Google Urges FTC to Investigate Microsoft's Exclusive Cloud Deal with OpenAI

Google Urges FTC to Investigate Microsoft's Exclusive OpenAI Cloud Deal

Google Flags Anti-Competitive Concerns Over Microsoft-OpenAI Partnership Google has approached the U.S. Federal Trade Commission (FTC) with concerns about Microsoft's exclusive partnership with OpenAI, highlighting potential anti-competitive practices. The tech giant raised issues regarding OpenAI's reliance on Microsoft Azure as its sole cloud service provider, which could limit fair competition in the rapidly expanding AI and cloud markets. This exclusivity arrangement has drawn scrutiny as it may hinder access to OpenAI's cutting-edge AI technologies, such as GPT and DALL-E, for businesses using other cloud platforms. The FTC's investigation forms part of a broader evaluation of Microsoft's bundling strategies within its cloud and AI services. The FTC's larger investigation into Microsoft and cloud dealing also disclosed how Google raised top concerns during a discussion where the Company stressed how the deal would experience negative effects. Rivals such as Google and Amazon, cloud server renters just like Microsoft, raised complaints about the fact that OpenAI's models were operational only on Microsoft servers. Critics of the OpenAI model state that this inflexibility does not allow customers to directly use OpenAI's technology without Microsoft support. One of the primary issues of debate is the perceived incremental expenses that customers are bound to encounter. OpenAI is compatible with Microsoft, and businesses interested in implementing OpenAI's models using Microsoft but currently do not utilize Microsoft's server are potentially subject to additional charges. In the report, the company said these fees might dissuade firms from investing in OpenAI's sophisticated AI technologies, which in turn could be detrimental to the cloud market. Google's call to action raises issues of fairness and competition that are relevant to the entire cloud computing industry. By pressing the FTC to cancel the agreement, Google and other large tech companies try to create fair competition because OpenAI's models will be hosted on multiple clouds. This would thus enable the cloud customers to have more elasticity and selections while at the same time minimizing monopolistic actions. Neither Microsoft, Google, OpenAI nor the FTC has issued any response regarding the subject being discussed here yet. However, this discussion draws attention to the fact that there is a conflict between the dominant market players in the emerging AI and cloud computing business.

Google wants the FTC to stop exclusive Microsoft cloud deal with OpenAI

Google has reportedly asked the Federal Trade Commission (FTC) to investigate Microsoft's current partnership with OpenAI, which allows it to be the AI giant's exclusive cloud provider. The accusation (via The Information), comes after months of deals between the two companies, starting with Microsoft's multi-billion dollar investment into OpenAI, and the subsequent rollout of GPT-powered AI tools across its office software. The problem, says Google, is that Microsoft's position as the sole cloud provider for OpenAI's models, including the widely used ChatGPT chatbot, would limit market competition and impose higher costs on certain customers seeking to access OpenAI's technology. Under Microsoft's current agreement, companies using OpenAI's services may incur additional charges if they do not use Microsoft's Azure cloud servers themselves, which has been branded as an anticompetitive practice. And Microsoft's oh-so familiar with allegations of anticompetitive business practices - this year alone it has faced numerous threats to investigate its cloud business, but this AI-related concern marks a slightly different angle of attack. Microsoft has been accused of creating itself an unfair advantage by discouraging businesses from using alternative cloud providers. Furthermore, increased costs could harm customers and reduce their access to AI tools. Microsoft isn't oblivious to these types of accusations, though. Earlier in 2024, it gave up an observer seat on OpenAI's board in order to address regulatory scrutiny. Although Google is pointing the finger at Microsoft, it, too, has faced antitrust investigations recently. In early 2024, a US judge stated Google has an illegal monopoly over the internet search market, and would be facing a probe Cloudflare's recent 2024 Year in Review figures confirmed that Google holds 88.5% of the search market, far ahead of Yandex (3.1%), Baidu (2.7%), Bing (2.6%) and DuckDuckGo (0.9%) in second to fifth places. OpenAI and the FTC have already declined to respond to media enquiries. Google and Microsoft have not yet responded.

Report: Google told FTC Microsoft's OpenAI deal is killing AI competition

Google reportedly wants the US Federal Trade Commission (FTC) to end Microsoft's exclusive cloud deal with OpenAI requiring anyone who wants access to OpenAI's models to go through Microsoft's servers. Someone "directly involved" in Google's effort told The Information that Google's request came after the FTC began broadly probing how Microsoft's cloud computing business practices may be harming competition. As part of the FTC's investigation, the agency apparently asked Microsoft's biggest rivals if the exclusive OpenAI deal was "preventing them from competing in the burgeoning artificial intelligence market," multiple sources told The Information. Google reportedly was among those arguing that the deal harms competition by saddling rivals with extra costs and blocking them from hosting OpenAI's latest models themselves. In 2024 alone, Microsoft generated about $1 billion from reselling OpenAI's large language models (LLMs), The Information reported, while rivals were stuck paying to train staff to move data to Microsoft servers, if their customers wanted access to OpenAI technology. For one customer, Intuit, it cost millions monthly to access OpenAI models on Microsoft's servers, The Information reported. Microsoft benefits from the arrangement -- which is not necessarily illegal -- of increased revenue from reselling LLMs and renting out more cloud servers. It also takes a 20 percent cut of OpenAI's revenue. Last year, OpenAI made approximately $3 billion selling its LLMs to customers like T-Mobile and Walmart, The Information reported. Microsoft's agreement with OpenAI could be viewed as anti-competitive if businesses convince the FTC that the costs of switching to Microsoft's servers to access OpenAI technology is so burdensome that it's unfairly disadvantaging rivals. It could also be considered harming the market and hampering innovation by seemingly disincentivizing Microsoft from competing with OpenAI in the market. To avoid any disruption to the deal, however, Microsoft could simply point to AI models sold by Google and Amazon as proof of "robust competition," The Information noted. The FTC may not buy that defense, though, since rivals' AI models significantly fall behind OpenAI's models in sales. Any perception that the AI market is being foreclosed by an entrenched major player could trigger intense scrutiny as the US seeks to become a world leader in AI technology development.

Report: Google Asks FTC to End Microsoft-OpenAI Cloud Deal | PYMNTS.com

The company did so after the agency asked it about Microsoft's business practices as part of a broader investigation, The Information reported Tuesday (Dec. 10), citing an unnamed source. Reached by PYMNTS, the FTC, Google and Microsoft declined to comment on the report. OpenAI did not immediately reply to PYMNTS' request for comment. Cloud service providers like Google want to be able to host OpenAI's AI models so that their customers can access that technology without having to access Microsoft servers, Reuters reported Wednesday (Dec. 11), citing The Information's paywalled article. Companies that buy OpenAI's technology through Microsoft may see additional charges if they don't use the company's servers to run their operations, according to the report. It was reported in November that the FTC was set to investigate allegedly anticompetitive practices at Microsoft's cloud computing business. The regulator will focus on allegations that the tech giant illegally uses the market power of its Office 365 productivity software to benefit its Azure cloud service, Reuters reported Nov. 14. The Financial Times reported the same day that the probe had not yet reached the stage where the FTC would formally request information from Microsoft. After reports surfaced that details of an antitrust investigation into the tech giant were leaked, Microsoft formally requested an investigation into the FTC. The company asked the FTC's inspector general to examine whether senior management at the agency disclosed nonpublic information about the probe and to release its findings publicly. The FTC said in March 2023 that it was seeking comments on the business practices of cloud computing providers that could impact competition and data security. The agency said it was especially concerned about the reliance of certain segments of the economy on a handful of cloud service providers, the ability or inability of customers to negotiate their contracts with cloud providers, and incentives providers offer to use more than one of their services.

Google asks FTC to kill Microsoft-OpenAI cloud deal- The Information By Investing.com

Investing.com-- Google had recently asked the U.S. government to break up Microsoft's exclusive cloud hosting deal with artificial intelligence major OpenAI, The Information reported on Tuesday. Google's (NASDAQ:GOOGL) recommendation was made after the Federal Trade Commission asked Google about Microsoft's business practices, as part of a bigger investigation, the report said. Microsoft (NASDAQ:MSFT) currently has an exclusive deal with OpenAI to host the firm's AI technology on its cloud servers. Firms that compete with the Redmond, Washington-based giant in the cloud industry also want to also host OpenAI's technology. Microsoft is a major investor in OpenAI, and has already drawn antitrust scrutiny over its relationship with the AI start-up. The company had earlier this year passed on an observer seat on OpenAI's board to stave off antitrust concerns. The FTC is already considering antitrust investigations into Microsoft, OpenAI and Nvidia (NASDAQ:NVDA) over their dominance in the AI industry, reports earlier this year had shown. Google is also grappling with its own antitrust case, after a U.S. judge ruled earlier this year that the company holds an illegal monopoly over the internet search market. The ruling could eventually see Google being pushed into selling off its Chrome browser and Android operating system.

Google Wants FTC To Dismantle Microsoft's Exclusive Cloud Hosting Deal With OpenAI: Report - Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN)

Alphabet Inc.'s GOOG GOOGL Google has reportedly requested the U.S. Federal Trade Commission to dismantle Microsoft Corporation's MSFT exclusive agreement to host OpenAI's technology on its cloud servers What Happened: This request came after the FTC inquired with Google regarding Microsoft's business practices as part of a larger investigation, reported Reuters citing The Information. Tech giants like Google and Amazon.com, Inc. AMZN are keen to host OpenAI's models. However, they argue that Microsoft's exclusive deal forces cloud customers to rely on Microsoft servers, potentially incurring additional costs, the report noted. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Google and Microsoft did not immediately respond to Benzinga's request for comments. Why It Matters: The tension between Google and Microsoft over AI dominance has been brewing for some time. Earlier this year during an antitrust case against Google, an internal email from Microsoft revealed that the investment in OpenAI was driven by fears of lagging behind Google's AI capabilities. In September 2024, Google filed a complaint with the European Commission, alleging that Microsoft engaged in anti-competitive behavior within its cloud services sector. The following month, Microsoft retaliated by accusing Google of conducting secret lobbying efforts aimed at disrupting its cloud computing operations. Previously it was also reported that insiders at Microsoft have voiced worries that the company's AI strategy is overly dependent on its partnership with OpenAI. Photo Courtesy: Shutterstock.com Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Intel Stock Is Where It Was 27 Years Ago: How The World's Leading Chipmaker Lost The Plot, Thrice Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMZNAmazon.com Inc$225.60-0.22%Overview Rating:Speculative50%Technicals Analysis660100Financials Analysis400100WatchlistOverviewGOOGAlphabet Inc$187.205.70%GOOGLAlphabet Inc$185.775.93%MSFTMicrosoft Corp$443.59-0.54%Market News and Data brought to you by Benzinga APIs