US prepares for antitrust clash with AI heavyweights Nvidia, OpenAI, Microsoft

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Top antitrust regulators in the U.S. are stepping up their scrutiny of the nation's most powerful developers of artificial intelligence.

The Department of Justice and the Federal Trade Commission have launched investigations into Nvidia ( NVDA ), Microsoft ( MSFT ) and OpenAI, and split them, the New York Times and Wall Street Journal reported.

According to the Times, the DOJ will lead an investigation into Nvidia's ( NVDA ) dominance of the market for microprocessors that power AI. The FTC will lead an antitrust investigation into Microsoft and OpenAI.

Federal Trade Commission Chair Lena Khan, left, and Assistant Attorney General for Antitrust Jonathan Cantor participate in a debate on antitrust reform in Washington, D.C., last October. (Photo by Drew Enger/Getty Images) (Outrage via Getty Images)

The new scrutiny is part of a broader effort by the Biden administration to address what it sees as competitive behavior in a number of industries, from health care to grocery to tech.

The administration has already accused tech giants Apple ( AAPL ) and Amazon ( AMZN ) of anticompetitive practices, claiming that Microsoft's acquisition of gaming giant Activision Blizzard would monopolize the gaming market.

He also heard a lawsuit filed by the Trump administration over Alphabet's (GOOG, GOOGL) dominance in search. A judge is currently weighing the evidence in the case, with a decision expected this year.

Attempts are not always successful. The FTC failed in its challenge to Microsoft's acquisition of Activision Blizzard and in a separate battle to prevent META from being able to buy the VR company internally.

The FTC made clear last year that it wants to take a closer look at the burgeoning field of AI.

It said last July that it had launched a consumer protection investigation into OpenAI's data collection practices, and potential harm caused by its large language models (LLMs).

Then in January, it launched a broader inquiry into deals between big tech and AI developers, including Microsoft's $13 billion investment in OpenAI, and Alphabet's relationship with rival AI developer Anthropic.

The Wall Street Journal reported that the FTC's investigation of Microsoft will go beyond examining the tech giant's conduct to include a deal it struck with AI developer Inflection AI.

According to the Journal, the FTC wants to know why Microsoft chose to pay a $650 million licensing fee to resell Inflection's technology instead of buying it. According to the report, the regulator's interest was piqued, as Microsoft also acquired most of Inflection's staff as part of the deal.

In response to the report, a Microsoft spokesperson said the agreements with Inflection allowed it to hire Inflection AI staff and accelerate development of its AI chat interface Microsoft Copilot.

This structure, Microsoft said, enables Inflection to continue its independent business and ambitions as an AI studio.

“We take seriously our legal obligations to report transactions under the HSR Act and we believe we have complied with those obligations,” the spokesperson said.

Both companies received subpoenas from the FTC seeking information about the deal, the Journal reported.

Nvidia declined to comment on the reports.

Michael Carrier, an antitrust expert and co-director of the Rutgers Institute for Information Policy and Law, said antitrust regulators are looking to test the Microsoft deal against antitrust rules, looking at the substance rather than the structure of the deal. .

“The agency will seek to determine whether Microsoft restructured the deal in a way that gave it control of InflectionAI while avoiding FTC review of the transaction,” Carrier said.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter. @alexiskweed.

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