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Published on
June 7, 2024
8 min read
Regulators Combine Forces to Mount US Antitrust Probes on Big Tech
Two US agencies have agreed to commence antitrust probes. The probes will focus on OpenAI, Microsoft, and Nvidia. The agencies are the Federal Trade Commission (FTC) and the Department of Justice (DoJ). They want to investigate the dominant roles the three companies play in the AI industry. Reuters suggests that the US antitrust probes show that regulators are paying more attention.
The FTC and DOJ have a shared role in enforcing federal competition laws. The two agencies avoid duplicating investigations. Bill Baer, former Antitrust Lead, says each agency takes a lead in areas where it has solid expertise. But, leaders from the two agencies occasionally have joint sessions to agree on who does what.
In the latest agreement, the Justice Department will lead the Nvidia antitrust probes. The FTC will take on the OpenAI and Microsoft antitrust probes.
Demand for Information
The regulators started the US antitrust probes soon after the FTC asked tech giants to disclose their investment data. In January, the agency asked Big Tech companies to share information on recent generative AI and cloud service partnerships and investments. The demand was directed at Microsoft, OpenAI, Amazon, Alphabet, and Anthropic.
Last week, Jonathan Kanter, the DOJ Antitrust Chief, spoke at an AI Conference at Stanford University. He said that some AI trends and structures should allow for a pause. He added that the technology depends on lots of computing power and huge volumes of data. This gives dominant tech companies a big advantage.
In mid 2023, the FTC launched OpenAI antitrust probes. The probes involved investigating the tech company for consumer protection law violations. The violations relate to placing personal data and reputation at risk.
A History of Collaboration
This is not the first time that US regulators have joined forces to probe Big Tech firms. In 2019, the two agencies worked together to probe giant tech companies. The probes culminated in cases against Amazon and Meta by the FTC. The Department of Justice filed cases against Google and Apple. All four companies denied the violation allegations. The cases are ongoing.
US regulators have previously expressed concerns about AI. A big concern is the unfair advantage large tech companies have in accessing data to train AI models. Another concern involves the effects of generative AI on creative work. Regulators have also raised concerns about the partnerships that overlook merger requirements.
Huge Market Shares
Nvidia and Microsoft are dominant players in their industries. They are also the world’s largest companies by market capitalization. Recently, its market valuation has surpassed the $3 trillion mark.
The tech giant’s share of the AI chip market currently stands at about 80%. Nvidia supplies custom AI processors to cloud computing giants. These giants include Microsoft, Google, and Amazon.com.
This dominance gave Nvidia huge profit margins of 70 to 80 percent.
Although a nonprofit owns OpenAI, Microsoft invested $13 billion in it for a 49% stake. The FTC is investigating a $650 million deal between Microsoft and Inflection AI. The probe seeks to determine whether the deal was a play to skirt the merger.
The US antitrust probes’ agreement was made last week. The expectation is to complete it in the coming days.
