FTC Raises Antitrust Concerns Over Big Tech-AI Startup Partnerships

Microsoft-OpenAI Partnership Raises Antitrust Concerns, FTC Says

Microsoft's $13 billion (roughly Rs. 1,12,485 crore) investment in OpenAI raises concerns that the tech giant could extend its dominance in cloud computing into the nascent artificial intelligence market, the Federal Trade Commission said in a report released Friday. The commission said Microsoft's deal with OpenAI, as well as Amazon.com and Google's partnerships with AI company Anthropic, raise the risk that AI developers could be "fully acquired" by the tech giants in the future. In the two-plus years since ChatGPT kicked off a frenzy around generative AI, leading AI startups have turned to large tech firms for support developing the costly and computationally intensive technology. But in its report, the FTC raised concerns that the cloud giants require some of their investments into these startups to be spent on their own products and services. The FTC also said there are risks of consolidating coveted AI talent around these large firms and potential for the companies to gain advantageous data related to chip development, model training and data center construction. "The FTC's report sheds light on how partnerships by big tech firms can create lock-in, deprive startups of key AI inputs, and reveal sensitive information that can undermine fair competition," FTC Chair Lina Khan said in a statement. The report also noted that at least one of the big tech firms -- it didn't say which -- received access to "confidential and potentially sensitive financial performance information" as part of its deal with one of the AI startups, receiving weekly reports about revenue trends and updates about customers. Additionally, it pointed out that at least one of the agreements provides for a big tech firm to have access to the output from an AI startup's model -- such as the text or other information spit out by a chatbot in response to a user's prompt. The tech firm planned to use this information, which is often referred to as "synthetic data," to train its own AI model. Google, Amazon and Anthropic declined to comment. OpenAI didn't immediately respond to requests for comment. "The partnership between Microsoft and OpenAI has enabled one of the most successful AI startups in the world and spurred a wave of unprecedented technology investment and innovation in the industry, creating thousands of new startups in the US and around the world," said Rima Alaily, Microsoft's deputy general counsel. Market Studies The FTC has the power to open market studies to glean more information about industry trends. The findings can be used to inform future actions. It's unclear what the agency's new leadership under the Trump administration will do with the report. The FTC opened the inquiry last year focusing on the billions of dollars of investments by the world's cloud-services giants into AI startups. That included Big Tech investments in OpenAI and in Anthropic, a company founded by former OpenAI employees. The FTC is conducting the inquiry under its so-called 6(b) authority that allows it to issue subpoenas to conduct market studies. The agency generally issues a report on its findings after analyzing the information from companies, though that process can take years to complete. None of the companies notified US antitrust agencies of the deals ahead of time because of how they were structured. The FTC said the partnerships between tech and AI could result in dominant tech companies holding "exclusivity rights" to their AI partners' tools, and it could discourage AI companies from working with multiple tech companies by increasing "switching costs for the AI developer partners." Skilled Talent The report also highlighted concerns the partnerships may have on the market for engineers. "An open question is whether the partnerships may consolidate access to this talent pool in the hands of a limited number of firms," the report said. The "skills necessary to develop and deploy large-scale generative AI models are relatively rare and may be difficult to acquire outside of working for large AI developers or the hyperscalers themselves." The agency took issue with the fact that some of the cloud giants' investments in these AI companies come back to benefit their own businesses. That's because significant parts of the investments come in the form of credits to be used to pay for cloud-computing capacity from the AI company's benefactor, or include stipulations that the AI firm will spend on these cloud services. For example, much of Microsoft's largesse toward OpenAI came through credits for Microsoft's Azure cloud. Calling the practice "circular spending," the report said this practice helps insulate Microsoft, Amazon and Google from potential losses. Since 2023, the agency has been investigating whether OpenAI violated consumer protection laws with its popular ChatGPT chatbot. In November, the FTC also opened a broad antitrust investigation into Microsoft that includes its investments into artificial intelligence among other topics. © 2025 Bloomberg LP

FTC says partnerships like Microsoft-OpenAI raise antitrust concerns

The Federal Trade Commission said in a staff report issued Friday that there are potential competitive issues in partnerships between big tech companies and generative AI developers -- specifically, Microsoft's backing of OpenAI and Amazon and Alphabet/Google's partnerships with Anthropic. "The FTC's report sheds light on how partnerships by big tech firms can create lock-in, deprive start-ups of key AI inputs, and reveal sensitive information that can undermine fair competition," said FTC Chair Lina Khan in a statement. (President-elect Donald Trump plans to replace Khan as chair.) The report focuses on Microsoft, Amazon, and Google's roles as cloud service providers working with OpenAI and Anthropic; among other things, it suggests that these partnerships could affect access to computing resources and engineering talent, increase switching costs for companies working with AI developers, and might give cloud providers unique access to sensitive information. Microsoft's deputy general counsel Rima Alaily told Bloomberg that the company's partnership with OpenAI has "enabled one of the most successful AI startups in the world and spurred a wave of unprecedented technology investment and innovation in the industry."

Microsoft-OpenAI Partnership Raises Antitrust Concerns, FTC Says

Microsoft Corp.'s $13 billion investment in OpenAI raises concerns that the tech giant could extend its dominance in cloud computing into the nascent artificial intelligence market, the Federal Trade Commission said in a report released Friday. The commission said Microsoft's deal with OpenAI, as well as Amazon.com Inc. and Google's partnerships with AI company Anthropic, raise the risk that AI developers could be "fully acquired" by the tech giants in the future.

FTC: OpenAI-Microsoft Pact Could Bring 'Competition Implications' | PYMNTS.com

The Federal Trade Commission (FTC) has issued a report examining the partnerships among artificial intelligence (AI) and cloud giants. The report, published Friday (Jan. 17) by the FTC, focused on the largest cloud service providers (CSPs) -- Google, Amazon and Microsoft -- and two of the largest AI companies: OpenAI and Anthropic. "As companies rapidly deploy generative AI technologies, enforcers and policymakers must stay vigilant to guard against business strategies that undermine open markets, opportunity, and innovation," FTC Chair Lina M. Khan said in a news release. "The FTC's report sheds light on how partnerships by big tech firms can create lock-in, deprive startups of key AI inputs, and reveal sensitive information that can undermine fair competition." The report explores important aspects of the structure of CSP and AI developer collaborations, such as the equity and revenue-sharing rights retained by CSPs in these partnerships and certain consultation, control and exclusivity rights that CSPs gain by investing in AI firms. In addition, the report covers some "potential competition implications," the FTC said. For example, the regulator said, these partnerships could affect "access to certain inputs," like computing resources and engineering talent. In addition, the partnerships could increase switching costs for the AI developer partners. The FTC also found that the partnerships could give CSPs access to sensitive technical and business information unavailable to others. "Voice assistants are one example -- of many -- of an area of potential overlap between CSP partner products and AI developer partner products," the report said. "One reporter in 2023 described a risk that new voice assistants, such as those provided by AI developer partners, might be 'coming for Siri and Alexa's jobs.' In fact, Siri and Alexa are now, or will soon be, reportedly powered by the AI partner respondents in this study. "Concerns about information exchange between CSPs and their AI model developer partners may be intensified by competition between their products." The report -- coming at the end of Khan's tenure as FTC chair -- followed an executive order last week from President Joe Biden that called for the use of AI in improving cybersecurity. "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," the order said. "The Federal Government must 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."

The FTC is concerned about Big Tech-AI startup partnerships -- Microsoft-Open AI raises alarms

According to a recent FTC report, Big Tech's growing investments in AI startups, such as Microsoft's $13 billion funding of OpenAI and Amazon's and Google's partnerships with Anthropic, are raising alarms about potential monopolization and competitive risks in the AI and cloud computing sectors. One of the major FTC concerns is the so-called 'circular spending' practice, under which startups spend their received money on services their investors offer, notes Bloomberg. Training artificial intelligence models requires a lot of computing power that usually costs billions of dollars, an amount of money that startups like Open AI and Anthropic do not have and can barely rise. As a result, they turn to Big Tech companies with billions of dollars and massive amounts of computing power. For obvious reasons, companies like Amazon, Google, and Microsoft try to capitalize on their deals with AI companies, which usually means exclusivity. Also, tech giants want their partners to spend the money they receive on products and services these companies offer. The report highlights concerns that these investments could allow major cloud service providers (CSPs) like Amazon, Google, and Microsoft to dominate the AI market by locking startups into exclusive agreements. These partnerships might restrict startups from collaborating with multiple firms, increasing dependency on their benefactors and reducing market competition. "The FTC's report sheds light on how partnerships by big tech firms can create lock-in, deprive start-ups of key AI inputs, and reveal sensitive information that can undermine fair competition," said FTC Chair Lina M. Khan. A major issue is the requirement that startups spend a portion of their funding on tech giants' products and services, a practice the FTC calls 'circular spending.' For example, much of Microsoft's investment in OpenAI involved credits for its Azure cloud platform, creating a feedback loop that shields Microsoft from financial risks. In return, CSPs provide AI developers with discounted access to vast computing resources that cannot usually be obtained elsewhere. Additionally, CSPs gain access to intellectual property, advanced AI models, and critical data related to training and development. The FTC also noted that some deals grant large tech firms access to sensitive information. In at least one case, a company received weekly reports about an AI startup's financial performance, including revenue trends and customer data, a type of access that could provide unfair competitive advantages. Moreover, the report reveals that some agreements include provisions allowing tech companies to use the output of AI models -- referred to as 'synthetic data' -- for training purposes. This practice raises ethical and competitive concerns, as it could enable the giants to strengthen their own AI systems at the expense of their partners. Another concern is that Big Tech companies leverage these partnerships to integrate AI models into their products or deploy them on their platforms, expanding their influence in the AI and cloud markets. Finally, there is a fear of consolidating highly specialized AI talent. The FTC warns that these partnerships could concentrate skilled engineers within a few dominant firms, making it difficult for smaller companies to acquire the expertise needed to develop advanced AI models. While this concern might have merits, the number of AI startups that emerge every month does not prove that. The report, based on data from September 2024 and public information until January 2025, aims to inform policymakers, regulators, and the public about the implications of these partnerships.

FTC flags potential antitrust risks in big tech, AI partnerships By Investing.com

"Investing.com -- Partnerships between major cloud service providers like Microsoft Corporation (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Amazon.com Inc (NASDAQ:AMZN) and AI developers such as OpenAI and Anthropic could potentially impact market competition and access to key resources, the Federal Trade Commission's Office of Technology staff said in a report released Friday. "The partnerships provide CSP (LON:CSPC) partners certain consultation, control, and exclusivity rights with respect to their AI developer partners to varying degrees," the report said. The FTC study, which examined partnerships between Microsoft-OpenAI, Amazon-Anthropic, and Google-Anthropic, found that these agreements could potentially impact AI model development and determine many aspects of individuals' and firms' experiences with AI technology. Under these partnerships, cloud service providers, or CSPs, could gain significant equity and certain revenue-sharing rights in their AI developer partners, with the possibility of full acquisition in the future, according to the report. This raises concerns that CSPs could limit access to inputs such as computing resources for AI developers and engineering talent, erecting potential barriers to entry for new AI developers. The partnerships also include substantial cloud commitments, requiring AI developers to spend a large portion of their CSP partner's investment on cloud services from their partners. This circular spending is "one avenue through which CSP partners may potentially aim to reduce the magnitude of potential loss invested directly into their partners and cloud infrastructure to serve their partners," the report said. The partnerships may also provide CSP partners access to "sensitive technical and business information that may be unavailable to others," providing CSPs an unfair advantage in the AI market, according to the report.