The US is opening antitrust investigations into two of the world’s most valuable companies, Microsoft Corp and Nvidia Corp, over their dominance of the rapidly emerging field of artificial intelligence (AI), people familiar with the matter said.
Microsoft has poured more than US$13 billion into its partnership with OpenAI, tapping the startup’s generative AI technology for the Bing search service, Edge internet browser and Windows.
Nvidia, the world’s most valuable chipmaker, has acknowledged allocating its chips to customers it deems most likely to use them quickly, prompting concerns that it has too much power over the market for cutting-edge AI semiconductors.
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The country’s two antitrust agencies also agreed to divide responsibility over AI. The US Federal Trade Commission (FTC) would handle the inquiry into Microsoft’s ties with OpenAI, while the US Department of Justice (DOJ) would probe Nvidia’s dominance in AI chips, said the people, who asked not to be named discussing inter-agency negotiations.
The DOJ would retain oversight of Google, the people said.
The agencies reached the deal in the past few days after more than six months of negotiations, the people said. The agreement gives each agency authority to open an antitrust probe into the conduct of the respective companies and their recent deals.
The FTC has also opened a probe into whether Microsoft failed to properly notify the antitrust agencies about its deal with Inflection AI, the people said. In March, software giant Redmond agreed to pay the startup US$650 million to license its AI software and hired much of Inflection’s staff. The agency can levy fines if it determines Microsoft violated the law about reporting transactions.
Microsoft has not been contacted by the FTC regarding OpenAI, a Microsoft spokesperson said.
“Our agreements with Inflection gave us the opportunity to recruit individuals at Inflection AI and build a team capable of accelerating Microsoft Copilot, while enabling Inflection to continue pursuing its independent business and ambition as an AI studio,” Microsoft said in a statement. “We take our legal obligations to report transactions seriously and are confident that we have complied with those obligations.”
The FTC has been in the beginning stages of a probe into the cloud computing market, seeking public comments last year. As part of that inquiry, online rivals and others complained about Amazon.com Inc and Microsoft, the No. 1 and No. 2 cloud companies respectively, which control more than 55 percent of the market.
The agency also sought information from OpenAI last year, as part of a probe into whether the company engaged in unfair or deceptive practices that caused “reputational harm” to consumers.
Last week, the DOJ held a public workshop on competition in AI at Stanford University, featuring dozens of companies across the industry. While Nvidia was rarely mentioned by name, companies said the scarcity of high-powered chips needed to train AI foundation models was significantly impacting the industry.
Nvidia’s leaders have openly acknowledged they allocate the supply of chips and other products to customers, deciding who gets what on the basis of whether the would-be recipient is able to immediately put products to work in a data center that is ready to go.
This is a mechanism to ensure that data center operators do not hoard chips, Nvidia has said.
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