U.S. Launches Antitrust Probe into AI Giants

U.S. launches antitrust probe into AI Giants. The U.S. Justice Department and the Federal Trade Commission (FTC) have agreed to launch antitrust investigations into Microsoft, OpenAI, and Nvidia due to their dominant positions in the artificial intelligence (AI) industry. The Justice Department will investigate Nvidia, while the FTC will focus on Microsoft and OpenAI.

Nvidia is particularly under scrutiny as it controls around 80% of the AI chip market, including custom AI processors used by major cloud computing companies like Google, Microsoft, and Amazon. Nvidia’s significant market share has allowed it to report gross margins between 70% and 80%.

This agreement between the Justice Department and the FTC is similar to a 2019 arrangement that divided enforcement responsibilities against Big Tech companies, with the FTC targeting Meta and Amazon, while the Justice Department pursued Apple and Google.

The investigations highlight concerns over potential antitrust violations and market concentration in the AI sector. Last year, the FTC began an investigation into OpenAI over allegations of violating consumer protection laws by compromising personal reputations and data. Additionally, Microsoft’s $13 billion investment in OpenAI’s for-profit subsidiary and its $650 million deal with AI startup Inflection AI are under examination. The FTC is scrutinizing whether the Inflection AI deal was structured to bypass merger disclosure requirements.

Read also: ECOWAS Strengthens Cyber Resilience in West Africa.

Microsoft has stated that its agreement with Inflection AI was intended to accelerate its work on Microsoft Copilot while allowing Inflection to pursue its independent business ambitions as an AI studio. Microsoft asserted its compliance with legal obligations.

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. The investigations underscore the importance of monitoring AI industry structures and trends that may give dominant firms a substantial advantage.

U.S. antitrust chief Johnathan Kanter recently emphasized these concerns at an AI conference, noting that reliance on massive data and computing power can entrench the positions of already powerful firms. Nvidia declined to comment, and OpenAI did not immediately respond to requests for comment. The Wall Street Journal and the New York Times first reported the investigation and the agreement between the regulators.