US companies to probe AI dominance of Nvidia, Microsoft, and OpenAI

A large Nvidia logo at a conference hall
Enlarge / Nvidia emblem at Impression 2024 occasion in Poznan, Poland on Could 16, 2024.

Getty Pictures | NurPhoto

The US Justice Division and Federal Commerce Fee reportedly plan investigations into whether or not Nvidia, Microsoft, and OpenAI are snuffing out competitors in synthetic intelligence expertise.

The companies struck a deal on easy methods to divide up the investigations, The New York Occasions reported yesterday. Below this deal, the Justice Division will take the lead function in investigating Nvidia’s conduct whereas the FTC will take the lead in investigating Microsoft and OpenAI.

The companies’ settlement “permits them to proceed with antitrust investigations into the dominant roles that Microsoft, OpenAI, and Nvidia play within the synthetic intelligence business, within the strongest signal of how regulatory scrutiny into the highly effective expertise has escalated,” the NYT wrote.

One potential space of investigation is Nvidia’s chip dominance, “together with how the corporate’s software program locks clients into utilizing its chips, in addition to how Nvidia distributes these chips to clients,” the report mentioned. An Nvidia spokesperson declined to remark when contacted by Ars immediately.

Excessive-end GPUs are “scarce,” antitrust chief says

Jonathan Kanter, the assistant lawyer normal answerable for the DOJ’s antitrust division, mentioned the company’s plans in an interview with the Monetary Occasions this week. Kanter mentioned the DOJ is inspecting “monopoly choke factors and the aggressive panorama” in AI.

The DOJ’s examination of the sector encompasses “all the things from computing energy and the info used to coach giant language fashions, to cloud service suppliers, engineering expertise and entry to important {hardware} comparable to graphics processing unit chips,” the FT wrote.

Kanter mentioned regulators are anxious that AI is “on the high-water mark of competitors, not the ground” and wish to take motion earlier than smaller rivals are shut out of the market. The GPUs wanted to coach giant language fashions are a “scarce useful resource,” he was quoted as saying.

“Generally essentially the most significant intervention is when the intervention is in actual time,” Kanter instructed the Monetary Occasions. “The great thing about that’s you may be much less invasive.”

Microsoft deal scrutinized

The FTC is scrutinizing Microsoft over a March 2024 transfer by which it employed the CEO of synthetic intelligence startup Inflection and a lot of the firm’s workers and paid Inflection $650 million as a part of a licensing deal to resell its expertise. The FTC is investigating whether or not Microsoft structured the deal “to keep away from a authorities antitrust overview of the transaction,” The Wall Road Journal reported immediately.

“Firms are required to report acquisitions valued at greater than $119 million to federal antitrust-enforcement companies, which have the choice to research a deal’s impression on competitors,” the WSJ wrote. The FTC reportedly despatched subpoenas to Microsoft and Inflection in an try “to find out whether or not Microsoft crafted a deal that might give it management of Inflection but additionally dodge FTC overview of the transaction.”

Inflection constructed a big language mannequin and a chatbot known as Pi. Former Inflection staff are actually engaged on Microsoft’s Copilot chatbot.

“If the company finds that Microsoft ought to have reported and sought authorities overview of its cope with Inflection, the FTC might deliver an enforcement motion in opposition to Microsoft,” the WSJ report mentioned. “Officers might ask a courtroom to wonderful Microsoft and droop the transaction whereas the FTC conducts a full-scale investigation of the deal’s impression on competitors.”

Microsoft instructed the WSJ that it complied with antitrust legal guidelines, that Inflection continues to function independently, and that the offers gave Microsoft “the chance to recruit people at Inflection AI and construct a staff able to accelerating Microsoft Copilot.”


Microsoft’s funding in OpenAI has additionally confronted regulatory scrutiny, notably in Europe. Microsoft has a profit-sharing agreement with OpenAI.

Microsoft President Brad Smith defended the partnership in feedback to the Monetary Occasions this week. “The partnerships that we’re pursuing have demonstrably added competitors to {the marketplace},” Smith was quoted as saying. “I’d argue that Microsoft’s partnership with OpenAI has created this new AI market,” and that OpenAI “wouldn’t have been capable of prepare or deploy its fashions” with out Microsoft’s assist, he mentioned.

We contacted OpenAI immediately and can replace this text if it supplies any remark.

In January 2024, the FTC launched an inquiry into AI-related investments and partnerships involving Alphabet, Amazon, Anthropic, Microsoft, and OpenAI.

The FTC additionally began a separate investigation into OpenAI final 12 months. A civil investigative demand despatched to OpenAI centered on probably unfair or misleading privateness and knowledge safety practices, and “dangers of hurt to customers, together with reputational hurt.” The probe centered partly on “era of dangerous or deceptive content material.”