Antitrust regulators play monopoly: rolling the dice at AI

The stakes are rising in the battle for artificial intelligence (AI) supremacy as the federal government steps up antitrust investigations into companies developing AI technology. On January 25, 2024, the Federal Trade Commission (FTC) announced that it was opening an investigation into generative AI investments and partnerships. The Department of Justice (DOJ) joined with the FTC in announcing on Thursday, June 6, 2024, that they would share oversight of the AI ​​industry, with the DOJ investigating semiconductor maker Nvidia and the FTC taking the lead in investigating Microsoft and OpenAI, the creator of ChatGPT.

This increased scrutiny should come as no surprise, given FTC Chairwoman Khan’s goal of focusing on successful American businesses, particularly technology companies. Her January 2017 Yale Law Journal The article, “Amazon’s Antitrust Paradox,” argued that protecting consumer welfare, including lower prices, should no longer be the standard for antitrust law because Amazon uses its market power in anticompetitive ways. One of her suggestions for changing the application of antitrust law would be to treat Amazon as a public utility.

Chairwoman Khan’s antagonism and activism, as well as her request for a 37 percent increase in the FTC’s budget for fiscal year 2024, led to her being named “September Pork of the Month” for September 2023 by Citizens Against Government Waste. Her vision for how antitrust laws should be enforced, as well as her expansive regulation beyond the statutory authority granted to the FTC by Congress, have been consistently rejected by the courts, including the July 3, 2024 decision by the United States District Court for the Northern District of Texas to issue a preliminary injunction against the FTC’s noncompete clause rule.

AI has many applications and holds great promise in industries such as agriculture, cybersecurity, education, energy, healthcare, manufacturing, retail, and transportation. However, if governments intervene with regulations and laws that hinder innovation and the development of new AI applications, the benefits to society will be much harder to achieve.

According to Adam Thierer of the R Street Institute, “Regulators need to tread carefully and take a soft approach because over-enforcement can freeze AI development to the detriment of the entire economy.” A good example of how a soft approach to new technologies worked was the Clinton administration’s initial approach to the internet, which was reversed by Title II net neutrality under the Obama administration, restored by the Trump administration through the Restoring Internet Freedom Order, and then resubmitted to net neutrality restrictions by President Biden’s FCC on April 25, 2024.

The FTC’s AI investigations include Alphabet, Amazon, Anthropic, Microsoft, and OpenAI. This heightened scrutiny of an emerging and critical technology is risky for the government at a time when it should be encouraging innovation. The Biden administration must be careful not to regulate or litigate in a way that stifles innovation in this critical technological frontier, where the United States currently leads the world. While other countries, including China, are working feverishly to gain an advantage in AI development and use, aggressive abuse of executive power could threaten America’s global competitiveness.

Antitrust battles and other efforts to regulate AI have only just begun. Their outcomes will shape the future landscape for this emerging technology. Regulators must strike a careful balance between promoting competition and protecting America’s continued leadership in innovation. Overzealous regulation will do more harm than good if it stifles investment and disrupts the pro-innovation ecosystem that has allowed American companies to flourish.

— Sofia Zaidi