The artificial intelligence (AI) revolution is currently dominated by tech giants Microsoft and Nvidia, with a combined market value of $6.6 trillion, making them two of the largest companies in the world. Microsoft’s success has been buoyed by its $13 billion investment in OpenAI, the startup behind the ChatGPT chatbot, while Nvidia is known for its advanced chips crucial for running high-end AI systems. However, their dominance has caught the attention of US competition authorities. The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have decided to investigate the companies’ stronghold in the AI space.
The FTC will focus on the close relationship between Microsoft and OpenAI, while the DOJ will lead the investigation into Nvidia’s competitive advantage. With Nvidia controlling around 80% of the AI semiconductor market and a valuation of $3.32 trillion, regulators are concerned about the monopoly these tech giants hold. There are concerns that smaller players are being coerced into exclusive deals with Nvidia, Microsoft, and other tech giants, giving them an unfair advantage in the market.
Recent acquisitions, such as Microsoft’s purchase of Inflection AI for $650 million, have also raised eyebrows as authorities suspect they may have been designed to avoid merger disclosure rules. With hundreds of startups being acquired by Big Tech without adequate scrutiny in the past, regulators are now focused on the impact of these mergers on innovation in the tech sector. Antitrust regulators are looking to act more decisively and hold tech giants accountable for any anti-competitive practices.
Despite the push for stricter regulations, some experts believe it is comical to file antitrust lawsuits based on potential future harm rather than actual damages. However, policymakers are keen to prevent tech giants from stifling innovation by acquiring promising startups and hindering competition in the market. With President Joe Biden making scrutiny of Big Tech a priority for his administration, there is a collaborative effort between the FTC and DOJ to curb Silicon Valley’s questionable business practices.
As the US presidential election approaches, there is a sense of urgency for the Biden administration to address the growing power of tech giants in the AI space. The animosity towards Big Tech companies has led to an onslaught of laws being introduced to regulate AI, creating a challenging environment for the tech sector. Big tech companies are now wary of acquiring startups, resulting in a decline in merger and acquisition activity in the tech industry. This cautious approach is damaging to the ecosystem as startups rely on being acquired for growth opportunities, highlighting the need for a balance between innovation and competition in the AI sector.
