The Justice Department and the Federal Trade Commission are nearing an agreement to divide investigations into possible anti-competitive behavior by some of the world’s largest technology companies in the artificial intelligence industry, according to three people with knowledge of the negotiations.
As part of the agreement, the DOJ is poised to investigate Nvidia and its leadership position in providing the high-performance semiconductors that underpin AI computing, while the FTC will investigate whether Microsoft and its partner OpenAI have unfair advantages with the rapidly developing technology. technology, especially around the technology used for large language models.
The three companies are leaders in AI, with the technology giving Nvidia a market value of $3 trillion today, second only to Microsoft.
The deal took almost a year to negotiate. And while leaders of both agencies have expressed an urgency to ensure that the fast-growing artificial intelligence technology is not dominated by existing tech giants, until an agreement was finalized, they were able to do very little investigative work.
The agreement is not yet final, but could be completed this week.
Spokespeople for the DOJ, FTC, Nvidia, Microsoft and OpenAI did not immediately respond to requests for comment.
As part of the agreement, the FTC will retain its authority over Amazon and the DOJ will retain its authority over Google, the people said. While both companies have already been hit by antitrust lawsuits, AI-related investigations into both were also suspended pending an agreement, the people said.
Spokespeople for Amazon and Google did not immediately respond for comment.
The New York Times first reported on Wednesday about the division of Nvidia, Microsoft and OpenAI. POLITICO reported in January that the FTC and DOJ were negotiating over who would investigate Microsoft and OpenAI.
The two agencies share antitrust enforcement in the U.S. and must clear any investigation with their counterpart before they can begin. That process is generally superficial and conducted along industrial lines, although in technology markets the lines are blurred.
Over the past eighteen months, both FTC Chair Lina Khan and DOJ Antitrust Chief Jonathan Kanter have said it is critical to ensure that the rapidly evolving field of AI is not controlled by just a handful of companies in the same way they believe it is. happened with social media. media, online advertising, commerce, search and other high-tech offerings over the past fifteen years.
The FTC is conducting investigations into the cloud computing market and the AI ​​investments of Microsoft, Amazon and Google. Last week, the DOJ hosted a daylong workshop at Stanford University on competition and AI. The FTC also recently held an AI workshop.
At issue is the so-called AI stack, which includes high-performance semiconductors, vast cloud computing resources, data for training large language models, the software needed to integrate these components, and consumer-facing applications like ChatGPT.
The jurisdictional split between the two agencies previously came to a head in 2019 when then-FTC Chairman Joseph Simons and then-DOJ antitrust chief Makan Delrahim reached a handshake agreement to allow the FTC to initiate monopolization investigations into Meta (then Facebook) and Amazon , while the DOJ would handle investigations into Google and Apple. According to people with knowledge of the process, that agreement was also reached after roughly a year of negotiations.
Since then, all four companies have faced antitrust lawsuits, with a pair of cases against Google being the most advanced. After a 10-week trial last fall, a ruling is pending before a federal judge in Washington on whether Google illegally monopolized the search market.
Artificial intelligence has been around in one form or another for years, including the Siri voice assistant on iPhones. But it exploded into public consciousness in late 2022 with the rollout of generative AI, including OpenAI’s ChatGPT. The products produce text, art, videos and answer questions in a strikingly human way.
Microsoft has poured billions of dollars into OpenAI in recent years. OpenAI uses Microsoft’s vast computing resources to develop its technology, and the software giant is integrating OpenAI’s services into its core businesses, including the Bing search engine. Regulators around the world are concerned that the investment is structured to avoid regulatory merger investigations and that the partnership will give the two companies an unfair advantage over competitors.
Nvidia’s profits have exploded in recent years as its chips, traditionally used for computer graphics, have been adapted for AI’s heavy computing workloads. The company is estimated to have as much as 90% of the market for high-end AI chips, which are often difficult to obtain. The French antitrust agency is already investigating Nvidia, according to press reports.
Nvidia has faced criticism from customers and competitors for its sales tactics, which some say stall at the expense of other options, as well as for the way it bundles essential related software on its chips, two industry people said.
At the Stanford event last week, the Justice Department’s Kanter warned that while “AI has so much promise,” it also has “unique characteristics that pose new threats to the markets for human ideas and innovation.”
