The move to divvy up the industry mirrors a similar agreement between the two agencies in 2019 to divide enforcement against Big Tech, which ultimately saw the FTC bring cases against Meta Platforms and Amazon.com, and the DOJ sue Apple and Google for alleged violations.
Those cases are ongoing and the companies have denied wrongdoing.
While OpenAI’s parent is a non-profit organisation, Microsoft has invested US$13 billion in a for-profit subsidiary, for what would be a 49 per cent stake.
The Justice Department will take the lead in investigating whether Nvidia violated antitrust laws, while the FTC will examine the conduct of OpenAI and Microsoft.
The regulators struck the deal over the past week, and it is expected to be completed in the coming days, the person said.
Nvidia has roughly 80 per cent of the AI chip market, including the custom AI processors made by the cloud computing companies like Google, Microsoft and Amazon. That domination helps the company report gross margins between 70 per cent and 80 per cent.
Spokespeople for Nvidia and OpenAI declined to comment on the regulators’ agreement on Thursday. Microsoft said it takes its legal obligations to report transactions seriously and is confident it has complied with them.
The agreement between the two regulators comes after the FTC in January ordered OpenAI, Microsoft, Alphabet, Amazon and Anthropic to provide information on recent investments and partnerships involving generative AI companies and cloud service providers.
In July last year, the FTC opened an investigation into OpenAI on claims it had run afoul of consumer protection laws by putting personal reputations and data at risk.
Last week, Justice Department antitrust chief Jonathan Kanter said at an AI conference at Stanford University that there are “structures and trends in AI that should give us pause”, adding that the technology relies on massive amounts of data and computing power, which can give already dominant firms a substantial advantage.
The DOJ and FTC, led by Chair Lina Khan, share jurisdiction to enforce federal competition law but avoid duplicative investigations.
Bill Baer, who led antitrust efforts at the agencies during the Obama and Clinton administrations, said that typically each agency will take the lead in areas where it has amassed expertise. But occasionally the heads of the two agencies will sit down and iron out who does what, said Baer, a visiting fellow at the Brookings Institution.
The FTC is also looking into Microsoft’s US$650 million deal with AI start-up Inflection AI, over concerns as to whether the deal was a play to skirt merger disclosure requirements, the person said.
The unusual deal reached in March allowed Microsoft to use Inflection’s models and hire most of the start-up’s staff, including its co-founders.
The probe was first reported by the Wall Street Journal and the regulators’ agreement on AI by The New York Times.