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The Justice Department and Federal Trade Commission are nearing an agreement to divvy up investigations of potential anticompetitive conduct by some of the world’s largest technology companies in the artificial intelligence industry, according to three people with knowledge of the negotiations.
As part of the arrangement, the DOJ is poised to investigate Nvidia and its leading position in supplying the high-end semiconductors underpinning AI computing, while the FTC is set to probe whether Microsoft, and its partner OpenAI, have unfair advantages with the rapidly evolving technology, particularly around the technology used for large language models.
The three companies have been leaders in AI, with the technology powering Nvidia today to a $3 trillion market value, second only to Microsoft.
The deal has been negotiated for nearly a year. And while leaders of both agencies have expressed urgency in ensuring that the rapidly growing artificial intelligence technology is not dominated by existing tech giants, until an agreement is finalized, there was very little investigative work they could do.
The agreement is not yet final, but could be completed as soon as this week.
Spokespeople for the DOJ, FTC, Nvidia, Microsoft and OpenAI did not immediately respond to requests for comment.
As part of the agreement, the FTC is retaining its authority over Amazon and the DOJ is retaining its authority over Google, the people said. While both of those companies have already been hit with antitrust lawsuits, AI-related investigations into both were also held up pending an agreement, the people said.
Spokespeople for Amazon and Google did not immediately respond for comment.
The New York Times first reported the division of Nvidia, Microsoft and OpenAI late Wednesday. POLITICO reported in January that the FTC and DOJ were negotiating over who would investigate Microsoft and OpenAI.
The two agencies share antitrust enforcement in the U.S. and must clear any investigation with their counterpart prior to starting. That process is typically perfunctory and done along industry lines, though in tech markets, the lines are blurred.
Over the last 18 months, both FTC Chair Lina Khan and DOJ antitrust head Jonathan Kanter have said it is crucial to ensure that the rapidly evolving field of AI not be controlled by just a handful of companies in the same way they believe that happened with social media, online advertising, commerce, search, and other high-tech offerings over the last 15 years.
The FTC is conducting studies of the cloud computing market and the AI investments of Microsoft, Amazon and Google. Last week, the DOJ hosted a day-long workshop at Stanford University about competition and AI. The FTC also recently held an AI workshop.
At issue is the so-called AI stack, which includes high-performance semiconductors, massive cloud computing resources, data for training large language models, the software needed to integrate those components and consumer-facing applications like ChatGPT.
The jurisdictional split between the two agencies previously came to a head most prominently in 2019 when then-FTC Chair Joseph Simons and then-DOJ antitrust chief Makan Delrahim reached a handshake deal to allow the FTC to pursue monopolization investigations into Meta (then Facebook) and Amazon, while the DOJ would handle investigations of Google and Apple. That agreement was also reached after roughly a year of negotiations, according to people with knowledge of the process.
Since then, all four companies have faced antitrust lawsuits, with a pair of cases against Google being the most advanced. Following a 10-week trial last fall, a ruling is pending before a federal judge in Washington over whether Google illegally monopolized the search market.
Artificial intelligence has existed in some form for years, including the Siri voice assistant on iPhones. But it exploded into public consciousness in late 2022 with the rollout of generative AI, including OpenAI’s ChatGPT. The products produce text, art, videos and answer questions in a strikingly human-like fashion.
Microsoft has put billions of dollars into OpenAI over the last several years. OpenAI is using Microsoft’s vast computing resources to develop its technology, and the software giant is integrating OpenAI’s services into its core businesses, including the Bing search engine. Regulators around the world are concerned that the investment was structured to avoid statutory merger reviews and that the partnership will give the two companies an unfair leg up on competitors.
Nvidia’s profits have exploded over the last few years as its chips, traditionally used for computer graphics, have been adapted for the heavy computational workloads of AI. The company is estimated to have as much as 90% of the market for high-end AI chips, which are often difficult to obtain. The French antitrust agency is already investigating Nvidia, according to press reports.
Nvidia has faced criticism from customers and competitors for its sales tactics, which some say lock them in at the expense of other options, as well as how it bundles essential related software to the chips, according to two people in the industry.
At the event at Stanford last week, the DOJ’s Kanter warned that while “AI has so much promise,” it also has “unique characteristics that pose new threats to the markets for human ideas and innovation.”
