US FTC Targets Big Tech 'AI Investment'... Launches Monopoly Investigation

Google, Amazon, and MS Asked for AI Investment Information
US Launches Antitrust Investigation Following UK and EU

The U.S. competition authority, the Federal Trade Commission (FTC), has launched an investigation into big tech companies' investments in artificial intelligence (AI) startups. Following the release of the generative AI 'ChatGPT,' big tech's AI investments have rapidly increased, prompting the FTC to closely examine whether these giant companies are effectively monopolizing the market and hindering competition.

On the 24th (local time), the FTC requested Alphabet, Google's parent company, Amazon, and Microsoft (MS) to submit information related to their investments in AI startups.

The FTC plans to focus its review on the impact of investment and collaboration relationships between big tech and AI startups on competition in the AI market. It will inquire about the influence big tech exerts on AI startups, the methods of cooperation in decision-making processes, and request internal documents that could shed light on transaction details and potential impacts on future competitive dynamics.

FTC Chair Lina Khan stated, "Through this investigation, we will determine whether investments and collaborations led by market-dominant companies distort innovation and impede fair competition."

This investigation comes amid a surge in big tech investments in AI startups following the success of ChatGPT. MS invested $13 billion (approximately 17.37 trillion KRW) in OpenAI, securing a 49% stake, and also poured funds into another AI company, Inflection. Google and Amazon have each committed to investing $2 billion (approximately 2.67 trillion KRW) and $4 billion (approximately 5.34 trillion KRW), respectively, in the AI company Anthropic. The concern is that big tech, leveraging their massive capital, are acquiring stakes in AI companies and influencing decision-making, thereby preempting the AI market and strengthening their dominance.

Previously, the European Union (EU) and UK competition authorities also launched antitrust investigations related to MS's investment in OpenAI. The EU Commission began investigating earlier this month whether MS's investment in OpenAI effectively constitutes a merger, while the UK's Competition and Markets Authority (CMA) started examining potential competition law violations related to the deal in December last year. Additionally, the EU, like the FTC, is investigating whether other big tech investments in AI companies violate antitrust laws.

The reason major countries' competition authorities have started investigating the cooperation between big tech and AI companies is analyzed to be linked to the unusual governance structure of OpenAI revealed during the abrupt dismissal and subsequent reinstatement of OpenAI CEO Sam Altman last year. MS's stake in OpenAI is below 50%, so it did not undergo antitrust merger review, but if it effectively exercises control, it should be subject to such review. Some speculate that MS pressured the OpenAI board to reinstate CEO Altman by offering to directly employ him and his staff during the dismissal incident.

In this context, the FTC also began investigating last year whether big tech deliberately avoided antitrust investigations during their AI startup investment processes. The FTC can review antitrust violations related to transactions exceeding $119 million, but it is reported that big tech did not notify the FTC of their investments despite investing tens of billions of dollars in AI startups.

FTC Commissioner Rebecca Kelly Slaughter said, "Big tech structured deals to evade U.S. merger laws," adding, "It is reasonable to think such investments could entrench markets dominated by a few."

This content was produced with the assistance of AI translation services.