Antitrust Regulators Play Monopoly: Rolling the Dice on Artificial Intelligence

The stakes are getting higher in the battle for artificial intelligence (AI) supremacy as the federal government ramps up antitrust investigations into companies developing AI technology. On January 25, 2024, the Federal Trade Commission (FTC) announced it was launching an inquiry into Generative AI investments and partnerships. The Department of Justice (DOJ) joined with the FTC with an announcement on Thursday June 6, 2024, that they will split up oversight of the AI industry, with the DOJ probing semiconductor producer Nvidia and the FTC taking the lead on investigating Microsoft and OpenAI, the creator of ChatGPT.

This increased scrutiny should not come as a surprise given FTC Chair Khan's goal of targeting successful American business, particularly technology companies. Her January 2017 Yale Law Journalarticle, "Amazon's Antitrust Paradox," argued that protection of consumer welfare, including lower prices, should no longer be the standard for antitrust law because Amazon was using its market power in an anti-competitive manner. One of her suggestions for changing the application of antitrust law would be to treat Amazon as a public utility.

Chair Khan's antagonism and activism, as well her request for a 37 percent increase in the FTC's budget for fiscal year 2024, led her to being named Citizens Against Government Waste's September 2023 Porker of the Month. Her vision of how the antitrust laws should be enforced as well as her expansive regulation beyond the statutory authority granted by Congress to the FTC have been consistently rejected by the courts, including the July 3, 2024, decision in the U.S. District Court of the Northern District of Texas to issue a preliminary injunction against the FTC Non-Compete Clause Rule.

AI has multiple uses and holds great promise in industries like agriculture, cybersecurity, education, energy, healthcare, manufacturing, sales, and transportation. However, if the government intervenes with regulations and laws that impede innovation and the development of new applications using AI, the benefits to society will be much harder to achieve.

According to Adam Thierer of the R Street Institute, "Regulators must tread carefully and use a light touch, as overenforcement could freeze AI advancement to the detriment of the entire economy." A good example of how a light touch approach for new technology worked well was the initial approach to the internet during the Clinton administration, which was undone with Title II net neutrality by the Obama administration, restored by the Trump administration with the Restoring Internet Freedom Order, and then subject to net neutrality restrictions again by President Biden's FCC on April 25, 2024.

The FTC's inquiries into AI cover Alphabet, Amazon, Anthropic, Microsoft, and OpenAI. This increased scrutiny of an evolving and critical technology is risky for the government at a time when it should be encouraging innovation. The Biden administration must be mindful not to regulate or litigate in a manner that will stifle innovation in this critical technological frontier in which, for now, the U.S. is leading the world. With other nations, including China, working feverishly to gain the upper hand on AI development and use, aggressive executive branch overreach could jeopardize America's global competitiveness.

Antitrust battles and other efforts to regulate AI have only just begun. The outcomes will shape the future landscape for this emerging technology. Regulators must strike a careful balance between promoting competition and safeguarding continued U.S. innovation leadership. Overzealous regulation will end up doing more harm than good if it chills investment and disrupt the pro-innovation ecosystem that has allowed American companies to flourish.

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