Why Microsoft, OpenAI, and Nvidia Are Facing Antitrust Investigations Technology

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The United States Department of Justice and the Federal Trade Commission (FTC) have reportedly reached an agreement on how they will conduct antitrust investigations against tech giants Microsoft, Nvidia, and Open AI.

Companies are all key players in creative AI: OpenAI is the non-profit startup behind ChatGPT, the blockbuster AI-powered chatbot. Microsoft, the world's largest company by market capitalization, has invested more than $13bn in OpenAI and holds a 49% stake in the company's not-for-profit subsidiary.

Chipmaker Nvidia is a global leader in graphic processing units (GPU), a critical piece of hardware essential in AI. The company recently achieved a valuation of $3 trillion, surpassing Apple to become the second largest company in the world.

U.S. officials likely want to determine whether tech giants have used competitive means to dominate the growing AI industry.

Under the terms of the agreement, which has been reported by several US media outlets, the FTC will reportedly investigate Microsoft and OpenAI, while the DOJ will investigate Nvidia.

What is the US government going to investigate?

U.S. regulators — as well as observers outside the government — worry about the dominance of a handful of companies over the industry and whether it will drive out smaller competitors and startups with unfair business practices.

The US government has previously investigated Google's monopoly on search engines and Meta's dominance of social media in light of its ownership of Facebook, Instagram and WhatsApp.

According to Dirk Auer, director of competition policy at the International Center for Law and Economics, the cases are part of a larger policy shift in the United States over the past five years toward more regulation after years of pro-market attitudes. Portland, Oregon.

“Enforcers in both the US and the EU are very keen to bring cases in the generative AI space. The way they see it, it's the next big thing, and they think, rightly or wrongly, that they're in the early years of Web 2.0. I failed to bring out competitive issues and this led to a greater concentration in less competitive markets than would otherwise have been the case,” Orr told Al Jazeera.

Why is the investigation being split between two government agencies?

Both the FTC and the DOJ are responsible for enforcing federal antitrust laws.

The DOJ is a criminal enforcement agency while the FTC is a civil enforcement agency, but their work can overlap. Before starting an antitrust investigation, the two agencies need to notify each other, as they share responsibilities.

The two agencies worked together in 2019 on a landmark case against Facebook, Amazon, Apple and Google's parent company Alphabet, which resulted in each tech firm being sued for alleged violations of antitrust laws. .

Experts say investigations against Microsoft, Nvidia, and OpenAI could take a similar approach.

Why are they taking action now?

U.S. antitrust lawyer Barry Bennett said the two enforcement agencies are trying to make progress in their inquiries before the sanctions expire or before the U.S. presidential election in November.

“There may also be a sense that Congress lacks the coherence and will to pass legislation that would provide a regulatory alternative to litigation against firms that dominate the AI ​​ecosystem,” Bennett told Al Jazeera.

In this climate, the FTC and DOJ are already busy this year. The DOJ filed an antitrust lawsuit against Apple in March for monopolizing the US smartphone market, while the FTC is also separately investigating a $650 million deal between Microsoft and Inflection, another AI startup. Is.

Are these companies expecting an investigation?

Neither Microsoft, OpenAI, nor Nvidia should be surprised when federal investigators come knocking.

In January, the FTC opened an inquiry into investments by Microsoft, Amazon, and Alphabet – Google's parent company – in OpenAI and Anthropic, another creative AI company.

At the time, FTC Chair Lena M. Khan said the agency “hopes to shed light on whether investments and partnerships by dominant companies distort innovation and undermine fair competition.” It's dangerous.”

What can be gained from a lawsuit?

The probe will aim to make the tech industry more competitive — something regulators have been credited with achieving in the past, according to Bennett.

The US government broke up the iconic telecom giant AT&T in 1984, and in 2001 won a landmark lawsuit against Microsoft over its monopoly in web browsers for the Windows operating system.

Bennett said the two cases “both unleashed enormous creativity and greatly improved innovation in the tech sector.”

Auer said, however, that he wasn't sure whether a case against Nvidia, Microsoft and Open AI would stand up in court.

“There are two main problems with these AI cases. The first is that right now, the creative AI space seems very, very competitive and therefore doesn't make an ideal target for antitrust intervention,” Auer said.

“The other big one is that these deals with big tech firms seem very valuable to creative AI startups,” Auer said, adding that more regulation means more time to get financing and investment deals approved. It will take, further research will slow down. innovation

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