FTC launches investigation into artificial intelligence deals like Microsoft’s OpenAI partnership

 – Gudstory

FTC launches investigation into artificial intelligence deals like Microsoft’s OpenAI partnership – Gudstory

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“We are investigating whether these relationships enable dominant companies to exert undue influence or obtain privileged access in ways that interfere with fair play,” Lina Khan, chair of the U.S. Federal Trade Commission, said in opening remarks at the AI ​​Forum on Thursday. “Can weaken competition.”

Khan said the market investigation will “review the investments and partnerships being made between AI developers and major cloud service providers.”

The FTC said Thursday it has issued “mandatory orders” to five companies — cloud providers Amazon, Google and Microsoft, and AI startups Anthropic and OpenAI — requiring them to provide information about investments and partnerships.

Microsoft’s years-long relationship with OpenAI is one of the most famous of the partnerships. Google and Amazon recently signed billion-dollar deals with Anthropic, another San Francisco-based AI startup formed by former OpenAI leaders.

Amazon, Google, Microsoft and OpenAI did not immediately respond to requests for comment. Anthropic declined comment.

The European Union and the United Kingdom have already indicated they may also investigate relationships with Microsoft and OpenAI. The EU’s executive branch said in January it was investigating whether the partnership could launch an investigation under rules covering mergers and acquisitions that would harm competition in the 27-nation bloc. Britain’s antitrust watchdog launched a similar review in December.

Antitrust advocates welcomed the actions of both the FTC and Europe in deals that some have derided as quasi-mergers.

“Big tech companies know they can’t buy top AI companies, so instead they’re finding ways to increase influence without formally calling it an acquisition,” said Matt Stoller, research director at the American Economic Liberties Project, in a written statement. “Looking for it.” “Promoters need to step in, and they are.”

Microsoft has never publicly disclosed the total dollar amount of its investment in OpenAI, which CEO Satya Nadella described as “a complicated thing”.

“We have a significant investment,” he said in a November podcast hosted by tech journalist Kara Swisher. “It doesn’t just come in the form of dollars, but it comes in the form of calculations and what have you.”

OpenAI’s governance and its relationship with Microsoft came into question last year when the startup’s board of directors suddenly fired CEO Sam Altman, who was later swiftly reinstated, making headlines around the world. . Behind-the-scenes maneuvering over the weekend and the threat of a mass exodus of employees backed by Nadella and other Microsoft leaders helped immobilize the startup and lead to the resignation of most of its previous board.

The new arrangement gave Microsoft a non-voting board seat, though “certainly we don’t have control,” Nadella said in Davos. Research institute dedicated to the safe development of future forms of AI. It is still governed as a non-profit, although most of its staff work for the for-profit arm formed several years later.

Microsoft made its first $1 billion investment in San Francisco-based OpenAI in 2019, more than two years after the startup introduced ChatGPT and sparked worldwide fascination with AI advancements.

As part of the deal, the Redmond, Washington software giant will supply the computing power — such as from one of its data centers in rural Iowa — needed to train AI models on vast stores of human-written texts and other media. Is. In return, Microsoft will receive exclusive rights to most of what OpenAI creates, allowing the technology to be incorporated into various Microsoft products.

Nadella in January compared it to several long-standing Microsoft commercial partnerships, such as chip maker Intel. “Microsoft and OpenAI are two different companies, accountable to two different stakeholders with different interests,” he told a Bloomberg reporter at the World Economic Forum in Davos, Switzerland.

“So we make the calculations. Then they use computers to do the training. Then we take that, put it into products. And so in some ways it’s a partnership that’s based on each of us really strengthening each other and then ultimately being competitive in the marketplace.”

The FTC has signaled for nearly a year that it is working to track and prevent illegal behavior in the use and development of AI tools. Khan said in April that the US government “will not hesitate to crack down” on harmful business practices involving AI. One target of popular concern is the use of AI-generated voices and imagery to turbocharge fraud and phone scams.

But increasingly, Khan also made clear that it is not just harmful applications, but broader consolidation of market power in a handful of AI leaders that deserves government scrutiny. “Companies may use this market tipping moment to leverage anti-competitive tactics to maintain their dominance and stifle competition,” the FTC said in a preview of Thursday’s forum.


AP Business Writer Kelvin Chan in London contributed to this report.

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Published: 26 January 2024, 12:07 am IST


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