AI poses a new antitrust problem

{"text":[[{"start":null,"text":"

"}],[{"start":6.69,"text":"The writer is former associate director for litigation in the FTC’s Bureau of Competition and co-founder of Simonsen Sussman"}],[{"start":15.830000000000002,"text":"I joined the Federal Trade Commission in the summer of 2021, just weeks after a federal judge dismissed the agency’s antitrust complaint against Facebook. It was a frantic, all-hands-on-deck moment. I was thrown into a room with lawyers and economists and tasked with keeping the case alive."}],[{"start":36.91,"text":"We rewrote the complaint, which challenged Facebook’s acquisitions of Instagram and WhatsApp in 2012 and 2014 respectively. Even then we were well aware of how late it was. If the FTC eventually won at trial (which, spoiler, it did not), the appeals process and complexity of unwinding these companies meant that a remedy might not arrive until 2029 — 17 years after the first acquisition."}],[{"start":67.21,"text":"Last month, Judge James Boasberg ruled that Meta was not a monopoly. The decision highlighted the difficulty that regulators around the world have in challenging acquisitions long after their completion."}],[{"start":81.6,"text":"Yet when Facebook made these purchases, regulators offered little pushback. This reflected a broader pathology at the time. In the wake of the 2008 financial crisis, the American economy seemed precarious. Against that backdrop, Silicon Valley offered a glimmer of hope. Companies like Facebook and Google were viewed as national champions. CEOs were paraded through the White House, treated as dignitaries of a new economic order."}],[{"start":113,"text":"We are now watching history repeat itself. Just as the government cheered on the consolidation of the social web in the 2010s, Washington is offering similar support today for the “hyperscalers” — Microsoft, Amazon and Google — to position themselves as guardians of artificial intelligence. Despite tough rhetoric, the administration is not pushing back on AI deals. We saw this recently when the Department of Justice cleared Google’s acquisition of cloud security company Wiz, waving through further consolidation in the cloud security market. Similarly, the regulatory response to the $38bn cloud deal between Amazon and OpenAI — an arrangement that binds the most prominent AI start-up to a dominant cloud incumbent — has been muted."}],[{"start":166.03,"text":"Such deals are fraught with conflict of interest. By taking controlling stakes in AI companies, hyperscalers are ensuring that the industry evolves in a way that serves their infrastructure and increases the moats around their lines of business. They have every incentive to direct innovation towards massive, data-hungry, compute-inefficient models rather than efficient, decentralised systems."}],[{"start":192.73,"text":"Yet instead of scrutiny, we are seeing a pilgrimage of AI CEOs to the White House. Proposals for a moratorium on state AI laws have been made. This is the language of antitrust amnesty. It suggests that, once again, economic uncertainty is leading Washington to trade competition for the pursuit of international corporate leadership."}],[{"start":216.26999999999998,"text":"The contrast between the current administration and the previous one is stark. When Nvidia attempted to acquire Arm in 2020 — a deal that would have locked down the fundamental architecture of chips used for AI — the FTC sued to block it and the deal was abandoned. Because Arm remained independent, Google is now able to compete with Nvidia in the production of AI chips, using Arm’s technology to build its own processors.  "}],[{"start":247.74999999999997,"text":"Regulators waited too long to address the danger that Facebook’s acquisitions posed to competition. This should be a wake-up call for the AI era. If we allow hyperscalers to devour the AI ecosystem under the guise of national competition, we will be left with a tech sector that is more centralised and more extractive than the one we have today. By the time it is a problem, it may once again be too late to change."}],[{"start":283.82,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1765248116_1543.mp3"}