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US Regulators Launch Antitrust Investigations into Microsoft, OpenAI and Nvidia

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Microsoft, OpenAI and Nvidia

The U.S. Justice Department and the Federal Trade Commission have agreed to start antitrust investigations into Microsoft, OpenAI, and Nvidia. These companies are major players in the artificial intelligence industry. This decision comes from a reliable source familiar with the situation.

According to the agreement US department of Justice will focus on investigating whether Nvidia has broken any antitrust laws. Meanwhile the Federal Trade Commission FTC will look into the actions of OpenAI and Microsoft.

Although OpenAI’s parent organization is a nonprofit. Microsoft invested $13 billion for profit subsidiary of OpenAI, aiming to acquire a 49% ownership stake.

The regulators agreed on the deal during the last week, and it should finished very soon according to the person.

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The decision to split up the industry is like a previous deal in 2019 where both agencies agreed to share responsibilities for regulating Big Tech. This resulted in the FTC taking legal action against Meta and Amazon, while the DOJ sued Apple and Google for supposed rule breaking. These lawsuits are still happening, and the companies involved say they didn’t do anything wrong.

The deal between the two agencies indicates that they are paying more attention to regulating the industries involved in AI. Because people worried that these industries are becoming too focused on just a few big companies.

Nvidia controls about 80% of the market for AI chips, which includes the special AI processors. Which used by big cloud computing companies such as Google, Microsoft, and Amazon.com. This dominance allows Nvidia to make a lot of profit, with gross margins ranging from 70% to 80%.

A representative for Nvidia chose not to say anything about the agreement reached by the regulators. OpenAI didn’t respond right away when asked for a comment on Thursday.

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The FTC is investigating Microsoft’s $650 million deal with an AI startup called Inflection AI. They worried that Microsoft might have done this deal to avoid having to disclose details about the merger as required by law, according to the person.

In a unique arrangement made in March, Microsoft gained the ability to utilize Inflection’s models and bring on board most of the startup’s employees, including its co-founders.

Microsoft explained in a statement on Monday that the deal with Inflection enabled them to speed up their progress on Microsoft Copilot. At the same time, it allowed Inflection to keep working on its own goals as an independent AI studio.

The company’s spokesperson emphasized that they take their legal duties to report transactions seriously and believe they have followed them correctly.

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The investigation was initially mentioned by the Wall Street Journal. While the agreement between the regulators was reported by the New York Times.

The agreement between the two regulators follows an action taken by the FTC in January. The FTC directed OpenAI, Microsoft, Nvidia, Alphabet, Amazon, and Anthropic to share details about their recent investments. Also about their partnerships concerning companies working on generative AI and cloud services.

In July of last year, the FTC started looking into OpenAI. They were investigating claims that OpenAI might have broken consumer protection laws by potentially endangering personal reputations and data.

At an AI conference last week, Jonathan Kanter, the US antitrust chief, spoke about concerns regarding the patterns and developments in AI. He mentioned that AI heavily depends on large volumes of data and computing capabilities. This reliance could give significant advantages to companies that are already dominant in the field.

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  1. Pingback: Nvidia's Stock Split Mania: Here's Why It is a Game Changer - Sports Groovy

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