The US Federal Trade Commission (FTC) is concerned about partnerships between major cloud providers and leading developers of generative artificial intelligence (AI). The focus is primarily on Microsoft’s $13 billion investment in OpenAI and the collaboration between Google and Anthropic. These companies are competitors with their AI models, Gemini and Claude, but are also strategic partners. The FTC sees a risk that these younger AI companies could soon be fully acquired or otherwise taken over by tech giants. The FTC is also wary of Amazon’s billion-dollar investment in Anthropic.
A report released by the FTC sheds light on how partnerships between large tech companies can lead to lock-ins. FTC Chair Lina Khan explained that such collaborations might withhold crucial AI research results from other startups, undermining competition. As more companies rely on generative AI, regulators and policymakers must remain vigilant to counter business strategies that undermine open markets, opportunities, and innovation.
The report examines the structure of partnerships between cloud providers and AI developers, focusing on equity and revenue-sharing rights, as well as consulting, control, and exclusivity rights that companies like Microsoft receive through their investments. The FTC is concerned about obligations requiring OpenAI and Anthropic to spend significant portions of their partner’s investments on their cloud services. The deals also include access to large amounts of computing resources at reduced prices, intellectual property rights related to cutting-edge AI models, and specific financial and training data. There are also options for expanding current products, such as integrating AI applications into cloud offerings or other solutions.
The FTC is critical of how these partnerships might influence access to computing resources and skilled labor, potentially affecting competition. It also highlights the potential of these deals to increase contractual and technical switching costs for AI developer partners, making it difficult for OpenAI and Anthropic to seek other cloud service providers.
What the new FTC leadership, starting next week under the second Trump administration, will do with these findings is uncertain. Former EU Competition Commissioner Margrethe Vestager stated in the summer that Microsoft’s investments in OpenAI were not yet a case for merger control review. However, the EU plans to question both companies under antitrust regulations to understand if certain exclusivity clauses might negatively impact competitors. The EU executive also wants to examine the agreement between Google and Samsung to pre-install Gemini Nano on certain Samsung devices. There is a risk that tech giants could make it difficult for smaller AI model developers to reach end consumers.