Big Tech Investments in Generative A.I. Companies Come Under FTC Scrutiny

The U.S. Federal Trade Commission has launched an inquiry into the investments made by companies including Microsoft and Amazon into smaller artificial intelligence firms like OpenAI, the company behind the digital art generator DALL-E.

The federal agency, which has the authority to regulate businesses with antitrust measures to foster competition, launched a specific type of investigative inquiry for studying market trends and business practices that usually end with a special report used to advise on future policy decisions and enforcement actions. In this inquiry, the FTC has sent compulsory orders to Google’s parent company Alphabet, Amazon, Microsoft, OpenAI, and Claude 2 chatbot maker Anthropic seeking confidential and privileged information about their investments and partnerships within 45 days.

The agency is asking for the strategic rationale of any investments made by the larger companies—Alphabet, Amazon and Microsoft—into the two smaller companies and others, as well as the practical implications of the investments made.

Artnet News has reached out to OpenAI about any investments made specifically tied to the DALL-E product but did not hear back by press time. The FTC did not appear to specifically call out companies like Stable Diffusion-maker Stability A.I. or Midjourney, two other generative A.I. companies subject to lawsuits by artists who allege their copyrights were violated in the training of such models.

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize A.I., we must guard against tactics that foreclose this opportunity,” FTC chair Lina M. Khan said in a statement. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”

As reported by the tech news website The Verge, the three larger companies have poured billions into OpenAI and Anthropic. For example, as recently as September, Amazon invested $4 billion in Anthropic. Different agencies within the federal government have also been keen on investigating the relationship between OpenAI and Microsoft, its largest investor, Politico revealed last week.

Beyond financial investments, regulators are concerned over the close integration of products—such as the blending of OpenAI’s headline-making ChatGPT into the Bing search engine.

Most of the language around such issues seem specific to text-generation products, though the technology is quickly advancing with generative A.I. platforms like GPT-4 able to blend text and image generation capabilities. Last year, the White House announced it had struck a deal with A.I. companies, including all those targeted by the FTC study, to “manage the risks” of artificial intelligence. Artists said the deal did nothing for them.

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