FTC is delving into the investments made by tech giants in AI companies OpenAI and Anthropic. This investigation reflects a growing interest in understanding the intricate financial relationships between established cloud service providers and burgeoning AI startups.
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FTC wants companies to stop manipulating customers by delaying or not cancelling physical or online subscription.
Initiating an Investigation
The Federal Trade Commission (FTC) has initiated an investigation into the financial entanglements between major tech corporations and smaller AI firms, specifically focusing on cloud service providers like Alphabet, Amazon, Microsoft, OpenAI, and Anthropic.
Letters from the FTC have been dispatched to Alphabet, Amazon, Anthropic, Microsoft, and OpenAI, compelling these entities to elucidate the ramifications of their investments on the competitive dynamics within the generative AI sector.
The Verge reported that the commission aims to meticulously scrutinize corporate partnerships and financial ventures involving AI providers to enhance its understanding of these intricate relationships and their potential impacts on industry competition.
Notably, Google and Amazon have made investments in Anthropic, while Microsoft maintains a close financial association with OpenAI.
The FTC is seeking detailed information on the specific terms of investment agreements, examining how these collaborations influence product launches and oversight privileges.
Additionally, the commission is interested in an analysis of the effects of these investments on market share, competition, and potential sales growth within the AI sector.
The inquiry also delves into whether there is competition for resources in the development of AI products and seeks information that companies may have disclosed to other government entities.
Also Read: DOJ, FTC Entangled in Jurisdiction Dispute Over Microsoft's Open AI partnership
FTC stated in its press release that the companies are given a 45-day window to respond to the regulatory agency's inquiries. Rima Alalily, Microsoft's Corporate Vice President of the Competition and Market Regulation Group, emphasized the global leadership of the United States in AI.
Alalily highlighted the collaborative efforts among significant American companies, such as Microsoft and OpenAI, as drivers of competition and innovation. Microsoft expresses eagerness to cooperate with the FTC by supplying the necessary information for the completion of its study.
Securing Funding from Major Corporations
Both Anthropic and OpenAI secured substantial funding from major corporations. Microsoft stands out as the primary investor in OpenAI, having been rumored to invest a significant $10 billion.
This financial association led to Microsoft's active involvement on OpenAI's board in a nonvoting observer role, particularly following the unsuccessful attempt to oust CEO Sam Altman, who then briefly joined Microsoft.
The close collaboration paved the way for Microsoft to integrate GPT-4-powered applications into its Copilot service.
In a separate investment scenario, Amazon injected $4 billion into Anthropic in September, while Google secured a 10 percent stake in the company through a $300 million investment in February.
AI developers frequently form partnerships with cloud providers like Google, Microsoft, and Amazon to access cost-effective resources, such as GPUs and processors essential for training, running, and refining large language models.
The government has displayed keen interest in investigating the intricate relationship between OpenAI and Microsoft. Allegedly, there have been disagreements between government entities, with the Department of Justice, over the initiation of the inquiry.
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