The Federal Trade Commission (FTC) and Justice Department are reportedly in discussions over which agency can investigate OpenAI's relationship with Microsoft.
As reported by Politico, the FTC and Justice Department opened talks several months ago to assess which one can initiate an antitrust probe into the issue. However, neither regulatory body wants to concede jurisdiction to the other — a contention that must be addressed before any official investigation into OpenAI and Microsoft can begin.
The debate stems from which agency can probe which businesses which (allegedly) illegally extract content to build and train their AI models. The discussion is reportedly centred on OpenAI and Microsoft specifically rather than an industry-wide, precedent-setting discussion about which agency can investigate OpenAI antitrust issues moving forward.
The basis for an antitrust investigation, as reported by Politico, is the ambiguity of Microsoft and OpenAI's relationship.
Microsoft has invested around $13 billion in OpenAI over the past four years, but these mooted probes arrive two months after November's dramatic OpenAI saga, in which its CEO Sam Altman was ousted by its board before being reinstated just four days later following intense pressure from both employees and investors.
Over 700 of OpenAI’s 770 workers said they would resign unless Altman was allowed to return, while Microsoft, as OpenAI’s largest investor, exerted pressure on OpenAI’s board.
Microsoft released a statement two days after Altman’s sacking that the tech giant had hired both Altman and his OpenAI Cofounder Greg Brockman to manage a new AI research team. In an open letter to their board, the 700-strong group of OpenAI employees said that Microsoft had promised them jobs if they followed through on their threat of resigning.
After Altman’s return, Microsoft CEO Satya Nadella was vocal about the need to improve OpenAI’s governance. Microsoft also since secured a nonvoting position on OpenAI’s board.
Because businesses have to report most deals to a federal antitrust regulator, it raised eyebrows that OpenAI and Microsoft have not yet done so. Microsoft has stated it has no power over OpenAI governance or strategy, but its conduct following Altman's firing has brought that relationship into the spotlight.
Microsoft and OpenAI's Dynamic Under the Microscope
The FTC and Justice Department aren't the first antitrust organisations to ponder a formal investigation of OpenAI and Microsoft.
Just before Christmas, across the pond, the UK’s Competition and Markets Authority (CMA) announced it was probing Microsoft and OpenAI’s relationship.
