Antitrust is coming for AI

The US government's two antitrust regulators struck a deal to divvy up major investigations into anti-competitive behavior in the AI industry. The Justice Department will look into Nvidia’s dominance over the chip market, while the Federal Trade Commission will investigate OpenAI and its lead investor, Microsoft.

In December, the FTC opened a preliminary inquiry into Microsoft's $13 billion stake in OpenAI, which makes ChatGPT. It’s an non-traditional deal, in which Microsoft receives half of OpenAI’s revenue until the investment is repaid, rather than traditional equity. But Microsoft also flexed its muscles after the sudden ouster of OpenAI CEO Sam Altman last year, offering to hire him and any defecting OpenAI employees, effectively pressuring the company to rehire him — which it did soon after. The UK’s Competition and Markets Authority also began probing the relationship between the two firms in December.

Meanwhile, Nvidia has become the undisputed leader of the AI chip industry with their powerful graphics processors powering the training and operation of generative AI models. The company recently disclosed in a filing with the US Securities and Exchange Commission that its pole position and market dominance has attracted regulatory scrutiny from the United Kingdom, though it didn’t specify the nature of the inquiry.

Noah Daponte-Smith, a United States analyst for Eurasia Group, sees this announcement “largely as a messaging exercise intended to show that DOJ [and] FTC will be just as dogged on antitrust issues in the AI space as in the rest of the Big Tech arena.” He sees the decision as more of a continuation of Biden’s aggressive antitrust regime than a policy position on the regulation of AI.

“My sense is that AI regulation will have to occur more through Congress and through executive actions not focused on competition,” he added.