FTC probes Amazon, Alphabet, Microsoft, OpenAI, Anthropic and their massive generative AI deals

In one of the first significant competitive practice actions around generative AI, the Federal Trade Commission (FTC) has launched inquiries into five top creators of the technology. 

The agency today issued 6(b) orders to Amazon, Microsoft, OpenAI, Anthropic and Alphabet, requiring the companies to provide information about recent multi-billion-dollar investments and partnerships. The inquiry will “scrutinize” those relationships and actions so that the FTC can better understand their impact on the competitive landscape. 

The companies have 45 days to reply. 

The commission is moving quickly after having initially raised concerns about gen AI competition last June. 

“History shows that new technologies can create new markets and healthy competition,” said FTC chair Lina M. Khan. “As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity.” 

In response to the investigation, Microsoft provided the following comment from Rima Alaily, corporate VP for its competition and market regulation group:

“The U.S. has assumed a global AI leadership position because important American companies are working together. Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation. We look forward to providing the FTC with the information it needs to complete its study.”

Investigating multi-billion-dollar investments, intertwining capabilities

Specifically, today’s orders were sent to those involved in three recent multi-billion-dollar investments: 

  • Microsoft and OpenAI’s extended partnership announced on January 23, 2023; 
  • Amazon and Anthropic’s strategic collaboration announced on September 25, 2023;
  • Google’s expanded AI partnership with Anthropic, announced on November 8, 2023; 

The FTC is seeking information related to: 

  • Agreements and strategic rationale for the investments/partnerships.
  • Implications of the investments/partnerships — including decisions around new product releases, governance and oversight and topics of joint meetings. 
  • Analysis of competitive impact, including market share, competitors, markets, potential for sales growth and expansion into product or geographic markets. 
  • Context around competition for AI inputs and resources, including competitive dynamics around products and services critical for gen AI
  • Information on government entities (including foreign governments) around any current investigation, request for information or other inquiries. 

Among many other requirements, the tech companies must provide all documents related to the nature and extent of interactions and any company influence, engagement around decision-making — such as road-mapping, discontinuation of products and services, decisions around personnel — as well as all analyses, reports, studies and surveys around the transaction.

They must also outline any agreements on expectation of inclusivity or privileged access and restrictions or conditions placed on abilities to set pricing or terms or granting access. 

“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” said Khan. 

Microsoft-OpenAI partnership in its ‘third phase’

Microsoft — which just hit a $3 trillion valuation — has invested some $10 billion in OpenAI, and the two companies are now in what they call the “third phase” of their collaboration. 

Notably, Microsoft is OpenAI’s exclusive cloud provider. The tech giant has also pledged to increase investment in the development and deployment of specialized supercomputing systems to “accelerate OpenAI’s groundbreaking independent AI research.” 

Microsoft is further deploying OpenAI’s models across its products and will “introduce new categories of digital experiences built on OpenAI’s technology,” including its Azure OpenAI Service. 

“In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models, and toolchain with Azure to build and run their applications,” Microsoft chairman and CEO Satya Nadella said in a statement about the collaboration. 

Amazon’s $4B investment and Anthropic’s ‘long-term commitment’

Anthropic has been an AWS customer since its inception, and their collaboration has since expanded substantially. Notably, Amazon is investing up to $4 billion in Anthropic and will have a minority ownership in the company. 

Further, AWS is Anthropic’s primary cloud founder — with the company planning to run the majority of its workloads on AWS — and Anthropic uses AWS Trainium and Inferentia chips to build, train and deploy its foundation models. The two companies are also collaborating on future Trainium and Inferentia capabilities.

Anthropic has made a “long-term commitment” to provide AWS customers with “future generations” of its foundation models via Amazon Bedrock — where Amazon developers and engineers can also build with Anthropic models. 

“In addition, Anthropic will provide AWS customers with early access to unique features for model customization and fine-tuning capabilities,” the companies announced. 

“By significantly expanding our partnership, we can unlock new possibilities for organizations of all sizes as they deploy Anthropic’s safe, state-of-the-art AI systems together with AWS’s leading cloud technology,” Anthropic cofounder and CEO Dario Amodei said in a press release about the collaboration. 

Google, Anthropic creating ‘steerable AI’

New investments in OpenAI rival Anthropic seem to come by the week, and Google and its owner Alphabet, Inc. have worked with the startup since its founding in 2021. 

Through their partnership, Anthropic uses Google Cloud security services, including Chronicle Security Operations, Secure Enterprise Browsing and Security Command Center. The startup has also deployed Google’s TPU v5e for its Claude large language model (LLM). 

Anthropic further makes use of Google’s PostgreSQL-compatible database AlloyDB to handle transactional data, as well as Google’s BigQuery data warehouse.

“Our longstanding partnership with Google is founded on a shared commitment to develop AI responsibly and deploy it in a way that benefits society,” Amodei said in a press release about the expanded relationship. “We look forward to our continued collaboration as we work to make steerable, reliable and interpretable AI systems available to more businesses around the world.”

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