Google Urges Ftc To Block Microsofts Exclusive Cloud Deal With Openai

Google Seeks FTC Intervention to Thwart Microsoft’s Exclusive Cloud Deal with OpenAI, Citing Concerns Over Competitive Imbalance

The tech giant is reportedly pushing the agency to end Microsoft’s lucrative deal with OpenAI, citing that it limits competition and potentially imposes higher costs on developers seeking to use ChatGPT APIs in their products.

In a move that has significant implications for the burgeoning artificial intelligence market, Google approached the US Federal Trade Commission (FTC) in an effort to have its rival, Microsoft, terminated from its exclusive deal with OpenAI. The exclusive agreement, reportedly worth over $13 billion, gave Microsoft access to OpenAI’s cutting-edge models and made it the company’s sole cloud provider through Azure.

Google argues that this deal harms competition by saddling rivals with extra costs and blocking them from hosting OpenAI’s latest models themselves. According to sources close to the matter, Google’s request came after the FTC began broadly probing how Microsoft’s cloud computing business practices may be harming competition.

In 2024 alone, Microsoft generated approximately $1 billion from reselling OpenAI’s large language models (LLMs), while rivals were stuck paying to train staff to move data to Microsoft servers if their customers wanted access to OpenAI technology. For one customer, Intuit, it cost millions monthly to access OpenAI models on Microsoft’s servers.

The FTC may not buy Microsoft’s argument that this arrangement constitutes “robust competition,” however, since rivals’ AI models significantly fall behind OpenAI’s models in sales. Any perception that the AI market is being foreclosed by an entrenched major player could trigger intense scrutiny as the US seeks to become a world leader in AI technology development.

The controversy surrounding Microsoft’s exclusive deal with OpenAI has sparked renewed interest in the regulatory landscape of the tech industry, particularly in light of the growing importance of artificial intelligence. As the US pushes to solidify its position as a global leader in AI technology, it remains to be seen whether the FTC will take action to address concerns over competitive imbalance.

Microsoft’s agreement with OpenAI could have significant implications for the broader tech industry, particularly if businesses convince the agency that the costs of switching to Microsoft’s servers to access OpenAI technology is so burdensome that it’s unfairly disadvantaging rivals. The outcome of this dispute will likely be closely watched by regulators and industry stakeholders alike.

The market reaction to this development has been largely muted, with many analysts predicting a prolonged period of uncertainty in the tech sector. As the situation continues to unfold, one thing is clear: the stakes have never been higher for Microsoft and its competitors in the rapidly evolving world of artificial intelligence.