The Leading Edge: Global Focus on AI Industry Deals
July 3, 2024 — PolicyView: AI | The Leading Edge

The Leading Edge: Global Focus on AI Industry Deals

By Philip Athey , Editor

Through partnership deals and “acquihires,” the artificial intelligence development marketplace is about as diverse as the Hapsburg family tree. Government regulators around the world have begun the long investigative process to untangle the incestuous mess.

OpenAI, which started as a non-profit hoping to develop safe AI, currently boasts partnerships with Microsoft and Apple. Anthropic, an AI company started by former OpenAI employees who disagreed with the company’s direction, is backed by Google and Amazon.

But the connections between AI firms don’t stop there.

PolicyView: AI

In June, the CEO and co-founder of the AI company Adept announced that he would join Amazon along with other Adept co-founders and employees. In March, Microsoft pulled off a similar move by hiring the CEO and co-founder of AI company Inflections, along with the company’s top engineers.

The practice of acquiring the leaders and top workers, which are smaller companies’s most valuable assets of these companies without buying the companies themselves has become known as acquihiring, which has already raised concerns on Capitol Hill.

Lawmakers and antitrust experts have warned that all these moves combined will simply entrench the tech giants as AI’s big winners, ultimately hurting consumers.

“Through partnerships, equity deals, acquisitions, cloud computing credits, and other arrangements, the largest technology companies are entrenching themselves as the dominant firms in the nascent generative AI industry,” said Sens. Elizabeth Warren, Peter Welch, and Ron Wyden in a letter to Federal Trade Commission Chair Lina Khan and Assistant Attorney General Jonathan Kanter, the nation’s top antitrust enforcers. “The extensive consolidation up and down the generative AI industry stack hurts consumers, hinders innovation, and threatens national security.”

Federal regulators are also looking into the deal, with the FTC launching an informal inquiry into the Amazon-Adept deal, Reuters reported. The Justice Department and FTC are also launching more formal investigations into the entanglement of these companies. In June, the agencies came to an agreement that will see the DOJ investigate how the semiconductor chipmaker Nvidia rose up as the go-to for AI chips, while the FTC will look into OpenAI’s entanglements.

The FTC investigation has already borne some fruit. Microsoft recently gave up its observer board seat at OpenAI, while Apple has dropped its plans to set up its own observer seat on the OpenAI board, the Financial Times reported.

America is not alone in the antitrust fight. The United Kingdom’s Competition Markets Authority announced it is investigating the Microsoft acquihire of Inflection, Bloomberg reported, while the European Union’s antitrust enforcer is “escalating its scrutiny” of the AI industry, the AP reported in June.

While it may be years before the courts make final rulings on any AI antitrust case, governments around the world are taking a close look at every consolidation these tech giants make.


PolicyView: AI is a twice-monthly intelligence report from National Journal that provides a comprehensive view of AI legislation at the state and federal levels. We track what’s gaining momentum in specific areas of the country, what industries are most likely to be affected, and which lawmakers and influencers are driving the conversation.

To learn more and request the latest report, visit policyviewresearch.com.

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