The US Federal Trade Commission (FTC) has launched a probe into the substantial investments made by Microsoft, Amazon, and Google in AI start-ups like OpenAI and Anthropic.

Microsoft's significant investment in OpenAI, the creator of ChatGPT, along with Amazon and Google's financial backing of Anthropic, has sparked an FTC investigation into potential antitrust violations. The inquiry, conducted under Section 6(b) of the FTC Act, aims to understand how these investments may alter the competitive landscape and whether they enable dominant firms to exert undue influence or gain unfair competitive advantage

The companies have been requested to provide information about their agreements and will have 45 days to respond. The agency also aims to obtain internal documents shedding light on the impact of these investment deals on competition.

Lina Khan, the Chair of the FTC, stated that the study intends to determine whether investments and partnerships pursued by dominant companies distort innovation and undermine fair competition.

Why does it matter?

This inquiry represents the FTC's first significant effort to understand how tech giants utilise partnerships and investments to rapidly expand their influence in the AI industry. Unlike previous antitrust probes focusing on acquisitions, the FTC's inquiry will examine how these investment deals impact the competitive landscape.

The investigation coincides with global regulatory scrutiny, with UK and European authorities also investigating tech companies' investments in AI start-ups. The UK's Competition and Markets Authority is reviewing Microsoft's deal with OpenAI to determine if it constitutes a merger that could harm competition. The European Union (EU) is also considering whether to launch a probe, due to similar concerns.

The study may lead to a more formal investigation into the legality of these deals, with officials discussing which agency will examine specific aspects of Microsoft's agreement with OpenAI. The findings from this inquiry are expected to have far-reaching implications for the AI industry and future regulations and competition policies in the AI investment landscape.