OpenAI, previously a close partner of Microsoft, is now officially recognised as a competitor. Microsoft’s recent SEC filing marks the first time the company has publicly acknowledged this shift. OpenAI is now listed alongside tech giants like Google and Amazon as a competitor in both AI and search technologies.
The relationship between the two companies has been under scrutiny, with antitrust concerns arising from the FTC. Microsoft’s decision to relinquish its board observer seat at OpenAI follows a series of significant events, including the brief dismissal of OpenAI’s CEO Sam Altman. The filing may reflect a strategic move to alter public perception amid these investigations.
Silicon Valley has a history of companies navigating complex relationships, balancing roles as both partners and competitors. The dynamic between Yahoo and Google in the early 2000s serves as a notable example. Microsoft and OpenAI might be experiencing a similar evolution, with both entities maintaining competitive and cooperative elements.
Meanwhile, Microsoft continues to expand its own AI initiatives. The hiring of Inflection AI co-founders to lead a new AI division and the development of Microsoft Copilot highlight the company’s broader strategy. The diversification suggests a strategic approach to AI that goes beyond its ties with OpenAI.
US progressive groups and Senator Elizabeth Warren have called on the Department of Justice to investigate Nvidia for potential anti-competitive practices, citing the company’s dominant position in the AI chip market. Nvidia’s market value surged to $3 trillion this summer, driven by high demand for its advanced chips used in AI models. The groups, including Demand Progress, criticised Nvidia’s bundling of hardware and software, arguing that it restricts competition and stifles innovation.
The Department of Justice has been directed to oversee potential antitrust probes into Nvidia, while the Federal Trade Commission is investigating other tech giants like Microsoft and OpenAI. Nvidia maintains that it follows all regulations and supports a wide range of industries and innovators.
With approximately 80% of the AI chip market and nearly 100% of the market excluding cloud providers’ custom chips, Nvidia’s dominance is significant. Senator Warren has expressed concerns about the risks of a single company controlling the AI market. The Department of Justice has not commented on the case’s specifics, but antitrust officials are concerned about potential bottlenecks in the industry.
The European Commission has approved Hewlett Packard Enterprise’s (HPE) acquisition of Juniper Networks without any conditions. The Commission determined that the merger would not pose significant competition issues within the European Economic Area (EEA). HPE, a provider of IT infrastructure and cloud solutions, and Juniper, which specialises in networking and security solutions, did not significantly overlap in their markets.
The Commission’s investigation covered several areas, including wireless network equipment, Ethernet switches, and data centre switches. It concluded that the merged entity would still face substantial competition from other major players and would need more market power to disrupt competitive dynamics. The Commission also found no risk of anti-competitive bundling practices due to the differing nature of the products offered by the two companies.
With no substantial competition concerns raised, the Commission cleared the transaction unconditionally. The Commission was notified of the merger on 27 June 2024, and the review was completed within the standard 25 working days. More details on the case can be accessed on the Commission’s competition website under case number M.11457.
Silicon Valley AI startups are increasingly merging with major tech giants like Microsoft and Amazon. Due to financial constraints, many promising companies such as Inflection AI and Adept have seen key executives move to these tech giants through discreet deals. These transactions, often viewed as acquisitions, aim to bypass competition regulators.
Character AI and French startup Mistral struggle to secure the funding needed to remain independent. Even OpenAI, the creator of ChatGPT, is deeply tied to Microsoft through a $13 billion investment deal, ensuring exclusive access to its advanced models. Amazon has similarly invested in Anthropic to secure high-performing AI models.
The immense computing power required for developing generative AI, which can produce human-like content rapidly, necessitates substantial financial resources. As a result, many AI startups, founded by former leaders of major tech firms, rely on the support of large cloud providers to recreate the conditions of well-funded research labs. The shift like this one deviates from the traditional Silicon Valley startup narrative.
However, the consolidation of AI innovation under a few tech giants raises concerns about competition. Critics argue that aligning with these companies stifles creativity and innovation. Government regulators in the US, EU, and UK are scrutinising these deals, with recent actions indicating a growing regulatory interest in ensuring fair competition within the nascent AI industry.
Britain’s antitrust watchdog is examining Google-parent Alphabet’s partnership with AI startup Anthropic to assess its impact on market competition. The scrutiny comes amid growing global concerns about the influence of major tech companies on the AI industry following the AI boom sparked by Microsoft-backed OpenAI’s release of ChatGPT.
Regulators are scrutinising deals between big tech giants and AI startups, including Microsoft’s collaborations with OpenAI, Inflection AI, and Mistral AI, as well as Alphabet’s investments in companies like Anthropic and Cohere. Anthropic’s AI models, developed by former OpenAI executives Dario and Daniela Amodei, compete with OpenAI’s GPT series.
Last week, the UK’s Competition and Markets Authority (CMA) joined forces with US and the EU regulators to ensure fair competition in the AI sector. The CMA is now inviting public comments on the Alphabet-Anthropic partnership until 13 August before deciding whether to initiate a formal investigation. The CMA’s decision will be based on feedback during this initial consultation.
Hewlett Packard Enterprise (HPE) is anticipated to receive unconditional EU antitrust approval for its $14 billion acquisition of Juniper Networks, a leading networking gear maker. The acquisition, announced in January, highlights the industry’s urgency to innovate and develop new products in response to the surge in artificial intelligence-driven services.
The European Commission is set to decide on the deal by 1 August. Both HPE and Juniper have declined to comment on the matter. Sources suggest that HPE plans to emphasise the dominant market position of Cisco, Juniper’s main competitor, to mitigate any potential competition concerns from the EU.
In addition to the EU review, the deal is also under scrutiny by the UK’s antitrust authorities, with their decision expected by 14 August. The acquisition marks a significant move in the tech industry as companies strive to stay competitive in the rapidly evolving AI landscape.
Apple’s upcoming AI features will be released later than initially expected, missing the launch of the new iPhone and iPad software updates. The AI features, called Apple Intelligence, are set to roll out by October, a few weeks after the scheduled release of iOS 18 and iPadOS 18 in September. These new features will first be available to developers for testing with the beta versions of iOS 18.1 and iPadOS 18.1.
In June, Apple highlighted its commitment to AI with new device enhancements, aiming to boost declining sales. Apple Intelligence is designed to generate text, images, and other content on demand. It will be compatible with the iPhone 15 Pro, iPhone 15 Pro Max, and devices with the M1 chip and later. The MacOS Sequoia update will allow iPhone screens to be mirrored on Mac computers for interaction.
Why does it matter?
The delay follows Apple’s decision in June to postpone the launch of three AI features due to the EU regulations. The rules mandate that Apple ensures compatibility with rival products and services.
The tech giant continues to push its AI initiatives despite the challenges posed by international regulations as it seeks to remain competitive in the evolving AI field.
Spain’s antitrust regulator, the CNMC, has launched an investigation into Apple’s App Store for potentially anti-competitive behaviour. The investigation focuses on Apple’s alleged imposition of unequal commercial conditions on developers of mobile applications sold through its platform.
The CNMC has suggested that these practices could constitute a serious violation of competition law. If Apple is found guilty, it could face a substantial fine of up to 10% of its global revenues. The following investigation in Spain highlights ongoing concerns about Apple’s dominance in the app store market and its impact on competition and developers.
Chinese companies have access to the much coveted Nvidia AI chips through their access to online cloud services owned by Google and Microsoft. The two American tech giants and other international companies rent to Chinese firms operating off-shore Nvidia-powered servers to power their data centres.
These and several other cloud service providers, including several AI startups, offer such services to companies across the globe. However, cloud service providers are based in more than just the US. Many operate out of Asia and Europe.
China’s access to these advanced AI semiconductors is noteworthy as the industry continues to benefit from an upswing, and the Biden administration continues to pressure local companies to ensure they uphold export regulations in place, targeting the ban on China.
The US Department of Commerce Secretary, Gina Raimondo, lamented the security risk China’s access to these chips poses to national security and promised to do more to prevent companies from skirting the legislation.
The French competition authority has officially launched an investigation into chipmaker Nvidia for suspected anti-competitive behaviour, confirming ongoing scrutiny of the company’s practices. Benoit Coeure, the agency’s president, affirmed during a press briefing that Nvidia could face charges pending the outcome of the investigation.
Earlier reports, based on insider information, indicated that Nvidia was likely to be formally charged by the antitrust regulator in France. The investigation focuses on allegations of practices that may hinder competition within the market.
Nvidia, a prominent player in the semiconductor industry, faces increasing regulatory scrutiny globally amid concerns over its market dominance and business practices. The outcome of the investigation by the French authority could have significant implications for Nvidia’s operations and market strategy moving forward.
