FTC Issues Staff Report on AI Partnerships

The Federal Trade Commission (FTC) has issued a report examining the partnerships among artificial intelligence (AI) and cloud giants.

The report, published Friday (Jan. 17) by the FTC, focused on the largest cloud service providers (CSPs) — Google, Amazon and Microsoft — and two of the largest AI companies: OpenAI and Anthropic.

“As companies rapidly deploy generative AI technologies, enforcers and policymakers must stay vigilant to guard against business strategies that undermine open markets, opportunity, and innovation,” FTC Chair Lina M. Khan said in a news release.

“The FTC’s report sheds light on how partnerships by big tech firms can create lock-in, deprive startups of key AI inputs, and reveal sensitive information that can undermine fair competition.”

The report explores important aspects of the structure of CSP and AI developer collaborations, such as the equity and revenue-sharing rights retained by CSPs in these partnerships and certain consultation, control and exclusivity rights that CSPs gain by investing in AI firms.

In addition, the report covers some “potential competition implications,” the FTC said. For example, the regulator said, these partnerships could affect “access to certain inputs,” like computing resources and engineering talent. In addition, the partnerships could increase switching costs for the AI developer partners.

The FTC also found that the partnerships could give CSPs access to sensitive technical and business information unavailable to others.

“Voice assistants are one example — of many — of an area of potential overlap between CSP partner products and AI developer partner products,” the report said.

“One reporter in 2023 described a risk that new voice assistants, such as those provided by AI developer partners, might be ‘coming for Siri and Alexa’s jobs.’ In fact, Siri and Alexa are now, or will soon be, reportedly powered by the AI partner respondents in this study.

“Concerns about information exchange between CSPs and their AI model developer partners may be intensified by competition between their products.”

The report — coming at the end of Khan’s tenure as FTC chair — followed an executive order last week from President Joe Biden that called for the use of AI in improving cybersecurity.

“Artificial intelligence has the potential to transform cyber defense by rapidly identifying new vulnerabilities, increasing the scale of threat detection techniques and automating cyber defense,” the order said. “The Federal Government must accelerate the development and deployment of AI, explore ways to improve the cybersecurity of critical infrastructure using AI, and accelerate research at the intersection of AI and cybersecurity.”