. The FTC's investigation will provide detailed information about these investments, seeking information about agreements, strategic rationales, and the actual impact of these partnerships, including decisions regarding product releases, governance, and supervisory authority. Additionally, the commission is keen to understand the competitive impact of these transactions, studying market share, competitive dynamics, sales growth potential, and expansion into new products or geographic markets. Special attention will be given to competition for AI inputs and resources, and the investigation will involve key products and services required for generative AI development. The companies involved in the investigation have 45 days to respond to the allegations and provide detailed information about all aspects of the investigation.