International watchdogs are intensifying their scrutiny of leading tech giants, collaborating to examine potential monopolistic behaviors and partnerships that may skew the market.
On July 23, regulatory bodies from the United States, European Union, and United Kingdom issued a joint statement aimed at ensuring effective competition in the AI sector and outlining principles to protect consumer interests.
Consensus between the international trio of watchdogs
According to Reuters and Euracity, the statement noted that the rapid development of generative AI in recent years has introduced new competitive dynamics, spurring opportunities, innovation, and growth.
However, these “technological inflection points” also pose potential competitive challenges. “Our legal powers and jurisdictional contexts differ, and ultimately, our decisions will always remain sovereign and independent,” the statement said.
It was co-signed by the EU Commission, the UK’s Competition Markets Authority (CMA), the US Federal Trade Commission (FTC), and the Department of Justice. “Due to the international nature of these problems, we are working to share an understanding of the issues as appropriate and are committed to using our respective powers where appropriate.”
AI giants network under scrutiny
The competition authorities highlighted three primary risks: concentrated control of critical inputs like data or advanced AI chips, the entrenchment or extension of market power in AI-related markets, and alliances among key players.
There are concerns about an “interconnected web” of over 90 partnerships and relationships among a few major tech firms and AI research organizations, potentially leading to near-monopolistic control of the sector. The watchdogs have solicited input on these partnerships, including those between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft’s connections to Inflection.
To mitigate these risks, the authorities outlined principles to maintain competition in the AI ecosystem. These include promoting fair dealing to avoid exclusionary tactics, encouraging interoperability of AI products and services to foster competition and innovation, and ensuring a variety of options for businesses and consumers to prevent undue influence by any single entity.
The statement also acknowledged other potential competition risks, such as algorithmic collusion, price discrimination, and unfair practices.
Anti-trust heat hot on the trail
The CMA has been examining various partnerships between big tech companies and foundation model developers, including Amazon and Anthropic. The joint statement “does not alter its merger review process concerning its AI partnership cases,” which also include Microsoft and OpenAI’s partnership.
The CMA is currently investigating whether Microsoft’s aggressive hiring of Inflection AI employees and related agreements constitute a covert merger that could stifle competition. Microsoft reportedly paid US$650 million to Inflection for access to its AI models and to reimburse the startup’s investors.
The EU executive has reportedly dropped a merger investigation into Microsoft’s investment and partnership with OpenAI but continues to examine potential anti-competitive practices.
The FTC launched its investigation into such partnerships in January. In June, Bloomberg reported that the FTC was probing Microsoft and Nvidia over their dominance in the rapidly emerging field of artificial intelligence.
Under pressure from the FTC’s investigation, Microsoft and Apple recently relinquished their OpenAI board seats, although this move is unlikely to alleviate the FTC’s concerns.
Both companies maintain strong ties with OpenAI, with Microsoft having invested over US$13 billion into the startup and Apple previously striking a deal to offer ChatGPT on the iPhone, iPad, and Mac as part of a suite of AI features.
