Federal AI Investigations Could Hinder Competition

Antitrust Scrutiny in the AI Market

### Navigating the AI Landscape

The Biden administration is taking an unprecedented approach to AI. The Department of Justice (DOJ) plans to investigate Nvidia. Similarly, the Federal Trade Commission (FTC) will investigate Microsoft and OpenAI.

These actions suggest a proactive stance. Regulators aren’t waiting for problems to occur. Instead, they aim to prevent issues before they arise.

### Predictive Regulation

FTC Chairwoman Lina Khan emphasized early intervention. Speaking at Harvard Law School, she highlighted the need to “issue-spot potential problems at the inception.” The goal is to be proactive rather than reactive.

DOJ Assistant Attorney General Jonathan Kanter also supports this approach. He stated, “the beauty of that is you can be less invasive.” However, predicting the future of AI remains a challenge.

### Historical Failures

U.S. antitrust authorities have a mixed record. The AOL-Time Warner merger in 2000 underwent exhaustive review. Despite this, it eventually failed in the marketplace.

Similarly, the Microsoft antitrust trial in 2001 became outdated before it concluded. Mobile devices and online data had already eclipsed browser wars.

### The Nvidia Case

Chipmaker Nvidia has seen a meteoric rise. Initially designed for video games, its chips excel at training large AI models. The company’s stock surged from $15 in November 2022 to $121.

Despite Nvidia’s success, Kanter pledged to investigate the company. He acknowledged the high level of competition yet called for scrutiny.

### Resource Allocation

Acting preemptively against a competitive company is curious. The DOJ and FTC’s approach consumes scarce regulatory resources. Yet, they continue to scrutinize established leaders like Meta, Apple, Google, and Amazon.

Regulators believe they can intervene in competitive markets. This attitude draws parallels to the poem “Tom Smith and His Incredible Bread Machine”.

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