American antitrust regulators are launching an investigation into the connections between top artificial intelligence companies, such as OpenAI which produces ChatGPT, and the large technology corporations that have poured billions of dollars into them.

This initiative focuses on Amazon, Google, and Microsoft’s influence on the growing popularity of generative AI, which has led to a high demand for chatbots like ChatGPT and other AI technology capable of creating unique images and sounds.

Lina Khan, the chair of the U.S. Federal Trade Commission, stated during the Thursday AI forum that they are examining if these connections allow larger companies to have excessive control or special advantages that could harm fair competition.

Khan stated that the market investigation will analyze the collaborations and investments made by AI developers and leading cloud service providers.

The Federal Trade Commission (FTC) announced on Thursday that it has issued “compulsory orders” to five companies, namely Amazon, Google, Microsoft, and AI startups Anthropic and OpenAI. These orders require the companies to disclose details about their agreements and decision-making processes.

Microsoft has had a long-standing partnership with OpenAI, which is widely recognized as the most successful. More recently, Google and Amazon have also struck deals worth billions of dollars with Anthropic, an AI startup in San Francisco founded by former executives from OpenAI.

Google issued a statement on Thursday in response to the FTC’s investigation, which also subtly criticized Microsoft’s partnership with OpenAI and their past experiences with antitrust investigations regarding their business methods.

Google stated that they are hopeful the FTC’s study will bring attention to companies that do not provide the same level of transparency as Google Cloud and have a track record of keeping customers tied to their services. These companies are also applying this same approach to their AI services.

Rimy Alaily, a corporate vice president for competition and market regulation at Microsoft, stated that the company is eager to work alongside the FTC and justified these partnerships as a way to encourage competition and drive innovation.

Amazon, Anthropic, and OpenAI did not provide a statement.

The European Union and the United Kingdom have both indicated that they are closely examining Microsoft’s investments in OpenAI. The EU’s governing body stated this month that the collaboration may lead to an inquiry under laws regulating mergers and acquisitions, potentially leading to negative effects on competition within the 27 member states. In December, Britain’s antitrust authority also launched a similar investigation.

Critics of potential monopolies expressed approval for the actions taken by both the FTC and Europe regarding agreements that have been criticized as resembling mergers.

According to a statement written by Matt Stoller, director of research at the American Economic Liberties Project, large technology companies are aware that they cannot purchase the leading artificial intelligence companies. As a result, they are seeking alternative methods of exerting their influence without explicitly labeling it as an acquisition.

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

During a November podcast with tech journalist Kara Swisher, he mentioned that we have made a substantial investment. This investment includes not only monetary resources, but also computing power and other forms of support.

Last year, concerns were raised about the governance of OpenAI and its partnership with Microsoft. This was sparked by the sudden firing of CEO Sam Altman by the startup’s board of directors. However, Altman was quickly reinstated, causing a lot of turmoil that gained international attention. A weekend of undisclosed negotiations and the potential loss of many employees, supported by Microsoft CEO Nadella and other leaders, helped to stabilize the situation and resulted in the resignation of most of the previous board members.

The recent agreement granted Microsoft a nonvoting position on the board, but according to Nadella at Davos, they do not have control. The issue that resulted in Altman’s temporary removal revolved around the unique governance system of the startup. OpenAI was originally established as a nonprofit organization with a focus on safely developing advanced AI technology. While it still operates as a nonprofit, the majority of its employees now work for the for-profit branch that was created a few years later.

In 2019, Microsoft made a $1 billion investment in OpenAI, a San Francisco-based company. This was over two years prior to the introduction of ChatGPT, which caused widespread interest in AI advancements.

Under the agreement, Microsoft, based in Redmond, Washington, would provide the necessary computing resources for training AI models on vast amounts of written materials and media. In exchange, Microsoft would have exclusive access to a significant portion of OpenAI’s developments, allowing for integration of the technology into various Microsoft products.

In January, Nadella compared it to several long-standing commercial partnerships of Microsoft, such as the one with Intel. During an interview with a Bloomberg reporter at the World Economic Forum in Davos, Switzerland, he mentioned that Microsoft and OpenAI are separate companies with their own stakeholders and interests.

“We develop the computing system, which is then utilized for training purposes. This training data is then incorporated into our products. This partnership allows us to mutually strengthen our individual strengths and ultimately remain competitive in the market.”

For almost a year, the FTC has expressed its intention to monitor and prevent illegal activities related to the creation and use of AI tools. In April, Khan stated that the U.S. government is prepared to take action against detrimental business practices involving AI. One area that has raised public concern is the utilization of AI-generated voices and images to enhance fraudulent activities and telephone scams.

However, Khan emphasized that the focus of examination should not only be on harmful uses of AI, but also on the overall concentration of market influence among a few dominant players. These leaders could potentially exploit this “market tipping moment” to solidify their control.

The Federal Trade Commission, with three Democratic commissioners due to two empty seats, unanimously decided to initiate the investigation. Commissioner Alvaro Bedoya stated that it would provide insight into the competitive dynamics involved in the use of these highly advanced models.

The FTC has given the companies a period of 45 days to submit details regarding their partnership agreements and the reasoning behind them. They have also requested information on how decisions are made for product launches and the essential resources and services required for developing AI systems.

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This report was contributed to by Kelvin Chan, an AP business writer based in London.

Source: wral.com