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The �鶹��ý Trade Commission today issued a staff report on the corporate partnerships and investments formed between the largest cloud service providers (CSPs)—Alphabet, Inc., Amazon.com, Inc., and Microsoft, Corp.—and two of the most prominent generative AI developers—Anthropic PBC and OpenAI OpCo, LLC.

The report details key aspects regarding the structure of the CSP and AI developer partnerships, such as the equity and revenue-sharing rights retained by CSPs in these partnerships and certain consultation, control, and exclusivity rights CSPs gained through their investments with AI developers.

The report outlines some potential competition implications, including that: the partnerships may impact access to certain inputs, such as computing resources and engineering talent; the partnerships may increase switching costs for the AI developer partners; and the partnerships provide CSP partners access to sensitive technical and business information that may be unavailable to others.

“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,” said FTC Chair Lina M. Khan. “The FTC’s report sheds light on 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 staff report stems from FTC orders issued in January 2024 under Section 6(b) of the FTC Act. The orders were sent to five companies involved in three separate multi-billion-dollar investments: Microsoft and OpenAI, Amazon and Anthropic, and Alphabet and Anthropic.

The FTC’s report is aimed at helping the Commission, the public, and policymakers deepen their understanding of the corporate partnerships between the generative AI developers and CSPs. The report’s findings also help equip the FTC to better evaluate the attributes and potential implications of partnerships involving large technology companies and the impact they may have on hundreds of millions of consumers, countless businesses, and huge segments of the economy.

Key Findings

The report highlights several key terms of the AI partnerships, which include:

• Significant equity and certain revenue-sharing rights for CSP partners in their AI developer partners;
• Certain consultation, control, and exclusivity rights CSP partners hold to varying degrees with respect to their AI developer partners;
• Commitments that require AI developers to spend a large portion of their CSP partner’s investment on cloud services from their partner;
• Sharing of key resources and information including access to large amounts of computing resources at discounted rates; assets and IP related to AI developers’ cutting-edge models; and certain financial and training data; and
• Opportunities to expand current products including through integration of AI models into CSPs’ products or deployment of AI models on CSPs’ platforms.

In addition, the report highlights the following areas to watch regarding potential implications of the AI partnerships:

• Their ability to impact access to certain inputs, such as computing resources and engineering talent, in ways that could affect competition for both AI developer partners and non-partner AI developers;
• The potential to increase contractual and technical switching costs for AI developer partners, making it more difficult for them to change CSPs or restricting their use of multiple CSPs; and
• CSP partners’ access to sensitive technical and business information that may be unavailable to others, such as information related to generative AI models, AI development methods, confidential chip co-design, partner finances, and customer usage and revenue numbers.

Findings in the report represent information available to staff as of September 2024 as well as publicly available information through January 2025.

The Commission voted 5-0 to allow staff to issue the report. Chair Lina M. Khan will be issuing a statement. Commissioner Andrew N. Ferguson issued a concurring and dissenting statement joined by Commissioner Melissa Holyoak. Commissioner Holyoak issued a concurring and dissenting statement joined by Commissioner Ferguson.