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FTC launches AI inquiry into leading tech players

By Nithya Bose in Business News, posted January 30, 2024

The Federal Trade Commission will extensively study the artificial intelligence (AI) sector, with major players like Amazon, Alphabet, Microsoft, Anthropic, and OpenAI facing intense scrutiny.

FTC Chair Lina Khan announced the plan during the agency's tech summit on AI.

The study, named a "market inquiry," aims to investigate the investments and partnerships established between AI developers and leading cloud service providers.

This inquiry will be carried out under Section 6(b) of the FTC Act, granting the commission authority to examine these AI firms separately from its enforcement division.

This provision allows the FTC to issue civil investigative demands, compelling companies to provide detailed reports and written answers about their operations.

Microsoft: “We look forward to providing the FTC with the information it needs to complete its study”

Khan said: “At the FTC, the rapid development and deployment of AI is informing our work across the agency.

“There’s no AI exemption from the laws on the books, and we’re looking closely at the ways companies may be using their power to thwart competition or trick the public.”

A Google spokesperson said: “We hope the FTC’s study will shine a bright light on companies that don’t offer the openness of Google Cloud or have a long history of locking-in customers – and who are bringing that same approach to AI services.”

Rima Alaily, Corporate Vice President of Microsoft's competition and market regulation group, said: “Partnerships between independent companies like Microsoft and OpenAI, as well as among many others, are promoting competition and accelerating innovation.

“We look forward to providing the FTC with the information it needs to complete its study.”

Amazon and OpenAI declined to comment on the matter.

The FTC's initiative mirrors a similar inquiry conducted in 2022 into the prescription drug intermediary industry.

It required information about their business practices from the six largest pharmacy benefit managers.

Two years prior, the FTC undertook a similar study into past acquisitions by tech giants like Alphabet, Amazon, Apple, Microsoft, and Facebook (now Meta).

It focused on transactions not previously reported to antitrust agencies.

Khan said: “What AI liability regimes will ultimately look like is still an open question.

“Our enforcement experience in other domains will directly inform how the FTC approaches this work.”

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