US prepares for antitrust showdown with AI heavyweights Nvidia, OpenAI, Microsoft

The US’s top antitrust regulators are stepping up their scrutiny of the country’s most powerful artificial intelligence creators.

The Department of Justice and the Federal Trade Commission have launched and split investigations into Nvidia (NVDA), Microsoft (MSFT) and OpenAIaccording to reports from the New York Times and the Wall Street Journal.

The DOJ will lead an investigation into Nvidia’s (NVDA) dominance of the market for microprocessors that power AI, according to the Times. The FTC would lead antitrust investigations into Microsoft and OpenAI.

The new scrutiny is part of a broad effort by the Biden administration to rein in what it sees as anticompetitive behavior across a range of industries, from healthcare to groceries to technology.

The administration has previously alleged anticompetitive conduct against tech giants Apple (AAPL) and Amazon (AMZN), and claimed that Microsoft’s acquisition of gaming giant Activision Blizzard would create a monopoly in the gaming market.

It also brought to trial a case opened by the Trump administration regarding Alphabet’s (GOOG, GOOGL) dominance in search. A judge is currently evaluating the evidence in that case, with a decision expected this year.

The efforts were not always successful. The FTC failed in its challenge against Microsoft’s acquisition of Activision Blizzard and failed in a separate battle to prevent Meta (META) from purchasing VR company Within.

The FTC made it clear last year that it wanted to take a closer look at the burgeoning field of AI.

He stated last July that he had started a investigation based on consumer protection on OpenAI’s data collection practices and the potential harm caused by the production of its large language models (LLMs).

Then in January it launched a broader investigation into deals between big tech companies and AI developers, including Microsoft’s $13 billion investment in OpenAI and Alphabet’s relationships with rival AI developers. Anthropic.

The Wall Street Journal reported that the FTC’s investigation into Microsoft will extend beyond an examination of the tech giant’s conduct to include an agreement reached with the AI ​​developer Inflection AI.

According to the Journal, the FTC wants to know why Microsoft chose to pay Inflection a $650 million licensing fee to resell Inflection’s technology rather than buy it. The regulator’s interest was piqued, according to the report, because Microsoft also acquired most of Inflection’s staff as part of the deal.

In response to the report, Microsoft’s spokesperson said that the agreements with Inflection gave it the opportunity to recruit Inflection AI staff and accelerate the development of its AI chat interface. Microsoft Copilot.

The story continues

This structure, Microsoft said, allows Inflection to continue pursuing its independent business and ambitions as an AI studio.

“We take our legal obligations to report transactions under the HSR Act seriously and are confident that we have met these obligations,” the spokesperson said.

Both companies received subpoenas from the FTC requesting information tied to the deal, the Journal reported.

Nvidia declined to comment on the reports.

Michael Carrier, an antitrust expert and co-director of the Rutgers Institute for Information Policy and Law, said antitrust regulators who want to test Microsoft’s deal against antitrust laws will look at the substance rather than the structure of the deal.

“The agency will attempt to determine whether Microsoft restructured this agreement in a way that gave it control of InflectionAI while avoiding FTC review of the transaction,” Carrier said.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

Click here for the latest technology news that will impact the stock market.

Read the latest financial and business news from Yahoo Finance