Microsoft, Google: FTC investigates AI partnerships and collaborations

The US Federal Trade Commission (FTC) is concerned about collaborations between large cloud providers and leading developers of generative artificial intelligence (AI). It is particularly concerned about Microsoft's investment of USD 13 billion in OpenAI and the collaboration between Google and Anthropic. The latter two are actually competing with each other with their Gemini and Claude models, but are also strategic partners. In these cases, the FTC sees an increased risk that the younger AI companies could be completely bought up or otherwise taken over by the technology giants in the near future. The authority is also skeptical about the billion-euro investment by cloud market leader Amazon in Anthropic.

The relevant report published by the antitrust watchdog on Friday "sheds light on the question of how partnerships between large technology companies lead to lock-ins", explained FTC boss Lina Khan. Such collaborations could deprive other start-ups of important AI research results, which could undermine competition. More and more companies are relying on generative AI, Khan explained. Regulators and policy makers must therefore remain vigilant to ward off business strategies "that undermine open markets, opportunities and innovation".

The authors of the report shed light on aspects of the structure of partnerships between cloud providers and AI developers. For example, they look at the equity and revenue-sharing rights as well as certain advisory, control and exclusivity rights that Microsoft & Co. receive as part of their financing. The competition watchdogs are also concerned about obligations that require OpenAI and Anthropic to spend a large proportion of their partner's investments on their cloud services. The deals also include access to "large amounts of computer resources at reduced prices", intellectual property rights relating to the latest AI models and certain financial and training data. In addition, there would be opportunities to expand current products – such as the integration of AI applications into cloud offerings or other solutions.

EU antitrust watchdogs also have questions

Furthermore, the FTC is critical of the ability of collaborations to influence access to computer resources and highly skilled workers in a way that could massively impair competition. It also criticizes the potential of the deals to increase contractual and technical switching costs for AI developer partners. This would make it more difficult for OpenAI and Anthropic to find other cloud service providers. It remains to be seen what the new leadership of the FTC under the second Trump administration, which takes office next week, will do with the results.

Former EU Competition Commissioner Margrethe Vestager said in the summer that Microsoft's investment in OpenAI was not yet a case for a review under merger control rules. However, she said that both companies would be asked questions under antitrust rules "to understand whether certain exclusivity clauses could have a negative impact on competitors". The EU executive also wants to scrutinize the impact of the agreement between Google and Samsung to pre-install Gemini Nano on certain Samsung devices. There is a risk that tech giants could make it difficult for smaller developers of AI models to "reach end users".

(axv)