DOJ Is Scrutinizing Rival AI Companies That Share Board Members

Leah Nylen, Bloomberg News

The US Department of Justice (DOJ) headquarters in Washington, DC, US, on Thursday, July 27, 2023. Donald Trump's lawyers are expecting the former president to be indicted as soon as Thursday over attempts to overturn the result of the 2020 election, according to a person familiar with the matter. Photographer: Al Drago/Bloomberg , Bloomberg

(Bloomberg) -- The Justice Department is scrutinizing whether artificial intelligence companies have overlapping executives or directors, an arrangement that can violate US antitrust law, a senior agency official said Wednesday.

The Justice Department is “on the lookout for AI competitors sharing board members,” Andrew Forman, deputy assistant attorney general for antitrust, said at a conference in Washington. Taking quick action to enforce rules while the industry is still developing can have competitive benefits, he said, “and that’s something that we’re particularly focused on.”

US antitrust law bars so-called interlocking directorates, in which individuals or entities sit on the board of directors for two companies that directly compete with one another. The Biden administration has stepped up enforcement against these interlocks, forcing directors to step down from the boards of companies such as Warner Bros. Discovery Inc. and Nextdoor Holdings Inc.

The AI industry has spurred particular concern among antitrust enforcers because many of the most promising startups depend heavily on the old guard of tech companies for their financing and infrastructure needs.

Over the past several months, Microsoft Corp., Amazon.com Inc. and Alphabet Inc.’s Google have spent billions of dollars investing in AI startups — a series of transactions that cemented alliances between the world’s cloud-computing giants and the leading developers of artificial intelligence software.

Microsoft has invested more than $13 billion in ChatGPT maker OpenAI. The ouster and subsequent reinstatement of OpenAI Chief Executive Officer Sam Altman in November exposed how inextricably linked Microsoft and the company have become. Those ties have already spurred antitrust reviews in both the UK and the European Union.

The Windows maker has subsequently invested 15 million euros in French AI startup Mistral and hired Inflection co-founders Mustafa Suleyman and Karén Simonyan, along with most of that startup’s 70 employees.

Google committed to back AI startup Anthropic with $2 billion in October, and Amazon agreed to an investment of as much as $4 billion last year. Anthropic was founded in 2021 by former employees of OpenAI, who left that company amid differences over the direction of the business.

The Biden DOJ’s enforcement efforts have unwound or prevented interlocks involving at least two dozen companies.

The Justice Department has previously said it has opened a number of probes into competition in artificial intelligence.

(Adds DOJ enforcement numbers. An earlier version corrected Microsoft’s investment in Mistral.)