Big Tech’s partnerships with leading artificial intelligence companies and the field’s explosive growth have made AI a top target for antitrust regulators. Most notably, Microsoft has invested more than $10 billion in OpenAI, the developer of ChatGPT, while Google and Amazon have invested billions in Anthropic, another AI leader. It is. And just last week, Microsoft signed a $650 million deal with AI startup Inflection.
The Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) share responsibility for policing competition, and the two agencies have engaged in turf wars, formally investigating and possibly challenging OpenAI’s partnership with Microsoft. I am planning to file a complaint. Although the clearance agreement between the two regulators provides guidelines on which authority to assign antitrust matters to, it is not conclusive enough to prevent disputes.
The government agency that prevails in this dispute will likely gain antitrust powers over the AI field in general. For a variety of reasons, the Department of Justice is the better authority to do so.
Earlier this year, in the midst of this battle, the FTC ordered OpenAI, Anthropic, Microsoft, Google, and Amazon to provide information about their Big Tech investments and their potential impact on the AI race. The order was issued under Section 6(b) of the Federal Trade Commission Act, which allows the Federal Trade Commission to conduct investigations into certain areas of competition.
President Biden’s pick to chair the FTC, Lina Khan, has made no secret of her interest in leading regulatory litigation against AI. 6(b) research could be a way to contest her position in her AI turf war with the Department of Justice.
Nevertheless, this clearance agreement would appear favorable to the Department of Justice. That’s because it specifies that a key element in dispute resolution is “expertise regarding the product or similar products… gained through substantial antitrust research within the past seven years.” Neither regulator has significant antitrust experience in the AI field, but Justice has extensive experience in the related field of internet search as a result of its lawsuit against Google.
Internet search and artificial intelligence are merging technologies. Search engines use AI, and AI tools like ChatGPT are often used in a similar way to search engines.
Additionally, the Justice Department has argued that Google’s dominance in internet search gives it an advantage in the AI market, and the Justice Department will likely seek to counter this with any remedies resulting from the lawsuit. . That would mean the FTC’s antitrust enforcement efforts in AI would overlap, at least with respect to Google.
Further complicating the FTC’s oversight of AI competition, the FTC lacks jurisdiction over nonprofit organizations in most situations. This is a problem because OpenAI, a leading AI company, is organized as a nonprofit with for-profit subsidiaries. OpenAI will likely use this fact to its advantage if sued by the FTC. The Department of Justice has no such restrictions.
Despite strong arguments to leave competition in the AI industry to the Department of Justice, the turf war and the FTC’s 6(b) investigation demonstrate that the department will not back down easily.
Antitrust moderates and many in the AI industry are concerned about the FTC’s potential victory. This is because the FTC under the Khan administration has indicated that it is pursuing a very broad interpretation of its authority under Section 5 of the FTC Act, which prohibits “unfair methods of competition.”
While past administrations have interpreted Section 5 to prohibit more than what the major antitrust laws (Sherman and Clayton) make illegal, the FTC’s 2022 Policy Statement makes it clear that the agency will It is clear that this has not been taken into account. Meanwhile, the Justice Department will be bound by antitrust laws.
It will be difficult for the government to prevail in a pure antitrust case because the tech giants do not have control over the major AI companies and there is intense competition in the AI industry. That would make broad use of Section 5 in AI cases brought by the FTC very attractive.
The AI revolution will undoubtedly depend on huge investments from Big Tech. That’s because training AI models requires tremendous and ever-growing computing power, which would be difficult to afford without the funding and cloud computing capabilities provided by companies like Microsoft, Google, and Amazon. is.
But given the “neo-Brandeisian” philosophy Mr. Kahn brings to the FTC, this argument is likely to fall on deaf ears if it has to go to the FTC rather than the Justice Department. This approach rejects the current economic efficiency and consumer-oriented antitrust status quo in favor of a broader use of antitrust enforcement to rein in corporate power.
If Donald Trump is elected in November, it is unclear whether he will choose an FTC chairman who is markedly favorable to Big Tech’s AI investments. After all, Trump is a vocal critic of Big Tech.
What is clear is that no matter who heads the FTC, the Justice Department is best suited to oversee competition in the AI industry due to its expertise in internet searches, jurisdiction over nonprofits, and compliance with the Sherman and Clayton Acts. This means that it is a good choice.
Kurt Levy is the Chairman of the Justice Committee. Before he entered law school, he worked in the AI industry and was a pioneer in the technology of overcoming the out-of-the-box nature of AI models.
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