FTC Investigating Amazon Deal with AI Startup Adept: Insider Reveals

Amazon.com is currently facing an informal inquiry by the U.S. Federal Trade Commission (FTC) regarding its recent deal with artificial intelligence (AI) startup Adept, according to a person familiar with the matter. This request from the FTC reflects their increasing concern over how AI partnerships are being formed, specifically in the case of Big Tech companies and prominent AI startups.

The focus of the inquiry revolves around Amazon's announcement last month that top executives and researchers from Adept, including CEO David Luan, would be joining the company. The FTC is seeking more details about the hiring process and the licensing of technology from the startup. It's important to note that informal inquiries may not always lead to official investigations or enforcement actions.

This comes as Amazon strives to catch up with competitors such as Google and Microsoft, both of which have partnerships with OpenAI, in developing their own large language models capable of providing near-instant responses to complex prompts or queries.

Earlier reports by Reuters have revealed Amazon's efforts to establish an organization called the Artificial General Intelligence (AGI) team, dedicated to the development of large language models. Luan now leads the AGI Autonomy team, which comprises several former Adept employees, and reports to Rohit Prasad, head of the AGI team at Amazon.

Adept, founded in 2022, garnered attention by securing over $400 million from venture capital investors. Their goal was to train large language models for general enterprise tasks. While the company once had a valuation of over $1 billion, it struggled to launch successful commercial products despite releasing open-source models. The details of any compensation to Adept investors or the licensing fees involved in the Amazon deal remain undisclosed.

All parties involved, including Amazon, Adept, and the FTC, declined to comment on the matter.

It is worth noting that the FTC is already investigating a similar movement by Microsoft. The company hired a significant portion of leadership and employees from another startup, Inflection AI, and agreed to pay a licensing fee of around $650 million. The FTC is examining whether this deal was an attempt to circumvent merger disclosure requirements.

This is not Amazon's first foray into investing in AI startups. Starting in September, the company has invested $4 billion in AI startup Anthropic, acquiring a minority stake in the San Francisco-based company.

Apart from Amazon and Microsoft, the FTC initiated a study earlier this year on investment and partnerships in the AI sector. They specifically demanded information on Microsoft's relationship with OpenAI, as well as Anthropic's partnerships with Google and Amazon. The extensive document request, made in January, aims to gather details on how such partnerships influence strategic decisions, pricing, access to products and services, and personnel choices.

U.S. antitrust enforcers have also expressed concerns about Big Tech companies using their AI advantages to stifle competition from smaller players. Both the FTC and the Department of Justice have assumed responsibility for potential investigations into Microsoft, OpenAI, and chipmaker Nvidia.