FTC Investigates Microsoft’s $13 Billion Investment in OpenAI: What You Need to Know

OpenAI's recent developments have not only attracted the attention of UK regulators. Reports indicate that the Federal Trade Commission (FTC) is investigating Microsoft's substantial investment in OpenAI, assessing whether it breaches US antitrust laws. FTC Chair Lina Khan has expressed concerns about the increasing dominance of major tech firms in the AI landscape, warning that "the expanding adoption of AI risks further locking in the market dominance of large incumbent technology firms."

Currently, the FTC's inquiry is preliminary, and no formal investigation has been initiated. However, Khan's team is reportedly analyzing the circumstances surrounding Microsoft's involvement and evaluating their options. A significant challenge for regulation is OpenAI's non-profit status, as transactions involving such entities are not legally required to be disclosed. Moreover, Microsoft's $13 billion investment does not legally confer control over OpenAI, complicating any potential regulatory action.

Nonetheless, the recent turbulence surrounding CEO Sam Altman's departure and subsequent re-hiring—alongside Microsoft’s influential role in these events—suggests that the notion of control is more nuanced than the legal framework implies.

Meanwhile, the UK's Competition and Markets Authority (CMA) has announced that it is contemplating an investigation into the relationship between Microsoft and OpenAI, considering recent events related to Altman. The CMA is specifically examining whether this partnership equates to an acquisition of control, where one entity holds significant influence or more than 50% of the voting rights over another.

Khan, who is simultaneously challenging Microsoft's proposed $69 billion acquisition of Activision Blizzard, has previously emphasized the necessity for AI regulations. She stated the FTC's commitment to maintaining competitive markets that foster innovation while protecting users from exploitation. Khan reassured that, although AI tools may be innovative, they are not exempt from existing regulations, and the FTC will rigorously enforce the laws governing this new market.