Even monopolists risk losing their powerful position at key moments when the market changes. Artificial intelligence had the potential to be an inflection point like this. It seems plausible that in another world, today’s incumbent gatekeepers could have been unseated by this technological transition.
The consumer shift to mobile had the potential to unseat Facebook. Facebook was struggling with the transition to mobile, and Instagram was doing great. By buying Instagram, Facebook was able to neutralize that competitor. Going further back in time, Microsoft had tight control over the computer operating system, which was the key gate for any business that wanted to make products to run on computers. But they recognized that the browser would be the next key gate: people could access anything over the internet.
At these pivotal moments we often see anti-competitive conduct as the monopolist attempts to protect their powerful position. Where Facebook chose to buy, Microsoft attempted to bury. They used multiple strategies to exclude Netscape from the market, resulting in the landmark antitrust case against them.
Unfortunately, today’s Big Tech platforms are even more powerful than past monopolists. They saw this transition coming and have been preparing for years. In some ways it appears they have already completely transitioned their existing gatekeeper control to the new industry. When Sam Altman and OpenAI wanted to take their AI products to the next level, Altman knew he would need immense computing power. Although he had initially hoped to keep his company in a not-for-profit model, he recognized how critical it was to get access to that computing power. As a result, he agreed to a partnership with Microsoft.
Google’s mechanism for locking up search has been exclusive default contracts with browsers, mobile device manufacturers, and others; the subject of last year’s antitrust trial against them that has yet to be decided. In the trial, Microsoft’s Satya Nadela was asked how the new technology of generative AI was changing or would change the search market. His answer was that it didn’t change the fundamentals of the market. The default contracts continue to prevent Microsoft and Apple, the two largest potential competitors, from competing effectively against Google.
But the story is not over. As we speak, AI companies are still in a mad dash to gain access to as much content as possible to train their models. AI companies are licensing content, scraping it from the web, or leveraging data that they already control. This is not finished and it is happening today.
But control of data is only one piece of the puzzle—there are other features of the AI industry that will make maintaining dynamic competition extremely difficult including a small pool of skilled researchers and developers and intensive capital investment costs for training supercomputers and the cloud computing infrastructure necessary for offering AI services at scale. As a result, even with pro-competition policies it is likely that we will see significant consolidation around existing technology gatekeepers that already have access to the inputs necessary to succeed in the AI industry. Even more so than the platform markets that dominate our world today, AI may be a market that will tend towards tipping to monopoly or oligopoly. Facing down the prospect that the AI ecosystem may be dominated by a few powerful companies, that makes it all the more critical to decisively regulate AI to protect people from real harms like racial bias and discrimination, labor exploitation, disinformation, invasions of privacy and autonomy.
At the same time, I don’t want to give up on competition. That means applying fair competition rules to prevent AI gatekeepers from leveraging their power in one part of the stack into others. This might include utility-style regulation for cloud infrastructure to ensure fair access. It should also mean robust public sector investments in lowering barriers to entry into AI, through research and infrastructure and building full-stack public AI options that can compete with private AI models.
Even competition that doesn’t successfully unseat incumbent gatekeepers is valuable. A threat of competition can still compel a company to pay more attention to the interests of their customers than if there was no competition at all, so a threat of competition is worth using our policy levers to promote. Another important benefit of competition is innovation, and AI is certainly an area we hope will be characterized by innovation. And I mean the real, disruptive innovation that comes from competitive environments, not just the high research and development budgets spent on essentially maintaining the status quo that often characterizes monopolistic environments.
But fundamentally, I’m most concerned about another huge swath of our economy being controlled by a few large companies. AI has the potential to upend our labor markets and decimate adjacent industries. We don’t want all that power in the hands of four companies, unchecked by the dual accountability mechanisms of government and competition.
We have the opportunity to address the underlying problem here, which is the gatekeeper power of Big Tech platforms. We need to use all the policy levers at our disposal to do so. One, we need to pass the American Innovation and Choice Online Act (AICOA), so that one of Big Tech’s key tools for maintaining power, self-preferencing, is no longer in their toolkit. Other legislation to strengthen our antitrust laws would also be invaluable. Two, we need continued strong enforcement of existing antitrust laws as we have seen from Jonathan Kanter and Lina Khan and their teams at our antitrust enforcement agencies. Three, we need AI-specific, pro-competition policies like support for truly open AI tools and public infrastructure to lower barriers to entry in AI. Four, we need common sense privacy legislation with the previous Congress’ American Data Privacy and Protection Act (ADPPA) as a floor to keep some private data out of the hands of AI companies. Ultimately, we need a digital regulator with authority and expertise to regulate this sector for competition and consumer protection.
