FTC Launches Investigation Into Microsoft/OpenAI, Other Cloud/AI Partnerships

The U.S. Federal Trade Commission (FTC) announced investigations into Microsoft and OpenAI and other related partnerships between dominant cloud providers and the AI companies that might otherwise threaten to replace them.

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

In the opening phase of this investigation, the FTC has ordered five companies—Alphabet/Google, Amazon, Anthropic, Microsoft, and OpenAI—to explain their partnerships and investments involving generative AI companies and cloud providers. The goal is a “better internal understanding” of these relationships and how they impact the competitive landscape, the FTC says. Its findings will determine the next steps, which could include taking action to block relationships it deems anticompetitive.

Microsoft, Amazon, and Alphabet have each invested several billion dollars in generative AI startups, Microsoft most notably in OpenAI and Amazon and Alphabet in Anthropic. But Microsoft’s partnership with OpenAI is the most unique and the most troubling, as it seems specifically designed to skirt the antitrust laws that would prevent Microsoft from acquiring OpenAI while giving it many of the same benefits of doing so.

The companies have 45 days to reply.