• 14 Jul, 2024

Why Microsoft, OpenAI and Nvidia are facing antitrust investigations

Why Microsoft, OpenAI and Nvidia are facing antitrust investigations

The United States Department of Justice and the Federal Trade Commission work to eliminate anti-competitive behavior in the field of intelligence.

The United States Department of Justice and the Federal Trade Commission (FTC) have reached an agreement on how to conduct an antitrust investigation against technology giants Microsoft, Nvidia and OpenAI.

These companies are major players in the field of artificial intelligence generation: OpenAI is the non-profit startup behind ChatGPT, a popular chat powered by artificial intelligence. Microsoft, the world's largest company by market capitalization, has invested more than $13 billion in OpenAI and holds a 49% stake in the profitable company. .

Chipmaker Nvidia is a world leader in graphics processing units (GPU), the main tool needed for intelligence. The company was recently valued at $3 trillion, surpassing Apple as the second largest company in the world.

US authorities want to know whether tech giants are using anti-competitive practices to dominate the artificial intelligence industry.

According to several American reports, under the terms of the agreement, the Federal Trade Commission will investigate Microsoft and OpenAI, and the Department of Justice will investigate Nvidia.
What is the US government investigating?
Policymakers and observers outside the U.S. government are concerned about the dominance of certain companies in the industry and the possibility that it will squeeze smaller competitors and startups through unfair business practices. The US government has previously investigated Google's control over search engines and Meta's control over social media, including Facebook, Instagram and WhatsApp.

Dirk Orr, director of competition policy at the Center for International Law and Economics in Portland, Oregon, said the cases are part of a major shift in U.S. policy over the past five years. more recently, to more regulation after years of market stagnation.

– Law enforcement agencies in the United States and the European Union are very interested in pursuing prosecutions in the field of artificial intelligence. In their eyes, it's the next big thing, and they argue, rightly or wrongly, that their failure to embrace the competition in the early days of Web 2.0 is getting more attention. into less competitive markets than might otherwise be the case. Orr told Media.
Why was the investigation split between two government agencies? The Federal Trade Commission and the Department of Justice are responsible for enforcing federal antitrust laws.

The DOJ is a criminal law enforcement agency and the FTC is a civil law enforcement agency, but their roles can overlap. Both agencies should notify each other before the start of an antitrust investigation because they have responsibilities.

In 2019, the two agencies worked together on a trademark case against Facebook, Amazon, Apple, and Google parent Alphabet, as the two tech companies were sued for allegedly violating antitrust laws. .

Experts say investigations into Microsoft, Nvidia and OpenAI are likely to follow a similar path. What will they do now?
U.S. Attorney Barry Bennett said the two law enforcement agencies could act before the statute of limitations expires or seek to make progress in the investigation before the U.S. presidential election. in November.

Bennett told Media that there may be "a preliminary impression that Congress lacks the unity and desire to enact legislation to provide legal avenues to prosecution for companies that dominate the AI ​​ecosystem". .

In this climate, the Federal Trade Commission and the Department of Justice have had a busy year. The U.S. Department of Justice filed a lawsuit against Apple in March, accusing it of dominating the U.S. smartphone market, while the Federal Trade Commission is investigating a $650 million deal between Microsoft and another artificial intelligence startup, Inflection. Do these companies expect to be investigated?
Microsoft, OpenAI, or Nvidia won't be surprised when federal investigators come to investigate.

In January, the FTC launched an investigation into Microsoft, Amazon, and Alphabet (Google's parent company) in OpenAI and Anthropic, another artificial intelligence company.

At the time, FTC Chairwoman Lina M Khan said the agency wanted to "clarify whether investments and partnerships between leading companies are at risk of stifling innovation and undermining the fair competition."
What can the trial do? Bennett said the goal of the investigation is to make the tech industry more competitive — a goal that regulators have met in the past.

The US government broke up the giant AT&T in 1984, and in 2001 won a lawsuit against Microsoft for infringing the Windows operating system's web browser.

Bennett said both cases "generate creative energy and stimulate innovation in science and technology."

But Orr said he wasn't sure if the cases against Nvidia, Microsoft and Open AI would hold up in court.

- There are two major problems in this case of AI. First, competition in the field of artificial intelligence is currently very intense, so this is not considered a good topic for antitrust intervention.

"The second big problem is that deals with big tech companies seem to be very important for AI startups," Orr said, adding that more regulation could take longer to fund and invest. , will delay research and innovation.

Syed Haider

Syed Haider