The United States Department of Justice (DOJ) and the Federal Trade Commission (FTC) have reportedly agreed on how to conduct an antitrust investigation targeting tech giants Microsoft, Nvidia, and OpenAI.

These companies are significant players in the generative artificial intelligence space: OpenAI, the nonprofit creator of the well-known chatbot ChatGPT, has seen substantial investment from Microsoft, the world's largest company by market capitalization, amounting to over $13 billion. Microsoft now holds a 49 percent stake in OpenAI’s for-profit subsidiary.

Chipmaker Nvidia, a key supplier of graphic processing units (GPUs) essential for AI, recently achieved a $3 trillion valuation, surpassing Apple as the second-largest firm worldwide.

The US authorities likely aim to investigate whether these tech companies have employed anticompetitive tactics to dominate the emerging AI industry.

As per media reports, the FTC will lead the investigation into Microsoft and OpenAI, while the DOJ will handle Nvidia.

What is the US government going to be investigating?

Regulators in the US, along with external observers, are concerned about the control a few companies exert over the AI sector, potentially sidelining smaller players and startups through unfair business methods.

The US has previously scrutinized Google’s monopoly in search engines and Meta’s dominance in social media through its ownership of Facebook, Instagram, and WhatsApp.

This shift towards more stringent regulation marks a significant policy change in the US over the past five years, after a long period of favoring market-driven approaches, explains Dirk Auer, Director of Competition Policy at the International Center for Law & Economics in Portland, Oregon.

“Regulators in both the US and the European Union are eager to address antitrust issues in the generative AI field. They believe they missed opportunities to enforce competition in the early days of Web 2.0, which led to higher market concentration,” Auer informed Al Jazeera.

Why are the investigations being split between two government agencies?

The FTC and the DOJ are jointly responsible for enforcing federal antitrust laws.

While the DOJ focuses on criminal enforcement and the FTC on civil enforcement, their duties often overlap. They are required to inform one another before starting an antitrust investigation, due to shared responsibilities.

In 2019, the two agencies collaborated on a landmark case against Facebook, Amazon, Apple, and Google parent Alphabet, resulting in lawsuits against these tech firms for allegedly violating antitrust laws.

Experts suggest that a similar approach could be taken in the investigation against Microsoft, Nvidia, and OpenAI.

Why are they taking action now?

US antitrust lawyer Barry Bennett notes that the enforcement agencies might be acting to avoid the expiry of the statute of limitations or to make significant progress before the US presidential elections in November.

They may also be acting due to a perceived legislative gap in Congress regarding regulatory measures against firms dominant in the AI ecosystem, Bennett told Al Jazeera.

This year, both the FTC and DOJ have been active. In March, the DOJ filed an antitrust lawsuit against Apple for monopolizing the US smartphone market. Separately, the FTC is investigating a $650 million deal between Microsoft and another AI startup, Inflection.

Have these companies been expecting an investigation?

Microsoft, OpenAI, and Nvidia should not be surprised by federal inquiries.

In January, the FTC began investigating investments by Microsoft, Amazon, and Alphabet—Google’s parent company—into OpenAI and another AI company, Anthropic.

FTC Chair Lina M Khan mentioned that the agency aims to understand whether major companies’ investments and partnerships might hinder innovation and fair competition.

What could a lawsuit achieve?

The primary goal of such an inquiry would be to enhance competition in the tech industry, a task regulators have tackled successfully before, according to Bennett.

Historically, the US government dissolved telecom giant AT&T in 1984 and won a landmark case against Microsoft in 2001 for monopolizing web browsers for Windows.

Bennett stated these cases unleashed significant creative potential and fostered innovation in the tech sector.

Auer, however, is skeptical about whether a case against Nvidia, Microsoft, and OpenAI would be sustainable in court.

“There are two main issues with these AI cases. Firstly, the generative AI sector appears to be highly competitive at present, making it a less suitable target for antitrust action. Secondly, the partnerships between AI startups and major tech companies seem to be highly beneficial,” Auer commented, noting that increased regulation could slow down future research and innovation by prolonging approval processes for financing and partnerships.