The Federal Trade Commission (FTC) has released a staff report examining the partnerships and investments between major cloud service providers (CSPs) and leading generative AI developers. The study focuses on collaborations involving Alphabet, Inc., Amazon.com, Inc., Microsoft Corp., Anthropic PBC, and OpenAI OpCo, LLC.
The report explores the structure of these partnerships, highlighting equity and revenue-sharing rights retained by CSPs. It also details consultation, control, and exclusivity rights that CSPs gain through their investments in AI developers.
Potential competition implications are discussed in the report. These include how partnerships might affect access to inputs like computing resources and engineering talent. The relationships may also raise switching costs for AI developer partners and provide CSPs with access to sensitive technical and business information not available to others.
FTC Chair Lina M. Khan commented on the findings: “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.”
The report originates from FTC orders issued in January 2024 under Section 6(b) of the FTC Act. These orders were directed at five companies involved in significant investments: Microsoft with OpenAI, Amazon with Anthropic, and Alphabet with Anthropic.
The purpose of the FTC’s report is to enhance understanding among the Commission, public stakeholders, and policymakers regarding corporate partnerships between generative AI developers and CSPs. This understanding will help evaluate the potential impact on consumers, businesses, and economic segments.
Key findings include significant equity stakes for CSP partners in AI developers; various degrees of consultation rights; requirements for AI developers to spend investment funds on partner cloud services; shared resources such as discounted computing power; intellectual property related to advanced models; financial data sharing; training data access; product expansion opportunities through integration or deployment of AI models on CSP platforms.
Areas highlighted for further observation include potential impacts on access to essential inputs like computing resources or engineering talent affecting competition among both partner and non-partner developers. Additionally noted are increased contractual or technical switching costs making it difficult for partners to change or use multiple CSPs simultaneously while providing exclusive information access unavailable elsewhere regarding generative models' development methods confidential chip co-design partner finances customer usage revenue numbers
Information within this document reflects knowledge available up until September 2024 along with publicly accessible details extending into January 2025
In a unanimous decision (5-0), commissioners voted approving staff issuance without objection although separate statements were made by Commissioners Andrew N Ferguson joined Melissa Holyoak expressing concurrence dissent alongside additional remarks directly from Commissioner Holyoak aligning Ferguson's views
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