US Sets Stage for Antitrust Probes into Microsoft, OpenAI, and Nvidia

The U.S. Justice Department and the Federal Trade Commission (FTC) have formalized an agreement that paves the way for potential antitrust investigations into Microsoft, OpenAI, and Nvidia.

This decision underscores the increasing regulatory scrutiny on these tech giants, which dominate the burgeoning artificial intelligence (AI) industry. The arrangement between the two agencies, confirmed by a source familiar with the matter, highlights growing concerns about market concentration in AI-related sectors.

Microsoft and Nvidia, among the world’s largest companies by market capitalization—with Nvidia recently surpassing $3 trillion—are at the forefront of this scrutiny. U.S. antitrust enforcers have expressed various concerns, including the substantial data advantage held by Big Tech companies for AI model training, the impact of generative AI on the creative market, and potential regulatory circumventions via strategic partnerships.

The current move echoes a 2019 agreement between the FTC and the DOJ to divide enforcement responsibilities against Big Tech, which led to significant antitrust cases against Meta, Amazon, Apple, and Google. These cases are ongoing, with the companies denying any wrongdoing. In this new phase, the DOJ will focus on investigating Nvidia, while the FTC will examine the practices of OpenAI and Microsoft.

Nvidia commands approximately 80% of the AI chip market, essential for training AI models, which enables it to maintain gross margins between 70% and 80%. The company’s market dominance has spurred regulatory concerns. Meanwhile, OpenAI, although founded as a nonprofit, has significant financial ties to Microsoft, which has invested $13 billion into its for-profit subsidiary for a 49% stake.

Spokespersons for Nvidia and OpenAI have declined to comment on the agreement, while Microsoft asserts its commitment to legal compliance and confidence in meeting its obligations. The FTC’s scrutiny of Microsoft extends to its $650 million deal with AI startup Inflection AI, probing whether it aimed to bypass merger disclosure requirements.

This regulatory initiative follows the FTC’s January directive requiring major AI companies, including OpenAI, Microsoft, Alphabet, Amazon, and Anthropic, to provide detailed information on their investments and partnerships involving generative AI and cloud services. This directive is part of a broader FTC market inquiry announced by Chair Lina Khan, emphasizing that AI development must comply with existing competition laws.

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity, “said FTC Chair Lina M. Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”

DOJ antitrust chief Jonathan Kanter has articulated concerns over AI’s reliance on extensive data and computing power, which may entrench the dominance of already powerful firms. This stance reflects a broader apprehension about the rapid evolution of AI and its societal impacts, as echoed by current and former employees of AI companies. These employees have highlighted the potential risks posed by AI advancements, including inequality, misinformation, and even existential threats.

A group of current and former OpenAI employees recently published an open letter urging for stronger oversight and whistleblower protections. They argue that the financial incentives for AI companies undermine effective self-regulation and that current whistleblower protections are inadequate for the unique risks posed by AI technologies.

This confluence of regulatory actions and internal industry concerns marks a significant chapter in the oversight of AI technology, as U.S. authorities aim to balance innovation with competition and consumer protection. The outcomes of these investigations could reshape the AI landscape, influencing how major players like Microsoft, OpenAI, and Nvidia operate within this critical sector.