The top antitrust regulators in the US are stepping up their scrutiny of the country’s most powerful artificial intelligence developers.
The Department of Justice and the Federal Trade Commission have launched and split investigations into Nvidia (NVDA), Microsoft (MSFT) and OpenAI, according to reporting from the New York Times and Wall Street Journal.
The DOJ will lead an investigation into Nvidia’s (NVDA) dominance of the market for microprocessors that power AI, according to the Times. The FTC would lead antitrust investigations into Microsoft and OpenAI.
The new investigation is part of a broad effort by the Biden administration to rein in what it sees as anticompetitive behavior in a number of sectors, from health care to grocery to technology.
The government has already alleged anti-competitive behavior against tech giants Apple (AAPL) and Amazon (AMZN), claiming that Microsoft’s acquisition of gaming giant Activision Blizzard would create a monopoly in the gaming market.
It also took a lawsuit filed by the Trump administration over Alphabet’s (GOOG, GOOGL) dominance in search. A judge is currently weighing the evidence in that case, and a ruling is expected this year.
The efforts have not always been successful. The FTC failed in its challenge to Microsoft’s acquisition of Activision Blizzard and fell short in a separate battle to prevent Meta (META) from buying VR company Within.
The FTC made it clear last year that it wanted to take a closer look at the fast-growing field of AI.
Last July, the company said it had begun a consumer protection-based investigation into OpenAI’s data collection practices and the potential harm caused by the output of its large language models (LLMs).
Then in January it began a broader investigation into deals between Big Tech and AI developers, including Microsoft’s $13 billion investment in OpenAI, and Alphabet’s relationship with rival AI developer Anthropic.
The Wall Street Journal reported that the FTC’s investigation into Microsoft will go beyond an investigation into the tech giant’s conduct and also include a deal it reached with AI developer Inflection AI.
According to the Journal, the FTC wants to know why Microsoft chose to pay Inflection a $650 million licensing fee to resell Inflection’s technology, rather than buying it. According to the report, the regulator’s interest was aroused because Microsoft also took over most of Inflection’s staff as part of the agreement.
Responding to the report, Microsoft’s spokesperson said the agreements with Inflection gave the company the opportunity to recruit Inflection AI staff and accelerate development of its AI chat interface Microsoft Copilot.
That structure, Microsoft said, allows Inflection to continue its independent activities and ambition as an AI studio.
“We take our legal obligations to report transactions under the HSR Act seriously and are confident that we have met those obligations,” the spokesperson said.
Both companies received subpoenas from the FTC seeking information related to the deal, the Journal reported.
Nvidia declined to comment on the reports.
Michael Carrier, an antitrust expert and co-director of the Rutgers Institute for Information Policy and Law, said antitrust regulators seeking to test the Microsoft agreement against antitrust law will look at the substance, not the structure, of the deal.
“The agency will seek to determine whether Microsoft has restructured this deal in a manner that gives it control over InflectionAI while avoiding FTC review of the transaction,” Carrier said.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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