OpenAI-Microsoft Pact May Bring ‘Competitive Implications’

The Federal Trade Commission (FTC) has issued a report examining the partnership between artificial intelligence (AI) and cloud giants.

the reportpublished Friday (Jan. 17) by the FTC, focused on the largest cloud service providers (CSPs) — Google, Amazon and Microsoft – and two of the biggest AI companies: OpenAI and Anthropic.

“As companies rapidly deploy generative AI technologies, implementers and policymakers must remain vigilant. to watch against business strategies that undermine open markets, opportunity, and innovation,” FTC Chair Lina M. Khan said in a news release.

“The FTC report sheds light on how partnerships with big tech companies can create lock-in, deprive startups of important AI inputs, and reveal sensitive information that harms fair competition.”

The report examines key structural aspects of CSP and AI developer collaborationsuch as the equity and revenue-sharing rights that CSPs hold in these partnerships and certain consultation, control and exclusivity rights that CSPs obtain by investing in AI firms.

In addition, the report contains some “potential competitive implications“said the FTC. For example, the regulator said, these partnerships can affect “access to certain inputs,” such as computing resources and engineering talent. Additionally, partnerships can increase transfer costs for AI developer partners.

The FTC also found that partnerships can give CSPs access to sensitive technical and business information not available to others.

“Voice assistants are one example – of many – of an area with potential overlap between CSP partner products and AI developer partner products,” the report said.

“A reporter in 2023 describes a risk that new voice assistantssuch as those provided by AI developer partners, may ‘arrive for the jobs of Siri and Alexa.’ Indeed, Siri and Alexa are now, or will soon be, reportedly powered by AI partner respondents in this study.

“Concerns about the exchange of information between CSPs and their AI model developer partners can intensifying by competition between their products.”

The report — which comes at the end of Khan’s tenure as FTC chair — follows an executive order last week from President Joe Biden calling for the use of AI in cybersecurity development.

“Artificial intelligence has the potential to transform cyber defense by rapidly identifying new vulnerabilities, increasing the scale of threat detection techniques. and automating cyber defense,” said the order. “The Federal Government should accelerate the development and deployment of AI, explore ways to improve the cybersecurity of critical infrastructure using AI, and accelerate research at the intersection of AI and cybersecurity.”