The US Justice Department and the Federal Trade Commission have reached an agreement that will allow for potential antitrust investigations into the roles that Nvidia, OpenAI, and Microsoft play in the AI industry, reports Reuters.
The agreement between the two agencies suggests regulatory scrutiny is gaining momentum amid concerns over concentration in the AI spectrum. Microsoft and Nvidia not only dominate their industries but are also two of the world’s biggest companies by market capitalization, since the latter’s market value crossed #3 trillion.
US antitrust enforcers have expressed several concerns around AI, from the advantage that Big Tech companies have in their access to data used to train AI models, to how gen AI is affecting creative markets.
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Is the US Justice Department Going After Big Tech?
The decision to divide the industry showcases a similar agreement between the two agencies in 2019 to divide enforcement against Big Tech, which eventually witnessed the FTC bring cases against Meta and Amazon, and the DOJ sue Apple and Google for alleged violations. Those cases are still underway and the firms have denied doing anything wrong.
While OpenAI’s parent is a nonprofit, Microsoft has pumped in $13 billion in a for-profit subsidiary, taking a 49% stake. The Justice Department will take the lead in investigating whether Nvidia violated antitrust laws, while the FTC will examine the conduct of Microsft and OpenAI. Recently, the regulators struck a deal, which is said to be completed in the coming days.
Nvidia has around 80% of the AI chip market, including custom AI processors made by cloud computing firms like Amazon, Google, and Microsoft. This kind of domination helps the company report gross margins between 70% and 80%. Nvidia and OpenAi spokespersons have denied to comment on the matter. Microsoft said it takes its legal obligations to report transactions seriously and is confident that it hasn’t done any wrongdoings.
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FTC Investigated OpenAI For Violation Of Consumer Protection Laws
The agreement between the two regulators follows FTC’s order for OpenAI, Microsoft, Alphabet, Amazon, and Anthropic to provide information on recent investments and partnerships involving gen AI firms and cloud service providers.
In 2023, the FTC investigated OpenAI on claims it had violated consumer protection laws by putting personal reputations and data at risk. Recently, Justice Department antitrust chief Jonathan Kanter, said during an AI conference at Stanford University that there are "structures and trends in AI that should give us pause."
He added that the tech depends on huge amounts of data and computing power, which can give already dominant firms an advantage.