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US Regulators Investigate Microsoft, OpenAI, and Nvidia for Potential Antitrust Violations

ByHuey Yee Ong

Jun 8, 2024

US Regulators Investigate Microsoft, OpenAI, and Nvidia for Potential Antitrust Violations

Microsoft, OpenAI, and Nvidia are under heightened scrutiny from US regulators for potential breaches of antitrust laws in the artificial intelligence sector. The Department of Justice (DoJ) and the Federal Trade Commission (FTC) have reportedly agreed to launch investigations into the roles these tech giants play in the AI industry, according to a report by the New York Times.

The DoJ is set to lead an inquiry into Nvidia, a key player in the production of chips critical for AI systems. The investigation will determine if Nvidia has violated antitrust regulations designed to ensure fair competition and prevent monopolistic practices, the New York Times reported on Wednesday.

Concurrently, the FTC will investigate OpenAI, the developer behind the ChatGPT chatbot, and Microsoft, which is OpenAI’s largest investor. The FTC will examine whether these companies have engaged in anti-competitive practices in the burgeoning AI market.

Microsoft’s Deal Under Scrutiny

The Wall Street Journal revealed on Thursday that the FTC is also looking into whether Microsoft structured a recent deal with startup Inflection AI to sidestep antitrust scrutiny. This March, Microsoft hired Mustafa Suleyman, Inflection’s CEO and co-founder, to lead a new AI division and agreed to pay Inflection $650 million for licensing its AI technology.

In January, the FTC requested detailed information from several companies, including OpenAI, Microsoft, Google’s parent company Alphabet, Amazon, and the startup Anthropic. The inquiry sought details on their recent investments and partnerships related to generative AI and cloud services.

Additionally, last year, the FTC began investigating OpenAI for alleged violations of consumer protection laws, suggesting that OpenAI’s practices might endanger personal reputations and data.

Regulators’ Stance on AI and Monopolies

Jonathan Kanter, head of the DoJ’s antitrust division, emphasized to the Financial Times on Thursday the urgency of examining the AI sector. He highlighted the need to scrutinize “monopoly choke points and the competitive landscape” to prevent dominant tech firms from monopolizing the market.

This regulatory attention coincides with Nvidia’s market valuation reaching $3 trillion on Wednesday, briefly surpassing Apple’s.

Rebecca Haw Allensworth, a professor at Vanderbilt Law School, noted that the collaborative approach between the DoJ and FTC reflects a stronger partnership under the Biden administration. She remarked, “Traditionally, the agencies divided their responsibilities by industry, but given the significance of the AI market for antitrust enforcement, they are now working closely together. They view AI as a critical area for addressing anti-competitive behavior by companies already suspected of stifling competition.”

Microsoft has expressed confidence in its compliance with antitrust laws regarding its deal with Inflection AI. When approached for comments, Nvidia, OpenAI, the FTC, and the DoJ all declined to provide statements.

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Featured Image courtesy of Jonathan Raa/NurPhoto via Getty Images

Huey Yee Ong

Hello, from one tech geek to another. Not your beloved TechCrunch writer, but a writer with an avid interest in the fast-paced tech scenes and all the latest tech mojo. I bring with me a unique take towards tech with a honed applied psychology perspective to make tech news digestible. In other words, I deliver tech news that is easy to read.

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