DOJ and FTC ready to challenge AI dominance

The Justice Department and the Federal Trade Commission (FTC) are reportedly preparing to unleash their antitrust dogs on Microsoft, OpenAI and Nvidia, according to a Wednesday, June 5 report from the New York Times.

These tech giants have driven innovation in artificial intelligence (AI), but are now facing new scrutiny as regulators probe whether their dominance is stifling competition in a sector poised to usher in digital transformation for a multitude of businesses.

“It’s not official yet, but there are reports that the Justice Department and the FTC have agreed to investigate AI-related companies,” Omar Ochoa, an antitrust lawyer, told PYMNTS. “There are reports that the Justice Department is investigating Nvidia and the FTC is investigating OpenAI and Microsoft. This is actually very similar to what the FTC did with the big tech companies several years ago, where they split the investigation into Google, Apple, Amazon, and Meta. Antitrust lawsuits have been filed against each of these companies.

Ochoa said he thinks history could repeat itself with the AI ​​industry.

“Now, seeing this happen again, but with AI, it’s probably a safe bet that legal action or administrative action will result from the investigations because, again, it mirrors what happened ago a few years with big tech,” he said.

“If these companies get an antitrust ruling imposed on them, it could be a real game-changer for the tech and AI industries,” Aron Solomon, an attorney and chief strategy officer at legal services firm Amplify, told PYMNTS. “We could see these giants split or have their wings clipped, which would open the door for smaller players and newcomers to step up and shake things up.”

Solomon also pointed out that a decision like this could force companies to rethink their business practices and partnerships, which could have a knock-on effect on everything from supply chains to pricing and availability of technological services and products.

“Companies may need to go back to the drawing board and figure out how to play nice with others,” he said.

The DOJ takes the lead

In this antitrust tag team match, the Justice Department will take on Nvidia, the largest maker of AI chips, while the FTC will take on OpenAI, the mastermind behind chatbot ChatGPT, and Microsoft, which has launched around billions, as if it It was monopoly money to participate in AI action.

But if the government wants to prevail in these antitrust cases, it will have to play its big game and prove that these companies intentionally stifled their rivals.

“The government will have to bring the receipts and show how these companies actively tried to crush the competition,” Solomon said. “It’s a difficult fight, but not impossible. It all comes down to the finer details of the case, legal jiu-jitsu, and regulatory climate.

AI under the microscope

These investigations are just the latest in a series of antitrust probes targeting tech giants around the world. Regulators in the United States and the European Union are going to great lengths to try to determine whether AI companies are using their strengths to dominate markets or put their competitors ahead of them. The results of these investigations will likely shape the future of competition and innovation in the AI ​​sector.

The stakes are high when it comes to the potential impact on trade.

“Comments from Congress, the White House, the FTC, and the DOJ have all indicated that they are seeking to get ahead of the AI ​​curve and initiate enforcement and surveillance measures as quickly as possible. as soon as possible, instead of waiting several years later and then developments occur. it makes it harder for them to undo business practices that have led to significant growth,” Ochoa explained. “From the comments made, the idea is not to eradicate AI and its development, but I think the idea is to regulate it as early as possible so that it does not turn into a unregulated industry and difficult to regulate in the future. »

If the AI ​​giants are broken up or have their powers limited, this could be a golden opportunity for smaller players and startups to swoop in and give them a run for their money. This could lead to lower prices for AI products and services, making them more accessible to businesses and consumers.

But if investigations fail or sanctions are just a slap on the wrist, AI giants could continue to tighten their grip on the market, leaving competition and innovation in the dust. This could mean higher prices, fewer options and a slower pace of progress in the development and deployment of AI technologies in various sectors of the economy.

As for the likelihood that the government will prevail in these cases, Ochoa remains cautious.

“At this stage it is difficult to predict the outcome. The companies under investigation are the main players in AI development, making it difficult to anticipate the government’s approach and the potential cases it might present,” he said. declared. “However, it is clear that investigations are ongoing and the industry will look forward to further developments.”