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FTC launches inquiry into generative AI partnerships

The FTC has announced that it's looking into the relationships between big tech companies and generative AI companies and their impact on the market.

Listen to this article. This audio was generated by AI.

The U.S. Federal Trade Commission is scrutinizing the generative AI investments and partnerships of Google, Amazon and Anthropic, as well as Microsoft and OpenAI.

The FTC's inquiry aims to scrutinize the partnerships with the goal of better understanding their "impact on the competitive landscape," according to a press release issued Thursday. The agency also wants to know about the practical implications of the partnerships and the competition for AI inputs and resources. FTC Chair Lina Khan said in the release that the study will shed light on whether such partnerships pursued by dominant companies "risk distorting innovation and undermining fair competition."

"History shows that new technologies can create new markets and healthy competition," Khan said. "As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity."

The FTC is sending a message that the enforcement agency is gaining knowledge to be ready to act in the future, as further developments in the tech industry unfold, said William Kovacic, director of the Competition Law Center at George Washington University.

The message is: We are looking, we are learning, we're not going to be spectators.
William KovacicDirector, Competition Law Center, George Washington University

"The message is: We are looking, we are learning, we're not going to be spectators," Kovacic said. "We will not be playing catch-up."

FTC inquiry looks to build agency's knowledge base

The FTC wants to understand what's taking place within the artificial intelligence dimension of the tech sector, Kovacic said. Antitrust enforcement since its inception in the U.S. has faced the difficulty of staying abreast of fast-moving industries, he noted.

The FTC's latest inquiry into the generative AI partnerships can be viewed as policy research and development that educates the agency and enables it to make good judgments moving forward, Kovacic said.

"There's been in many respects a chronic knowledge deficit that they seek to overcome," Kovacic said. "One of the most important ways to do that is to conduct studies that don't necessarily wait for industry developments to fully mature, but to do them relatively early so that you get in on the ground floor of what's taking place."

However, Daniel Castro, vice president of the Information Technology and Innovation Foundation, said he doesn't believe the FTC's inquiry is a neutral request. The FTC is not only looking for information, but also sending a message to industry startups that they shouldn't partner with big tech companies because of the risk of coming under scrutiny of the FTC, he said.

"They've clearly said big tech is in their crosshairs, and they're willing to go after them even when they don't have a solid legal basis because they want to try out new theories," Castro said.

The companies have 45 days from the day they received the order to respond.

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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