The federal agency issued orders to five companies— Amazon, Google and Microsoft, Anthropic and OpenAI.
Jan 26, 2024The Federal Trade Commission (FTC) issued orders to five companies requiring them to provide information about their investments and partnerships involving artificial intelligence (AI).
The “compulsory orders” on Jan. 25 were issued to cloud providers Amazon, Google and Microsoft, and AI startups Anthropic and OpenAI. The companies have been at the forefront of generative AI tools, including chatbots such as ChatGPT, and other AI tools that can produce novel imagery and sound.
The inquiry's stated purpose is to "scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape."
Khan Statement
“History shows that new technologies can create new markets and healthy competition,” said FTC Chair Lina M. Khan in a statement announcing the inquiry. “As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity.”
FTC commissioners voted 3-0 to issue the orders, under the guise of the FTC Act that authorizes them to conduct studies to gain a deeper understanding of market trends and business practices.
“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” said Khan.
Information Being Sought
The inquiry comes as concerns have heightened in Washington and abroad about how companies are deploying a range of strategies in developing and using AI, including pursuing partnerships and direct investments with AI developers to get access to key technologies and inputs needed for development.
The FTC’s inquiry is being framed as helping agency enforcers have a deeper understanding of the investments and partnerships formed between generative AI developers and cloud service providers.
The FTC officials said they are seeking information specifically related to:
- Information regarding a specific investment or partnership, including agreements and the strategic rationale of an investment/partnership;
- The practical implications of a specific partnership or investment, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings;
- Analysis of the transactions’ competitive impact, including information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets;
- Competition for AI inputs and resources, including the competitive dynamics regarding key products and services needed for generative AI; and
- Information provided to any other government entity, including foreign government entities, in connection with any investigation, request for information, or other inquiry related to these topics.
“We’re scrutinizing whether these ties enable dominant firms to exert undue influence or gain privileged access in ways that could undermine fair competition,” said Khan in opening remarks at an AI forum.
Google, Microsoft Response
The companies have 45 days from the date they receive the order to respond.
Google welcomed the FTC inquiry in a Jan. 25 statement, hoping “the FTC’s study will shine a bright light on companies that don’t offer the openness of Google Cloud or have a long history of locking-in customers—and who are bringing that same approach to AI services.”
Microsoft's Rimy Alaily, a corporate vice president for competition and market regulation, offered that the company looks forward to cooperating with the FTC and defended such partnerships as “promoting competition and accelerating innovation.”
