FTC generative AI investigation includes Alphabet, Amazon, Microsoft

The Federal Trade Commission (FTC) is ordering five major tech companies to provide information about their generative AI activities.

The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with AI providers in what it says is an effort to better understand these relationships and their impact on the competitive landscape. The compulsory orders were sent to Alphabet Inc. (parent of Google), Amazon Inc., Anthropic PBC, Microsoft Corp. and OpenAI Inc.

In particular, the FTC is investigating activity among these companies related to generative AI, which is based on machine learning (ML) and can create new content and ideas, including conversations, stories, images, videos, and music. 

Specific information the FTC says it wants to examine includes:

• Information regarding a specific investment or partnership, including agreements and the strategic rationale of an investment/partnership.
• The practical implications of a specific partnership or investment, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings.
• Analysis of the transactions’ competitive impact, including information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
• Competition for AI inputs and resources, including the competitive dynamics regarding key products and services needed for generative AI.  
• Information provided to any other government entity, including foreign government entities, in connection with any investigation, request for information, or other related inquiry.

Interestingly, all five companies affected by the FTC order previously agreed to follow a set of voluntary commitments to ethically and safely develop AI released by President Biden in July 2023, which was followed by an executive order on AI safety in October. 

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity," said FTC chair Lina M. Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

The FTC issued its orders under Section 6(b) of the FTC Act, which authorizes the agency to conduct studies that allow it to gain a deeper understanding of market trends and business practices. The companies will have 45 days from the date they receive the order to respond.

The FTC voted 3-0 to issue the Section 6(b) orders and conduct the study of AI investments and partnerships.