The FTC’s Inquiry Into AI Firms Undermines US Competitiveness, Says ITIF

WASHINGTON—Following the Federal Trade Commission’s (FTC) announcement today that it began an inquiry into five companies regarding recent investments and partnerships involving generative AI companies and major cloud service providers, the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, released the following statement from ITIF Vice President and Director of the Center for Data Innovation, Daniel Castro:

The FTC’s announcement today sends a brutal warning to all startups: Partner with Big Tech at your peril. AI startups face massive global competition, and they are striving to quickly launch products and close deals. No company will want to partner with U.S. tech companies if they suspect that doing so will invite an inquiry from the FTC, as well as the legal headache and expenses that might follow.

The FTC’s actions today will create a chilling effect on AI startups and, in the long term, will hurt U.S. competitiveness. Investors will likely be wary of funding firms that face a hostile regulatory environment that discourages strategic partnerships and mergers, thereby limiting the ability of AI startups to grow.

The FTC has provided no evidence to support launching this inquiry, nor is this inquiry based on an objective reading of the facts. The FTC has made clear in the past that it has Big Tech in its crosshairs and that it will pursue any opportunity to target these companies, even if its claims do not hold up in court. Unfortunately, it seems that the FTC is willing to take these actions even if it causes collateral damage to some of America’s most promising AI startups.