FTC Is Looking Into Microsoft’s Investment in OpenAI

FTC Is Looking Into Microsoft’s Investment in OpenAI – The recent controversy surrounding OpenAI has not only drawn the scrutiny of UK regulators but also sparked an investigation by the Federal Trade Commission (FTC) into Microsoft’s investment in the Sam Altman-led company, examining potential violations of US antitrust laws.

FTC Chair Lina Khan wrote in a New York Times op-ed earlier this year that “the expanding adoption of AI risks further locking in the market dominance of large incumbent technology firms.” Bloomberg’s report emphasizes that the FTC inquiry is in its early stages, and no formal investigation has been initiated. However, Khan and her team are said to be carefully evaluating the situation and considering their available options. 

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An additional challenge for regulation stems from OpenAI being a non-profit, as transactions involving non-corporate entities are not legally mandated to be reported. Furthermore, the $13 billion investment by Microsoft doesn’t legally grant it control over OpenAI, adding complexity to potential government interventions. 

Despite this, the recent sequence of Altman’s removal and reinstatement, orchestrated with significant involvement from Microsoft, implies that the absence of control over the nonprofit is more of a technicality than a true reflection of the underlying relationship. Today, the UK’s Competition and Markets Authority (CMA) announced its contemplation of an investigation into the dynamic between the two leading players in AI. 

The statement alludes to “recent developments,” implicitly pointing to the Altman-Microsoft controversy. “The CMA will review whether the partnership has resulted in an acquisition of control — that is, where it results in one party having material influence, de facto control or more than 50% of the voting rights over another entity,” the CMA wrote in its news release.

Khan, who is also scrutinizing Microsoft’s $69 billion acquisition of Activision Blizzard, has previously highlighted the imperative for regulations in the realm of AI. “As these technologies evolve, we are committed to doing our part to uphold America’s longstanding tradition of maintaining the open, fair and competitive markets that have underpinned both breakthrough innovations and our nation’s economic success.”

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“Without tolerating business models or practices involving the mass exploitation of their users,” the youngest-ever FTC chair wrote in May. “Although these tools are novel, they are not exempt from existing rules, and the F.T.C. will vigorously enforce the laws we are charged with administering, even in this new market.”

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