The United States' largest antitrust regulator is stepping up scrutiny of the country's most powerful artificial intelligence developers.
The Department of Justice and the Federal Trade Commission have opened and split off investigations into Nvidia (NVDA), Microsoft (MSFT), and OpenAI, according to reports from The New York Times and The Wall Street Journal.
According to the New York Times, the Department of Justice will lead an investigation into Nvidia's (NVDA) dominance in the market for microprocessors that power AI, while the FTC will lead an antitrust investigation into Microsoft and OpenAI.
The new investigation is part of a broader effort by the Biden administration to rein in what it sees as anticompetitive behavior in a number of industries, from health care to groceries to technology.
The administration has already alleged anticompetitive behavior against tech giants Apple (AAPL) and Amazon (AMZN), and has argued that Microsoft's acquisition of gaming giant Activision Blizzard would create a monopoly in the gaming market.
Also on the table is a lawsuit brought by the Trump administration challenging Alphabet's (GOOG, GOOGL) search dominance. A judge is currently reviewing evidence in that case, and a decision is expected later this year.
These efforts haven't always been successful: The FTC failed in its challenge to Microsoft's acquisition of Activision Blizzard and in a separate battle to block Meta's acquisition of VR company Within.
The FTC said last year that it wanted to scrutinize the burgeoning field of AI more closely.
Last July, the company announced that it had launched a consumer protection investigation into potential harm posed by OpenAI's data collection methods and the output of its Large Language Models (LLMs).
Then in January, it launched a broader investigation into big tech companies' dealings with AI developers, including Microsoft's $13 billion investment in OpenAI and Alphabet's ties to rival AI developer Anthropik.
The Wall Street Journal reported that the FTC's investigation into Microsoft will extend beyond the tech giant's conduct to also include a contract the company signed with AI developer Inflection AI.
According to The Wall Street Journal, the FTC wants to know why Microsoft chose to pay a $650 million licensing fee to resell Inflection's technology rather than buying it. The FTC's interest is reportedly heightened because Microsoft also bought most of Inflection's staff as part of the deal.
In response to the report, a Microsoft spokesperson said the deal with Inflection gives the company the opportunity to hire Inflection AI staff and accelerate development of its AI chat interface, Microsoft Copilot.
Microsoft says the structure will allow Inflection to continue pursuing its independent business and ambitions as an AI studio.
“We take our legal obligations to report transactions under the HSR Act seriously and are confident that we comply with those obligations,” the spokesman said.
According to the Wall Street Journal, both companies received subpoenas from the FTC seeking information related to the deal.
Nvidia declined to comment on the reports.
Michael Carrier, an antitrust expert and co-director of the Rutgers University Institute for Information Policy and Law, said antitrust regulators seeking to review the Microsoft agreement will likely focus on its substance, not its structure.
“The authorities will seek to determine whether Microsoft restructured the transaction in a manner that allowed it to gain control of Inflection AI while avoiding the FTC's investigation of the transaction,” Carrier said.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter. Alexis Weed.
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