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U.S. Initiates Antitrust Investigation into Major AI Companies
U.S. Initiates Antitrust Investigation into Major AI Companies

Tech

U.S. Initiates Antitrust Investigation into Major AI Companies

The U.S. Justice Department and the Federal Trade Commission (FTC) have announced antitrust investigations into Microsoft, OpenAI, and Nvidia due to their influential roles in the artificial intelligence (AI) industry.

The Justice Department will investigate Nvidia, while the FTC will scrutinize Microsoft and OpenAI.

Nvidia is under particular scrutiny for controlling about 80% of the AI chip market, which includes custom AI processors used by major cloud providers like Google, Microsoft, and Amazon.

This dominant market share has resulted in Nvidia reporting gross margins between 70% and 80%.

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This collaboration between the Justice Department and the FTC is reminiscent of a 2019 agreement that split antitrust enforcement duties among Big Tech firms, with the FTC handling Meta and Amazon, and the Justice Department addressing Apple and Google.

The investigations are driven by concerns about potential antitrust violations and market concentration within the AI sector. Last year, the FTC began investigating OpenAI for allegedly violating consumer protection laws by compromising personal reputations and data.

Additionally, Microsoft’s $13 billion investment in OpenAI’s for-profit arm and its $650 million deal with AI startup Inflection AI are under review.

The FTC is examining whether the Inflection AI deal was structured to circumvent merger disclosure requirements.

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Microsoft has stated that its deal with Inflection AI was aimed at advancing its work on Microsoft Copilot while allowing Inflection to operate independently as an AI studio.

Microsoft maintains that it has complied with legal requirements.

Ai Artificial Intelligence

This regulatory action follows a January FTC order requiring OpenAI, Microsoft, Alphabet, Amazon, and Anthropic to provide information on their recent investments and partnerships involving generative AI companies and cloud service providers.

These investigations underscore the need to monitor AI industry dynamics that could give dominant firms a substantial advantage.

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U.S. antitrust chief Johnathan Kanter recently highlighted these concerns at an AI conference, pointing out that reliance on vast data and computing power can entrench the dominance of already powerful companies.

Nvidia declined to comment, and OpenAI did not immediately respond to requests for comment.

The Wall Street Journal and the New York Times were the first to report on the investigation and the regulators’ agreement.

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