The US Federal Trade Commission (FTC) raised antitrust concerns over Microsoft’s $13 billion investment in OpenAI, warning the tie-up could provide the tech giant with an unfair advantage in the AI market.

In a wide-ranging report looking into the relationship between cloud providers and AI developers, the regulator also took aim at deals struck by Amazon and Google with AI companies such as Anthropic.

The FTC claimed such deals could lead to big tech companies gaining undue control over AI start-ups, even fully acquiring them in the future. It criticised their “circular spending” practices, where companies like Microsoft require AI start-ups to reinvest funding into their cloud services and products, skewing market power. Microsoft’s funding of OpenAI was largely delivered as credits for its Azure cloud platform.

In the report, it was also revealed that at least one unnamed tech giant received confidential financial information from an AI start-up, including weekly revenue reports and customer updates. Another deal allowed a company to access AI-generated outputs, or “synthetic data,” used to train the tech company’s own AI models.

Concerns were also raised over the potential for such partnerships to result in the monopolisation of AI talent and resources. Additionally, exclusivity rights included in some agreements might discourage AI companies from partnering with multiple cloud providers, further disrupting competition.

In a statement, FTC chair Lina Khan claimed the report uncovers “how partnerships by big tech firms can create lock-in, deprive start-ups of key AI inputs, and reveal sensitive information that can undermine fair competition”.

The European Commission also took a look at the Microsoft OpenAI partnership in 2024. However, it opted not to launch a formal investigation because it found the AI company was not under Microsoft’s direct control.