Nvidia, Microsoft, OpenAI Face US Antitrust Investigations

The Justice Department of Justice (DOJ) and the Federal Trade Commission (FTC) have entered into an agreement to initiate antitrust investigations into Microsoft, OpenAI, and Nvidia, examining the influence of these major players in the artificial intelligence (AI) industry, according to sources cited by The New York Times.

Under this arrangement, the DOJ will spearhead the investigation into Nvidia, the foremost producer of AI chips, to determine whether its conduct has violated antitrust laws. Meanwhile, the FTC will lead the inquiry into the activities of OpenAI, known for its ChatGPT chatbot, and Microsoft, which has invested US$13 billion in OpenAI and partnered with other AI firms.

“Both the DOJ and the FTC have been at the forefront of the Biden administration’s efforts to curb the influence of major technology corporations,” the NYTreported. This effort mirrors a similar agreement in 2019, which led to investigations and subsequent lawsuits against Google, Apple, Amazon, and Meta on grounds of antitrust violations.

Despite initial avoidance, Nvidia, Microsoft, and OpenAI have now come under scrutiny as generative AI (GenAI) technology, capable of producing human-like text, images, videos, and audio, gained widespread attention in late 2022, sparking industry fervor.

Recent regulatory actions underscore a proactive stance toward AI developments. In July, the FTC launched an investigation into potential consumer harm stemming from OpenAI’s data collection practices. In January, the FTC initiated a broad inquiry into strategic partnerships between tech giants and AI startups, including Microsoft’s investment in OpenAI and similar ventures by Google and Amazon.

“As startups such as OpenAI and Anthropic gain traction in the generative AI market, industry giants like Google, Microsoft, Amazon, and Meta are engaged in an AI race, investing heavily to integrate the technology and secure their positions in a market projected to surpass US$1 trillion in revenue within a decade,” according to a CNBC article.

Microsoft’s significant investment in OpenAI exemplifies this trend. Initially investing US$1 billion in 2019, Microsoft has seen a return of approximately US$13 billion, and relies on OpenAI's models for its Copilot chatbot and to provide open-source models through its Azure cloud platform.

“These significant investments are necessitated by the exorbitant costs associated with building and training AI models, primarily reliant on specialized chips, predominantly supplied by Nvidia,” reads the NYT article. “Meta, developing its AI model called Llama, has disclosed spending billions on Nvidia’s graphics processing units, contributing to the chipmaker’s remarkable year-over-year revenue growth”.

News of the impending antitrust investigation follows an open letter from current and former OpenAI employees expressing concerns regarding the rapid advancement of the AI industry amid inadequate oversight and whistleblower protections.

“AI companies possess substantial non-public information about the capabilities and limitations of their systems, the adequacy of their protective measures, and the risk levels of different kinds of harm,” reads the letter. “However, they currently have only weak obligations to share some of this information with governments, and none with civil society. We do not think they can all be relied upon to share it voluntarily.”

The FTC’s decision to conduct a study on AI industry giants, including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI, underscores the regulatory commitment to scrutinizing the sector. Lina Khan, FTC Chair, announced this inquiry in January, describing it as a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.” 

By leveraging its authority under Section 6(b) of the FTC Act, the agency can independently investigate AI companies and issue civil investigative demands, compelling companies to provide detailed reports and respond to inquiries.

“At the FTC, the rapid development and deployment of AI is informing our work across the agency,” Khan said about the January study. “There is no AI exemption from the laws on the books, and we’re looking closely at the ways companies may be using their power to thwart competition or trick the public.” 

In response to queries, OpenAI has remained silent, while Microsoft and Nvidia declined to offer any comments, according to CNBC, The New York Times, and The Guardian.