The U.S. Federal Trade Commission (FTC) has announced an inquiry into the connections between leading artificial intelligence (AI) startups, including OpenAI, and tech giants such as Amazon, Google, and Microsoft. This move is focused on examining the influence these companies may have on the boom in generative AI, which has driven the demand for chatbots like ChatGPT and other AI tools capable of creating novel imagery and sound.

Lina Khan, Chair of the FTC, expressed concerns about potential unfair competition and undue influence resulting from these ties during an AI forum. The market inquiry will investigate the investments and partnerships formed between AI developers and major cloud service providers.

To gather the necessary information, the FTC has issued "compulsory orders" to five companies: Amazon, Google, Microsoft, Anthropic, and OpenAI. These orders require them to provide details about their agreements and the decision-making processes behind them. Microsoft's longstanding relationship with OpenAI is well-known, while Google and Amazon have recently made multibillion-dollar deals with Anthropic, another San Francisco-based AI startup founded by former leaders at OpenAI.

In response to the inquiry, Google issued a statement welcoming the investigation and subtly criticizing Microsoft's relationship with OpenAI. Google emphasized its own openness and history of avoiding customer lock-in, championing fair competition. Microsoft's Rimy Alaily, a corporate vice president, expressed cooperation with the FTC and defended such partnerships as promoters of competition and innovation.

Amazon, Anthropic, and OpenAI have declined to comment on the FTC inquiry. It is worth noting that the European Union and the United Kingdom have already indicated their scrutiny of Microsoft's investments in OpenAI, with possible investigations under merger and acquisition regulations.

Experts in the field, like Matt Stoller from the American Economic Liberties Project, argue that tech giants are finding ways to exert influence without outright acquisitions of top AI companies. Stoller emphasizes the need for transparency in these partnerships.

Microsoft's total investment in OpenAI has not been publicly disclosed. Satya Nadella, CEO of Microsoft, stated that the investment involves not only dollars but also computing power. OpenAI's governance and its relationship with Microsoft faced scrutiny last year following the sudden dismissal and subsequent reinstatement of CEO Sam Altman. The situation led to an executive reshuffle and the establishment of a nonvoting board seat for Microsoft.

The FTC's inquiry aligns with its commitment to track and prevent illegal AI practices. Chair Khan has emphasized the need to crack down on harmful business practices involving AI. The focus extends beyond harmful applications to include the consolidation of market power by a few AI leaders, potentially solidifying their dominance.

The FTC's three commissioners, all Democrats due to two vacant seats, unanimously voted to commence the inquiry. Commissioner Alvaro Bedoya highlighted the importance of shedding light on the competitive dynamics in play within the advanced AI models.

The companies involved have 45 days to provide the requested information, including partnership agreements, strategic rationale, decision-making processes, and key resources and services required for building AI systems. The outcome of the FTC's inquiry will be closely watched as the role of tech giants in the AI industry continues to face scrutiny and concerns over fair competition persist.