Why are antitrust authorities reportedly preparing to fight over artificial intelligence?

Companies like OpenAI, Microsoft and Nvidia have positioned themselves as winners in the race to own the latest wave of artificial intelligence. But could it be so? too dominant?

That’s what federal regulators tasked with ensuring fair competition between companies will be examining in the coming months, according to recent reports in The New York Times and other media. The Federal Trade Commission and the Department of Justice have reportedly reached an agreement to share oversight as they launch an investigation into this emerging space.

What’s behind this movement: The antitrust investigation is just one front in the Biden administration’s efforts to shape control over this new technology and curb its potentially worst trends.

Biden also hired leaders at these agencies who, after decades of taking a more relaxed approach, sought to revitalize how the government enforces antitrust laws.

In January, the FTC announced an investigation into partnerships between tech giants and high-flying startups such as Microsoft and OpenAI, likely to examine whether the arrangements are intended to bypass legal checks required for a more traditional acquisition.

FTC Chair Lina Khan, a noted critic of Big Tech before joining the administration, said the effort is aimed at solving problems as technology develops before dominance is established.

What is it about: As part of this new deal, the Justice Department will investigate Nvidia, which has cornered the AI ​​chip market and as a result has become the world’s second most valuable public company, according to Axios.

Meanwhile, the FTC is reportedly investigating Microsoft’s $13 billion investment in OpenAI. The Washington Post reported that the FTC is also reviewing Microsoft’s $650 million deal with AI startup Inflection and whether the quasi-acquisition was an attempt to “avoid government antitrust controls.”

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As the primary federal antitrust enforcers, this is not the first time the two agencies have divided and won in this type of investigation. They previously reached a similar agreement in 2019 regarding an investigation into Silicon Valley giants Facebook, Amazon, Apple and Google.

Why is it important: According to Stephen Weymouth, distinguished associate professor at Georgetown University’s McDonough School of Business and author of the book, network effects typically mean that digital markets tend toward dominance by a small number of players Digital Globalization: Politics, Politics and the Paradox of Governance. Weymouth said that “the largest companies need to realize that the administration is not willing to turn a blind eye to anti-competitive behavior,” but noted that Congress has so far done little in this area.

Weymouth said the move means the Biden administration is serious about fostering competition between companies as the United States faces competition with China in rapidly developing technologies.

“The era of loose regulatory control that existed before recent advances in generative AI is over for now,” Weymouth said in an email. “This administration appears to recognize the enormous potential of artificial intelligence to transform the economy and is unwilling to sit idly by and allow all the benefits to accrue to a small handful of companies.”

“This could be good news for smaller players looking to compete, although it is unclear whether antitrust policy has enough resources to deter concentration and increase competition in the industry, especially before it causes any obvious harm to consumers,” he added.