The U.S. Federal Trade Commission today launched a competition inquiry that focuses on five of the largest players in the generative artificial intelligence market.

The companies in question are Microsoft Corp., Amazon.com Inc., Google parent Alphabet Inc., Anthropic PBC and OpenAI. Last January, Microsoft reportedly invested $10 billion in OpenAI for a 49% stake. Later in 2023, Amazon and Google committed to investing up to $4 billion and $2 billion, respectively, in Anthropic.

Through its newly launched inquiry, the FTC will seek to map out how those partnerships affect the generative AI market. It has asked Microsoft, Amazon, Google, OpenAI and Anthropic to provide the information necessary for the study within 45 days.

“History shows that new technologies can create new markets and healthy competition,” said FTC Chair Lina Khan. “As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity. Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”

One of the FTC’s goals is to understand the “strategic rationale” behind the partnerships. The agency also plans to study the practical implications of each deal, such as how it influences the relevant companies’ product roadmaps. Microsoft, for example, has already incorporated OpenAI language models into several of its products including Windows and Azure.

Beyond the partnerships’ implications for the participating companies, the FTC will map out their impact on the broader market. As part of the effort, officials are set to study how the deals affect competitors and sales growth opportunities in the generative AI segment. The FTC also plans to carry out an analysis of “competitive dynamics regarding key products and services needed for generative AI.”

The inquiry could potentially lead to more in-depth antitrust investigations. Today, The New York Times reported that the FTC and the Justice Department are discussing which agency will examine the Microsoft-OpenAI collaboration. The companies’ partnership is already facing regulatory scrutiny in the U.K., where antitrust officials are investigating whether the deal may negatively impact market competition. 

“The U.S. has assumed a global AI leadership position because important American companies are working together,” said Rima Alaily, corporate vice president of Microsoft’s competition and market regulation group. “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.”

Google said in a statement that “we hope the FTC’s study will shine a bright light on companies that don’t offer the openness of Google Cloud or have a long history of locking-in customers – and who are bringing that same approach to AI services.” 

Photo: John Taylor/Flickr