Microsoft, Amazon and Google Face F.T.C. Inquiry Over A.I. Deals

The Federal Trade Commission opened an inquiry on Thursday into the multibillion-dollar investments by Microsoft, Amazon and Google in the artificial intelligence start-ups OpenAI and Anthropic, broadening the regulator’s efforts to corral the power the tech giants can have over A.I.

These deals have allowed the big companies to form deep ties with their smaller rivals while dodging most government scrutiny. Microsoft has invested billions of dollars in OpenAI, the maker of ChatGPT, while Amazon and Google have each committed billions of dollars to Anthropic, another leading A.I. start-up.

Regulators have typically focused on bringing antitrust lawsuits against deals where the tech giants are buying rivals outright or using acquisitions to expand into new businesses, leading to increased prices for consumers and other harm, and have not regularly challenged stakes that the companies buy in start-ups. The F.T.C.’s inquiry will examine how these investment deals alter the competitive landscape and could inform any investigations by federal antitrust regulators into whether the deals have broken laws.

The F.T.C. said it would ask Microsoft, OpenAI, Amazon, Google and Anthropic to describe their influence over their partners and how they worked together to make decisions. The agency also said it would demand that they provide any internal documents that could shed light on the deals and their potential impact on competition.

“Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition,” Lina Khan, the F.T.C. chair, said in a statement.

The inquiry is the agency’s first major effort to understand the way the companies are using partnerships and investments to rapidly expand their influence in A.I. Ms. Khan, who was appointed in 2021, has long pushed to modernize the way the government deploys antitrust law. That has included her agency’s filing an antitrust suit against Amazon last year accusing it of artificially raising prices and asking courts to embrace more novel theories about how corporations can harm the economy.

Other regulators internationally are also examining some of the big tech companies’ investments in A.I. start-ups. Last month, the Competition and Markets Authority, a British regulator, said that it was reviewing whether Microsoft’s deal with OpenAI was a merger that fell under its purview and would harm competition in the economy. The European Commission also said it was looking at whether its antitrust laws could apply.

In a statement, Rima Alaily, a top Microsoft competition lawyer, said the United States had “assumed a global A.I. leadership position because important American companies are working together.” She said partnerships, including Microsoft’s with OpenAI, were “promoting competition and accelerating innovation.”

A Google spokesman, Peter Schottenfels, said that the company hoped the study would “shine a bright light” on companies that “have a long history of locking-in customers” and are taking the same approach when building A.I. tools. He added that Microsoft’s cloud computing business had an exclusive license to use OpenAI’s A.I. models while Google’s deal with Anthropic did not involve exclusive tech rights.

Amazon and OpenAI declined to comment. Anthropic did not respond to a request for comment.

Brad Smith, Microsoft’s president, said in a social media post in December that the company had “forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies.” He said the arrangement was “very different from an acquisition.”

The F.T.C. and the Justice Department, which examine corporate mergers and look at whether they could hurt competition, in recent years have divided up responsibility for investigating whether tech giants have broken antitrust laws. The F.T.C. has filed antitrust lawsuits against Amazon and Meta, while the Justice Department has sued Google and is investigating Apple’s behavior.

The F.T.C. has additional powers to produce public studies that look at specific corporate conduct and its effect on the economy. In 2021, for example, it released a report that looked at tech giants’ acquisitions, determining that many of them were not big enough to meet the standard for mandatory government scrutiny. More recently, the agency conducted an inquiry into how social media companies and video platforms handle deceptive advertising.

The ties between the tech giants and A.I. start-ups have faced increased scrutiny since November, when OpenAI’s board ousted its chief executive, Sam Altman. In the chaotic days that followed, Microsoft’s chief executive, Satya Nadella, counseled Mr. Altman and later offered to directly hire him and his team, raising questions about the influence Microsoft had over the start-up’s operations. Mr. Altman ultimately returned to OpenAI.

As part of Thursday’s inquiry, the F.T.C. said, it will ask Microsoft, Amazon, Google’s parent company, Alphabet, OpenAI and Anthropic for details including whether the deals between the giants and the start-ups involved have rights to board seats or other oversight over each other. Microsoft obtained a seat on OpenAI’s board in November but does not have the right to vote on its decisions.

Microsoft has committed $13 billion for what is effectively a 49 percent stake in the start-up. The company worked to keep its share below 50 percent because of antitrust concerns, The New York Times previously reported. Amazon said it would invest up to $4 billion in Anthropic. Google has committed to investing more than $2 billion in Anthropic.

The study could be followed by a more formal investigation into whether the deals between the companies violate antitrust laws. Officials at the F.T.C. and in the Justice Department have been in discussions about which agency will get to examine the deal between Microsoft and OpenAI, according to a person familiar with the matter who spoke on condition of anonymity because the discussions are confidential.

An F.T.C. spokesman said that the study was a first step to understanding a new market for technology and that the findings could be used by either agency.

William Kovacic, a former chairman of the agency, said the study would allow officials to better understand a “formative tech issue” after years of criticism that the agency had been slow to handle competition problems in the economy.

“This is a strategy for getting ahead of the issue,” he added.

Separately, the F.T.C. last year opened an investigation into whether ChatGPT had harmed consumers, with a focus more broadly on whether the technology could be used to commit fraud. (The Times has sued Microsoft and OpenAI over use of copyrighted work.)

“America’s longstanding national commitment to fostering fair and open competition has been an essential part of what has made this nation an economic powerhouse and a laboratory of innovation,” Ms. Khan said in a Times guest essay last year. “We once again find ourselves at a key decision point.”

Tripp Mickle contributed reporting from San Francisco, and Karen Weise from Seattle.




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