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DOJ Investigates AI Firms with Shared Board Members

 |  April 10, 2024

The Justice Department is closely examining the artificial intelligence sector for potential antitrust violations. The investigation is focused, as reported by Bloomberg, on whether AI companies have overlapping executives or directors, a situation that could breach US antitrust laws.

Andrew Forman, deputy assistant attorney general for antitrust, highlighted the agency’s proactive stance during a conference in Washington, stating, “The Justice Department is on the lookout for AI competitors sharing board members.” Forman emphasized the importance of early enforcement in the rapidly evolving AI industry to ensure a competitive landscape.

US antitrust law prohibits so-called interlocking directorates, where individuals or entities hold board positions in competing companies. This practice has come under increased scrutiny under the Biden administration, leading to significant actions such as forcing directors to resign from the boards of major companies like Warner Bros. Discovery Inc. and Nextdoor Holdings Inc.

The AI sector has drawn particular attention from antitrust enforcers due to the deep financial and infrastructural dependencies of emerging AI startups on established tech giants. Bloomberg reports that companies such as Microsoft Corp., Amazon.com Inc., and Alphabet Inc.’s Google have invested billions into AI startups, creating intricate alliances that could potentially stifle competition.

Related: DOJ Investigates AI Competition, Eyes Microsoft’s OpenAI Deal: Bloomberg

Microsoft’s relationship with ChatGPT maker OpenAI serves as a prime example, with more than $13 billion invested by the tech giant. The recent controversy surrounding the ouster and reinstatement of OpenAI CEO Sam Altman has shed light on the close ties between Microsoft and OpenAI, prompting antitrust reviews in the UK and the European Union. Microsoft’s further investments, including a 2 billion euro investment in French AI startup Mistral and the acquisition of Inflection’s co-founders and team, underscore the growing entanglements in the AI industry.

Similarly, Google and Amazon have made significant moves, with Google backing AI startup Anthropic with $2 billion and Amazon committing up to $4 billion in investments. Anthropic, interestingly, was founded by former OpenAI employees who left due to disagreements over the company’s direction.

The Justice Department has acknowledged opening several probes into the competitive dynamics within the artificial intelligence sector, signaling a comprehensive effort to ensure that the burgeoning field remains open and competitive. As the AI industry continues to evolve, the outcomes of these investigations could have far-reaching implications for the future of technology and innovation.

Source: Bloomberg