US Regulators Launch Antitrust Investigations into Microsoft, OpenAI, and Nvidia

The U.S. Justice Department and the Federal Trade Commission (FTC) have agreed to initiate antitrust investigations into Microsoft, OpenAI, and Nvidia, focusing on their significant influence within the artificial intelligence industry, according to an insider.

As per the agreement, the Justice Department will lead the investigation into Nvidia’s potential antitrust violations, while the FTC will scrutinize the practices of OpenAI and Microsoft.

Despite OpenAI’s nonprofit status, Microsoft has invested $13 billion in its for-profit subsidiary, aiming for a 49% stake.

The agreement was finalized over the past week and is expected to be officially completed soon, the source indicated.

This division of responsibilities between the agencies is reminiscent of a 2019 arrangement to tackle Big Tech, which resulted in the FTC filing cases against Meta and Amazon, and the DOJ suing Apple and Google for alleged antitrust violations. These cases are ongoing, with the companies denying any wrongdoing.

The new agreement underscores increasing regulatory scrutiny amid growing concerns about market concentration in AI-related industries.

Nvidia commands about 80% of the AI chip market, including custom processors for cloud computing giants like Google, Microsoft, and Amazon. This dominance allows Nvidia to achieve gross margins of 70-80%.

Nvidia declined to comment on the regulatory agreement. OpenAI also did not respond to a request for comment.

The FTC is additionally investigating Microsoft’s $650 million deal with AI startup Inflection AI. There are concerns that the deal might have been an attempt to bypass merger disclosure requirements, the source said.

The deal, finalized in March, permitted Microsoft to utilize Inflection’s models and hire most of its staff, including the co-founders.

Microsoft stated on Monday that the agreement with Inflection accelerated its work on Microsoft Copilot while allowing Inflection to continue as an independent AI studio. The company emphasized its commitment to legal compliance and expressed confidence that it had adhered to all reporting obligations.

The Wall Street Journal first reported the probe, while the New York Times reported the regulators’ agreement.

This regulatory action follows an FTC order in January for OpenAI, Microsoft, Alphabet, Amazon, and Anthropic to provide details on their investments and partnerships with generative AI companies and cloud service providers.

In July last year, the FTC began investigating OpenAI over allegations that it violated consumer protection laws by jeopardizing personal reputations and data.

Recently, U.S. antitrust chief Jonathan Kanter highlighted at an AI conference the “structures and trends in AI that should give us pause,” noting that the technology’s reliance on vast amounts of data and computing power could significantly advantage dominant firms.

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