US opens antitrust investigations into Nvidia, Microsoft and OpenAI

Federal regulators have reached an agreement that allows them to continue antitrust investigations into the dominant roles played by Microsoft, OpenAI and Nvidia in the artificial intelligence industry, in the strongest sign of how regulatory scrutiny of the powerful technology is escalating.

The Justice Department and the Federal Trade Commission closed the deal last week, and it is expected to be finalized in the coming days, according to two people with knowledge of the matter, who were not authorized to speak publicly about the confidential discussions.

Under this arrangement, the Justice Department will take the lead in investigating whether the conduct of Nvidia, the largest maker of artificial intelligence chips, violated antitrust laws, the sources said. The FTC will play a leading role in examining the behavior of OpenAI, which makes the ChatGPT chatbot, and Microsoft, which has invested $13 billion in OpenAI and has struck deals with other AI companies, the sources said.

The agreement signals intensified scrutiny by the Justice Department and Federal Trade Commission into artificial intelligence, a rapidly advancing technology that has the potential to upend jobs, information and people’s lives. Both agencies have been at the forefront of the Biden administration’s efforts to rein in the power of the largest technology companies. After a similar deal in 2019, the government investigated Google, Apple, Amazon, and Meta and has since filed a lawsuit against each of them for allegedly violating antitrust laws.

For months, Nvidia, Microsoft and OpenAI have largely escaped the brunt of the Biden administration’s regulatory scrutiny. But that started to change as generative AI, which can produce human-like text, images, videos and audio, came on the scene in late 2022 and created a craze in the industry.

Regulators have recently indicated that they want to get ahead of developments in artificial intelligence. In July, the Federal Trade Commission opened an investigation into whether OpenAI harmed consumers through its data collection. In January, the FTC also began a wide-ranging investigation into strategic partnerships between tech giants and AI startups, including Microsoft’s investment in OpenAI and Google and Amazon’s investments in Anthropic, another young AI company.

However, the United States still lags behind Europe in regulating AI. EU officials last year agreed to landmark rules governing the rapidly developing technology, with a focus on the riskiest ways it can be used. In Washington last month, a group of senators issued legislative recommendations for artificial intelligence, calling for spending $32 billion annually to advance American leadership in the technology, but stopped short of calling for specific new regulations.

Discussions between the FTC and the Justice Department regarding AI companies entered their final stages over the past week and involved senior levels of both agencies, said one of the people familiar with the discussions, an FTC official.

Lina Khan, Chair of the Federal Trade Commission he said in a February interview That when it came to AI, the agency was trying to detect “potential problems at the beginning rather than discovering them years and years and years later, when the problems are deeply ingrained and become more difficult to correct.”

Spokeswomen for the Federal Trade Commission and the Justice Department declined to comment. Microsoft and OpenAI did not immediately respond to requests for comment. A representative for Nvidia declined to comment.

Nvidia, OpenAI and Microsoft have been in the spotlight as some of the biggest winners in the AI ​​boom, raising questions about their dominance.

Nvidia, a Silicon Valley chipmaker, is a major supplier of graphics processing units, or GPUs, components adapted for artificial intelligence tasks such as machine learning. After the explosion of artificial intelligence, technology companies raced to acquire Nvidia’s graphics processing units, doubling and tripling their sales. Nvidia’s stock price has risen more than 200% over the past year, and the company’s market value surpassed $3 trillion for the first time on Wednesday, surpassing Apple.

Industry players have become concerned about Nvidia’s dominance, including how the company’s software is preventing customers from using its chips, as well as how Nvidia distributes those chips to customers, two people familiar with the concerns said.

Microsoft, the world’s most valuable public technology company, has also become a leading provider of artificial intelligence. It owns 49 percent of OpenAI, which jumped into the public consciousness with the release of ChatGPT in 2022. The chatbot’s ability to answer questions, create images, and build computer code captivated people and quickly made the startup one of the most prominent companies in the technology industry. .

Microsoft has integrated OpenAI technology into its own products. The AI ​​now creates answers for users of its search engine, Bing, and can help create presentations and documents in PowerPoint and Word. (The New York Times has filed a lawsuit against OpenAI and Microsoft, alleging copyright infringement on news content related to AI systems.)

Microsoft’s AI deals have attracted scrutiny because they give one of the largest technology companies influence over emerging technology, while some in the industry have raised questions about whether the deals are structured in a way that allows Microsoft to avoid direct review by regulators.

Microsoft structured its minority stake in OpenAI in part to avoid antitrust scrutiny, the Times reported. Microsoft also reached an agreement in March to hire most of the employees of Inflection AI, another AI startup, and license its technology. Because the deal was not a normal acquisition, it may be difficult for regulators to scrutinize it.

Last week, the Justice Department’s Antitrust Division organized a conference on artificial intelligence at Stanford University. In his opening remarks, Jonathan Kanter, the agency’s top antitrust official, pointed to “structures and trends in AI that should give us pause.”

“AI relies on massive amounts of data and computing power, which can give already dominant companies a significant advantage,” he said.