AI Enters its Antitrust Era

Trustbusters are coming for AI. 

This week, the Federal Trade Commission and Department of Justice have seemingly agreed on a battle formation for probing the rollicking world of generative AI for antitrust issues, according to multiple reports. Both agencies have stuck thorns into Big Tech’s side, and they’re eager to investigate exactly how the companies may be carving up the generative AI pie in anti-competitive ways. The question this time around: Have Big Tech companies become a little too smart?

Acqui-hire Fire Sale

The New York Times reported that the FTC and DOJ have jointly decided which agencies will go after which companies. According to the NYT, the DOJ will take the lead on chipmaker Nvidia, while the FTC will run point on OpenAI. This reportedly marks a detente for the two government agencies, as Politico reported in January that they tussled over who got to investigate OpenAI, the darling of the generative AI hype cycle.

The FTC isn’t limiting itself to OpenAI. The Wall Street Journal reported on Thursday that the FTC also will investigate a deal Microsoft struck with AI startup Inflection AI. What will prove key in this new era of antitrust wrangling isn’t just whether large tech companies are winnowing down the competitive landscape too much, but whether they’ve been too sneaky about it:

• Microsoft didn’t buy Inflection AI outright, but it did hire its cofounder and most of its staff while kicking the company $650 million as a licensing fee. This has the classic hallmarks of an “acqui-hire,” and the FTC is looking into whether the deal was structured specifically to avoid the scrutiny that comes with acquisitions over $119 million, per the WSJ.
• Microsoft has also maneuvered itself into an influential position in the AI landscape through its investment in OpenAI, and other Big Tech companies have followed suit. Amazon invested in AI startup Anthropic.

AI Misgivings: It’s been a slightly zesty week in generative AI. Meta’s head of AI, Yann LeCun, has been publicly squabbling with Elon Musk, and current and former employees at OpenAI, plus a handful from Google’s DeepMind unit, wrote an open letter calling for increased oversight of AI and more robust whistleblower protection. Stick it on the regulator tab.