Microsoft and Nvidia occupy a leadership position in artificial intelligence (AI). Together, the two companies have a stock market value of US$6.6 billion and, together with ManzanaAre the most valuable companies in the world.
Microsoft has invested a total of US$613 billion in OpenAI, the company behind the AI chatbot ChatGPT. Nvidia, which actually specializes in graphics cards, makes chips essential for the operation of high-end AI systems.
In the United States, its success has led competition authorities to intervene. Earlier this month, the Department of Justice and the Federal Trade Commission They agreed to investigate the dominant position of both companies in the AI market.
Nvidia has a market share of around 80% in specialized AI semiconductors. In just two years, its market capitalization has gone from US$6364 billion to US$63.32 trillion.
“Big tech has gained too much power in the last 15 years, and the regulators have stood idly by in the face of this fact“explains to D.W. Simonetta Vezzoso, lawyer and economist at the Italian University of Trento. “Now regulators want to prevent the same game from being repeated with AI.”
Nvidia and Microsoft: in the crosshairs of regulators
The many startups in the AI field need large amounts of data, as well as storage space and chips to train their software.
The regulators they suspect that technology giants like Microsoft and Nvidia use their power to force start-ups to sign opaque and exclusive contracts if they want to use their technology.
“The authorities responsible for regulating competition want to protect the innovations of start-ups,” says Vezzoso. “There are many conditions attached to these contracts, so it is possible that big technology companies hinder competition.”
Recent merger review likely
In March 2024, Microsoft acquired startup Inflection, which develops a personal assistant app called PI. The deal, valued at $6.65 billion, caused a stir over suspicions that it was actually getting a burgeoning rival to OpenAI out of the way.
“Microsoft bought Inflection without buying it,” Pedro Domingos, professor emeritus of computer science at the University of Washington, told DW. “They divided the company into its units, hired most of the employees and paid the investors what they were entitled to.”
Some competition authorities believe that large technology companies have bought, thanks to insufficient controls, hundreds of start-ups that, if they had not been acquired, could perhaps have radically changed the technology sector. For this reason, an important point of their investigations will be assess the impact on innovation of these acquisitions.
To correct the mistakes of the past, competition authorities “now want to act more quickly,” emphasizes Vezzoso, from the University of Trento. Vezzoso herself says she is in favor of taking “decisive measures against big technology companies.”
What does the future hold?
Pedro Domingos, for his part, considers it “strange” that antitrust lawsuits are filed “not for damages that have actually occurred,” “but for damages that could occur in the future.”
Domingos recalls that Meta CEO Mark Zuckerberg has often stressed that Instagram would never have been so successful if Facebook had not bought it. “Facebook has given Instagram a tremendous amount of infrastructure and expertise that the company didn’t have.
The same could be said for Microsoft and Nvidia in the future, with respect to the start-ups they could still buy,” says Domingos.
US President Joe Biden has promised to make controlling big technology companies a priority of his administration. And, according to legal experts, the Federal Trade Commission (FTC) and the Department of Justice are now working more closely to pursue business practices that distort competition in Silicon Valley.
Growing aversion to big tech
Pedro Domingos highlights that, in the US, almost a thousand laws regulating AI have been introduced since ChatGPT appeared. In his opinion, some politicians are “very hostile towards big technology companies and want to use AI as a tool to attack them.”
The increased scrutiny of their actions is already having a chilling effect on the US technology sector, where the number of acquisitions has decreased.
According to the analysis company 451 Research, mergers and acquisitions amounted to less than $300 billion last year, the lowest figure in recent years. In 2022, the value of all acquisitions reached almost US$6,800 billion.
According to data from Capital IQ Pro, large technology companies such as Meta, Salesforce, Alphabet, Apple and Amazon only made four acquisitions last year, compared to 18 the previous year.
“Big technology companies are now afraid of acquisitions and this harms the entire sector,” says computer scientist Domingos. “The fate of many startups is to be absorbed. “Everyone benefits from it.”
