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US antitrust enforcement agencies will “urgently” investigate the artificial intelligence (AI) sector amid concerns that power over transformative technologies is being concentrated in the hands of a few well-funded companies.
In an interview with the Financial Times, Jonathan Cantor said the company is investigating “monopoly bottlenecks and the competitive landscape” in AI, including everything from computing power and the data used to train large language models to access to cloud service providers, engineering talent and critical hardware like graphics processing unit chips.
Kanter said regulators were concerned that the emerging AI field was “at the height of the competition, not the bottom”, and that they must act “urgently” to stop already-dominant tech companies from dominating the market.
“Sometimes the most meaningful interventions are when the interventions are done in real time,” he added. “The advantage of that is it's less invasive.”
Cantor, in his third year at the Justice Department, has led a tougher antitrust effort with the Federal Trade Commission, prosecuting cases against big tech companies including Google and Apple that the U.S. government claims are unfair monopolies in app stores, search engines, digital advertising and other services. He has worked closely with FTC Chairman Lina Khan.
He said regulators are looking at the generative AI sector and examining the competitive landscape for microchips.
Kanter said GPUs, needed to train law students, have become a “scarce resource.” Nvidia has dominated sales of cutting-edge GPUs, and its market capitalization overtook Apple on Wednesday to become the world's second-most valuable public company.
Kanter pointed to government efforts to boost domestic production, including the $39 billion in incentives in the CHIP Act, but added that antitrust regulators are looking at how chipmakers allocate cutting-edge products as demand soars.
“One thing to really think about is conflicts of interest — the trade-off between helping a competitor and helping customers,” Kanter said. “If decisions are made that indicate the company is focused on competitive outcomes rather than maximizing profits or creating shareholder value,” that would be a problem.
Since the release of OpenAI's ChatGPT chatbot in November 2022 caused a sensation, companies have been racing to secure multi-billion-dollar partnerships with the most promising AI companies and those building models and apps based on the technology.
Symbolic of such a deal was Microsoft's $13 billion investment in OpenAI, which came with exclusive rights to the startup's intellectual property and a share of profits, but stopped short of an outright acquisition.
Still, the FTC and competition regulators in the UK and EU have said they will investigate the relationship along with Google and Amazon's multibillion-dollar deals with rival Anthropik.
In March, Microsoft Chief Executive Satya Nadella hired Mustafa Suleiman, founder of another AI startup, Inflexion, and most of his 70 staff to launch a new consumer-AI division in a deal that some industry observers saw as a tactic to skirt antitrust laws and avoid formal investigations.
“Hiring by acquisition is something that antitrust enforcement is looking at,” Cantor said, declining to comment on specific transactions. “We’re not taking advantage of the style or formal features that these companies employ. [explain these deals]Our focus is on market realities.
“We focus on facts. If the form is different but the substance is the same, we will not hesitate to act,” he added. “We look at what the raw materials are to produce the product. Whether it's steel or engineering, it fits into the traditional paradigm that we hold dear.”
Microsoft has denied accusations that it exercises undue influence or de facto control through its investments and cloud-computing services. The company also has an investment in France's Mistral and has put $1.5 billion into Abu Dhabi-based AI group G42.
“The partnerships we're pursuing are clearly bringing competition to the market,” Brad Smith, president of the tech giant, told the Financial Times. “You could say that the Microsoft-OpenAI partnership has created this new AI marketplace,” and without that support, the startup “would not have been able to train or deploy models.”
When asked why Microsoft didn't buy Inflection, he said, “We didn't want to own the company. We wanted to hire some of the people who worked there.”
