US ‘clears way’ for antitrust inquiries of Nvidia, Microsoft and OpenAI; ECB interest rate cut expected today – business live | Business

Elsewhere this morning, the top US antitrust enforcer has pledged to look “with urgency” at the artificial intelligence sector.

Jonathan Kanter has told the Financial Times about his concerns that power over the transformative technology is being concentrated among a few deep-pocketed players.

Kantar cited “monopoly choke points and the competitive landscape” in AI, such as thecomputing power and the data used to train large language models, to cloud service providers, engineering talent and access to essential hardware such as graphics processing unit chips (where Nvidia has such power).

The FT explains:

Regulators are concerned that the nascent AI sector is “at the high-water mark of competition, not the floor” and must act “with urgency” to ensure that already dominant tech companies do not control the market, Kanter said.

Sometimes the most meaningful intervention is when the intervention is in real time,” he added. “The beauty of that is you can be less invasive.”

Some of the biggest players in the artificial intelligence field are facing the prospect of an antitrust investigation.

US regulators have cleared the way for antitrust inquiries into Nvidia, Microsoft and OpenAI, according to reports this morning, as they intensify their scrutiny of AI.

The New York Times reports that the US Justice Department and the Federal Trade Commission have reached a deal to split responsibility for investigating the three major players in AI.

Once completed, probably in the coming days, the deal will mean the DoJ will take the lead investigating Nvidia, whose chips are driving the AI revolution, and whose market capitalisation hit $3trn last night.

This leaves the FTC with the task of examining OpenAI, maker of the ChatGPT chatbot, which has received billions of dollars of investment and support from Microsoft, which owns 49% of its shares.

Nvidia, OpenAI and Microsoft are in the spotligh due to concerns over their dominance of the AI space, and worries that. artificial intelligence will cost millions of jobs, and that safety oversight within the industry is weak.

The move shows that the AI industry faces growing regulatory scrutiny.

Back in January, the FTC launched an inquiry on Thursday into investments and partnerships made by some of the biggest companies in the generative artificial intelligence space.

Just last week, US antitrust chief Jonathan Kanter told a conference that there are structures and trends in AI that should give us pause’”.

Kanter, the assistant attorney general for the antitrust division at the Department of Justice, explained:

AI relies on massive amounts of data and computing power, which can give already-dominant firms a substantial advantage.

Powerful network effects may enable dominant firms to control these new markets, and existing power in the digital economy may create a powerful incentive to control emerging innovations that will not only impact our economy, but the health and well-being of our society and free expression.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The European Central Bank is poised to join a select group today, by lowering borrowing costs across the eurozone.

Following heavy hints in recent weeks, economists widely agree that the ECB will vote to lower its key interest rates at a governing council meeting in Frankfurt today.

A cut makes sense, as inflation across the eurozone has cooled this year – to 2.6% in May. It would start to unwind a tightening cycle that began in summer 2022, and which has pushed the ECB’s deposit rate to a record high.

The decision comes at 1.15pm UK time; the money markets this morning show that a rate cut is a 92% probability, with just 8% chance of no change.

If that’s accurate, the ECB would join Sweden and Switzerland, who lowered their interest rates in recent months, and Canada, which yesterday became the first G7 country to cut rates in this cycle.

It would mean, unusually, the ECB easing policy before the US Federal Reserve.

Economists and traders are also looking for hints as to how quickly the ECB might continue to ease policy in the coming months.

Inflation actually rose in May, up from 2.4% in April, which has created some uncertainty over whether underlying price pressures have been subdued.

Henk Potts, market strategist at Barclays Private Bank, commented:

“After nine months of keeping rates on hold, we expect the European Central Bank to embark on a rate-cutting cycle at its meeting on Thursday, 6 June. A quarter-point reduction across its policy rates, the first cut since 2019, is anticipated.

Our view is that the Governing Council’s rationale will likely be driven by a stronger-than-expected recovery in activity and increased confidence that inflation will return to the targeted level. Beyond the June meeting, we forecast that we could see quarter-point cuts in September and December. In addition, we expect to see 75 basis points of cuts next year, with the deposit rate finishing 2025 at 2.5%.”

Analysts at Deutsche Bank told clients that the question is, “what comes after June?”, adding:

The cut will set the new direction for policy but with economic momentum outperforming expectations and domestic inflation proving sticky in 2024, the ECB can afford to take things slowly and let the data set the parameters of the easing cycle.

The agenda

• 9.30am BST: UK construction PMI report for May

• 9.30am BST: UK economic activity and business insights data

• 1.15pm BST: European Central Bank interest rate decision

• 1.30pm BST: US weekly jobless claims

• 1.30pm BST: US trade balance for April

• 1.45pm BTS: European Central Bank press conference