Federal regulators strike deal: AI giants Microsoft, OpenAI and Nvidia face antitrust investigations, says report

Federal regulators have reached a deal permitting antitrust investigations into Microsoft, OpenAI, and Nvidia's dominant roles in the artificial intelligence industry. 

The development marks the strongest indication yet of escalating regulatory scrutiny of this powerful technology, as per a New York Times report.

The Justice Department and the Federal Trade Commission (FTC) finalized the deal over the past week, with completion expected in the coming days. 

According to two sources familiar with the matter, who requested anonymity due to the confidential nature of the discussions, the Justice Department will lead the investigation into Nvidia, the top maker of AI chips. At the same time, the FTC will focus on OpenAI and Microsoft. The report added that Microsoft has invested $13 billion in OpenAI and made deals with other AI companies.

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The agreement signals increased scrutiny from both the Justice Department and the FTC into AI, a technology advancing rapidly and potentially impacting jobs, information, and people's lives significantly. Both agencies have been proactive in the Biden administration's efforts to control the power of major tech companies. In a similar deal in 2019, the government investigated Google, Apple, Amazon, and Meta, subsequently suing each for alleged antitrust violations, the New York Times report added.

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For months, Nvidia, Microsoft, and OpenAI largely avoided the Biden administration's regulatory focus. However, this began to shift as generative AI, capable of producing human-like text, photos, videos, and audio, gained prominence in late 2022, sparking an industry frenzy, as per the report.

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Regulators recently indicated a desire to address developments in AI preemptively. In July, the FTC investigated whether OpenAI harmed consumers through data collection. In January, the FTC initiated a broad inquiry into strategic partnerships between tech giants and AI startups, including Microsoft's investment in OpenAI and Google’s and Amazon’s investments in Anthropic, another AI company, the report said.

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Despite these efforts, the United States trails behind Europe in AI regulation. Last year, European Union officials agreed on landmark rules to govern the fast-evolving technology, focusing on its riskiest applications. In Washington last month, a group of senators released legislative recommendations for AI, advocating for $32 billion in annual spending to bolster American leadership in the technology but refraining from calling for specific new regulations, the New York Times reported.

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The final discussions between the FTC and the Justice Department over AI companies occurred within the last week and involved senior officials from both agencies. The report further added that one source, an FTC official, noted the significance of these discussions.

In a February interview, Lina Khan, the FTC chair, emphasized that regarding AI, the agency aims to identify “potential problems at the inception rather than years and years and years later when problems are deeply baked in and much more difficult to rectify.”