Jodi Godoy
(Reuters) – The U.S. Justice Department and the Federal Trade Commission have reached an agreement that allows them to continue their antitrust investigation into the dominant roles that Microsoft (NASDAQ:), OpenAI and Nvidia (NASDAQ:) play in the artificial intelligence industry. This was reported by a source familiar with the situation.
Under the agreement, the US Department of Justice will take over the investigation into whether Nvidia violated antitrust laws, and the Federal Trade Commission will review the conduct of OpenAI and Microsoft.
Although OpenAI’s parent company is a non-profit organization, Microsoft has invested $13 billion in the for-profit subsidiary, representing a 49% stake.
Regulators finalized the deal last week and it is expected to be completed in the coming days, the person said.
The decision to split the industry mirrors a similar agreement between the two agencies in 2019 to split enforcement of big tech companies, which ultimately led to the Federal Trade Commission filing cases against Meta (NASDAQ:) and Amazon and the Justice Department suing Apple (NASDAQ:) and Google for alleged violations. These cases continue and the companies deny wrongdoing.
The agreement between the two agencies shows that regulatory scrutiny is gaining momentum amid concerns about concentration in industries that make up AI.
Nvidia has about 80% of the AI chip market, including custom AI processors made by cloud computing companies such as Google, Microsoft and Amazon.com (NASDAQ:). This dominance helps the company report gross margins of 70% to 80%.
An Nvidia representative declined to comment on the regulatory agreement. OpenAI did not immediately respond to a request for comment Thursday.
The FTC is also looking into Microsoft’s $650 million deal with artificial intelligence startup Inflection AI over concerns that the deal was an attempt to circumvent merger disclosure requirements, the person said.
The unusual deal reached in March allowed Microsoft to leverage Inflection’s models and hire most of the startup’s employees, including its co-founders.
Microsoft said in a statement Monday that the agreement with Inflection helped it accelerate work on Microsoft Copilot while allowing Inflection to “continue to pursue its independent business and ambitions as an artificial intelligence studio.”
The company takes its legal obligations to report transactions seriously and is confident it has met them, the spokesman said.
The investigation was first reported by the Wall Street Journal and the regulatory agreement was first reported by the New York Times.
The agreement between the two regulators comes after the Federal Trade Commission in January ordered OpenAI, Microsoft, Alphabet (NASDAQ:), Amazon and Anthropic to disclose recent investments and partnerships involving generative artificial intelligence companies and cloud service providers.
Last July, the Federal Trade Commission began investigating OpenAI over allegations that the company violated consumer protection laws by putting personal reputations and data at risk.
At a conference on artificial intelligence last week, US antitrust chief Jonathan Kanter spoke of “frameworks and trends in AI that should give us pause,” adding that the technology relies on vast amounts of data and computing power that could give already dominant companies benefit significantly. advantage.