Microsoft and Big Tech Want to ‘Own’ Generative AI. Will Creators and the Feds Let Them? | Commentary

The last massive tech-tonic shift that rocked Hollywood — the Internet — birthed whole new categories of innovative companies that ultimately created the Big Tech world we know today. Now we’re in the next transformational wave — generative AI — and this time, history most certainly is not repeating itself. Big Tech’s established usual suspects — Microsoft, Google, Amazon, Meta and Apple — are doing everything in their enormous and largely unchecked power to prevent truly independent new players from encroaching on this next multi-trillion-dollar opportunity – the genAI space race.

Big Tech’s ever-greater power leads to ever-greater risk to the entertainment and creative community. Left unchecked, it both stifles innovation and the media and entertainment industry’s  ability to place sensible and necessary guardrails. After all, we know how Big Tech feels about copyrighted works — in its view, there is no reason to pay for it. All’s f-AI-r in AI love and war.

Big Tech boasts resources, including lobbying, that others can’t come close to matching. Its dollars spent to win at all costs are relentless, and its megaphone is by far the loudest. Look past the optics to see and appreciate AI’s realities. OpenAI — a putative indie — is the leading player. After all, it unleashed ChatGPT into a largely unsuspecting world to take the pole position — and just recently followed with its sensational cinematic quality video generator sequel Sora that left much of Hollywood and Madison Avenue in shock and awe. But Big Tech, in the form of its O.G. Microsoft, effectively owns it.

Sure, OpenAI started its independent life innocently enough. Well, as innocent as you can be with Elon Musk as a co-founder. It dedicated itself to serving the public by creating AI to “do good” — in the company’s words, “unconstrained by a need to generate financial return.” But that all changed when the company needed money. Microsoft stepped in with $10 billion, and just like that, principles be damned. (Microsoft and OpenAI can’t monetize that after all.)

Sugar daddy Microsoft’s fingerprints are all over OpenAI. It was Microsoft’s CEO Satya Nadella who came to Sam Altman’s rescue when some on the company’s board (you know, the “do good” ones?) ousted him as OpenAI’s CEO. This was no magnanimous gesture, of course. Nadella had his investment — and first-mover position — to protect. OpenAI also depends on Microsoft infrastructure to churn all those unlicensed copyrighted works in its AI black box. So much for high ideals. More like, innocence lost.

Microsoft is also a significant investor in two of OpenAI’s biggest “indie” rivals, Inflection AI and Mistral. It has invested more than $1 billion in Inflection AI alone. So how “indie” are they really? At a very basic level, any time a company receives a “strategic investment” — as is the case here — that investment comes with strings attached. Strategic investors like Microsoft expect some semblance of control. That’s precisely the point.

But there’s more. In a truly magical case of Big Tech sleight of hand, Microsoft recently absorbed Inflection’s entire senior management team into its own, leaving Inflection’s corporate carcass to essentially fend for itself. In other words, it found a way to buy the company without actually buying the company. Why? Because Microsoft knew that  antitrust regulators likely wouldn’t allow an outright acquisition to happen, especially since the company already finds itself in the Federal Trade Commission’s line of sight. So, Nadella sent his lawyers back to the drawing board, and voila — they came up with a new form of M&A without the pesky fuss and muss.

Notice anything else a bit unsettling here? Yes, that’s right — Microsoft is a strategic investor in three of the leading “independent” generative AI companies. In a classic case of hedging its bets, why just seek control over one when you can control them all (or at least exert some meaningful semblance of control)? Seems like concentrated power to me.

Big Tech is playing to win

Now let’s turn to Google, arguably next in line in this generative AI space race. Google, which is also on the Feds’ “most wanted” antitrust list, is playing to win so badly that it’s now openly casting aspersions on OpenAI by calling out OpenAI’s Sora for stealing YouTube’s IP. The funny thing is that Google is doing the same thing with its YouTube videos — using them to train its AI. Believing that we can’t handle the truth, Google blames its OpenAI derision on the AI company’s violation of YouTube’s terms of service, rather than using the triggering words “copyright infringement” (which could come back to bite it if they did).

Anthropic is another leading Silicon Valley born generative AI independent unicorn. But it’s same old same old here too. Amazon leads the Big Tech investment pack with $4 billion, but Google threw in $2 billion of its own for good measure. So Anthropic certainly is not free from Big Tech’s tentacles. And there we go again — big fish Google, like fellow whale Microsoft, swims in multiple ponds, leaving little room for smaller fish to thrive. They simply don’t have the resources or the magnitude needed to compete effectively.

Then there’s Meta, once again a leading player on the Big Tech stage after CEO Mark Zuckerberg jettisoned his bizarro metaverse-ian avatar persona (which is even stiffer than his actual one). Zuck finally found Wall Street religion and refocused the company’s resources on generative AI to catch up fast with the competing Goliaths. When his team determined they couldn’t waste the time or resources necessary to license the content they needed for training, they instead — like his Big Tech brethren — decided, “F’ it! Full steam ahead!” Copyrights be damned. That’s just about what his team reportedly said, according to The New York Times.

Let’s not forget formerly almighty Apple, which now faces significant industry headwinds. Just like Meta before it, Apple just recently dropped its own earlier “next big thing” dreams. Tim Cook was focused on project Titan, its long-anticipated autonomous car. Now Apple is moving full speed ahead into generative AI.

So, that’s your generative AI leaderboard, starring your usual cast of Big Tech characters that you know and some of you may actually love (especially if they’re in your 401K).

But is that a good thing? The simple answer is “no.” Unchecked power concentrated in the same few hands – all of which are relentlessly throwing unchecked dollars for the sake of “winning” the AI race simply to get bigger and bigger — is not good for anyone. That’s business 101 (even Dr. Seuss railed against it in “The Lorax”), and that’s what antitrust is about in the first place.

That’s precisely why the FTC  is scrutinizing all of this right now. Earlier this year, it launched an official inquiry into Microsoft’s investments into OpenAI and Amazon, and Google’s separate investments into Anthropic. But that doesn’t mean it will act or that Big Tech will slow down its investments into generative AI “startups” anytime soon. Amazon, in fact, thumbed its nose at the Feds just a few weeks ago when it added $2.75 billion to its original $1.25 billion investment into Anthropic – months after the FTC made its move. And just last week, the European Union — typically faster and more aggressive in its antitrust pursuits — cleared Microsoft from a formal review of its OpenAI investments.

The more things change, the more they stay the same.

Reach out to Peter at peter@creativemedia.biz. For those of you interested in learning more, sign up to his “the brAIn” newsletter, visit his firm Creative Media at creativemedia.biz, and follow him on Threads @pcsathy.

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