FTC & the DOJ Launch Antitrust Investigation against OpenAI, Microsoft & Nvidia
- The Federal Trade Commission and the Justice Department have come together to launch an investigation against OpenAI, Microsoft, and Nvidia to ensure that they don't have too much influence in the AI industry.
- Microsoft and OpenAI will be investigated by the FTC, whereas Nvidia will be investigated by the Department of Justice.
- The investigation will only concern how these companies operate and not how many mergers or acquisitions they have made.
Microsoft, OpenAI, and Nvidia-the three tech giants that have been making significant moves in the AI industry-have come under the radar of the Federal Trade Commission and the Justice Department, which are now planning to launch an antitrust investigation against them.
The agreement for a joint collaboration for this investigation was struck between the two agencies just last week and is expected to be executed very soon in the coming days.
According to the agreement, the FTC will focus on Microsoft and OpenAI whereas Nvidia will be investigated by the Justice Department.Speaking of the investigation, it will focus on how much influence each company has on the AI industry-in terms of their business practices and not their acquisitions or mergers.
Interestingly, this isn't the first time these companies have come under the radar of regulators.
- For example, in July of last year, the FTC was investigating whether OpenAI was taking unfair advantage of customers through its data collection practices.
- Then in January of this year, a broader investigation was launched on the relationship between tech giants and AI companies, such as Microsoft's investment in OpenAI and Google and Amazon's investment in Anthropic.
To understand why these companies are being investigated, it's important to understand what antitrust laws are.
Simply put, antitrust laws are regulations that ensure that no particular company has too much influence (monopoly) in an industry and that there's healthy competition in the market.
Now, while it may be a stretch to call OpenAI and Microsoft monopolies right now, there's no doubt that they are industry leaders in AI.
Microsoft's investment in OpenAI started with $1 billion, but over the course of the last few years, it has swelled up to $13 billion.Also, OpenAI's model is being used to power Microsoft Copilot+, which in turn will be used by various laptop makers such as Dell, HP, Lenovo, Samsung, and so on.
Basically, almost every single well-known laptop brand will now be powered by Microsoft and OpenAI. This is how a company slowly turns into a monopoly and this is exactly what the FTC is trying to prevent.
Nvidia is also not far behind. Meta, which is currently working on its own AI model called Llama, has been investing billions in Nvidia chips.
As a result of this, the chip maker's revenue shot up by more than 250%. It also recently overtook Amazon as the second-most valuable company in the U.S., with a market capital of over $3 trillion. If things continue at this pace, other smaller chipmakers won't stand a chance against it.
The antitrust investigation news also comes at the heels of several controversies in OpenAI.
- Several top executives left OpenAI, stating that the company has digressed from its original goal and is now focusing more on profit than sustainable development.
- Plus, just recently, 13 people who were formerly employed with popular AI firms, including OpenAI, signed an open letter, calling for these companies to be more transparent about their AI practices and their long-term impacts on society.
Apparently, the financial incentive is so huge that these AI companies are being tempted to ignore the risks associated with such rapid development of AI. This is what the antitrust investigation aims to rectify-an important step for general public welfare.
The post FTC & the DOJ Launch Antitrust Investigation against OpenAI, Microsoft & Nvidia appeared first on The Tech Report.