With the AI race heating up between Big Tech companies and fast-growing startups alike, some companies may be violating antitrust laws in order to gain an upper hand on their competition.
At least, that's what both the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) are investigating.
Microsoft, OpenAI, and Nvidia are now under a regulatory microscope after the DOJ and FTC struck a deal over the two agencies' roles in the AI-related inquiry. The FTC is also conducting an investigation into Microsoft over its dealings with Inflection AI, a generative AI company.
The DOJ will lead the investigation into Nvidia, the main provider of GPUs, the prime component in developing AI models. Nvidia is arguably the biggest winner of the AI race, as its products power pretty much all of the AI products that tech companies have been developing. Its stock has risen by more than 200 percent in the last year. Nvidia briefly surpassed Apple's market valuation when the chipmaker hit a $3 trillion market valuation this week.
However, the DOJ will be investigating Nvidia for potentially violating antitrust laws regarding how the company distributes chips to players in the market as well as its software practices that require customers to use their chips.
The FTC will take the reins when it comes to investigating Microsoft and OpenAI. Microsoft owns 49 percent of OpenAI, arguably the largest AI company in the world, thanks to the success of its AI chatbot, ChatGPT. Since then, Microsoft has tightly integrated OpenAI's technology into its own AI-related products. Furthemore, the deal Microsoft struck with OpenAI was allegedly structured specifically in a way to escape antitrust investigations.
While the Microsoft and OpenAI dealings are grabbing headlines as the larger of the investigations, FTC is also conducting a separate inquiry into another one of Microsoft's AI dealings for potential antitrust issues.
In March, Microsoft hired Mustafa Suleyman, co-founder of generative AI company Inflection AI, along with nearly all of the company's employees. Microsoft also agreed to pay a $650 million licensing fee to Inflection AI for resale rights to its technology. If Microsoft had acquired the AI startup outright, the deal between the two companies would've been subject to review by federal agencies. However, it seems Microsoft may have once again structured a deal in order to avoid such oversight.
As a result of the FTC's inquiry, the federal agency could fine Microsoft and potentially suspend the deal between Microsoft and Inflection AI until it is subject to an antitrust investigation to assess its potential impact on the market.
