U.S. antitrust authorities have turned their attention to the rapidly evolving artificial intelligence (AI) industry. They are exploring potential enforcement actions as concerns grow about market dominance by major tech companies.
The U.S. Department of Justice and the Federal Trade Commission have begun scrutinizing leading industry players, which signals a new regulatory approach in the AI sector, said a news release by the International Bar Association.
The justice department recently initiated an investigation into Nvidia Corp, a chip manufacturer whose stock has seen significant gains this year. Nvidia’s dominant position in the AI hardware market is under review.
Meanwhile, the trade commission is probing Microsoft Corp’s investment in OpenAI and is questioning whether the tech giant is gaining an unfair advantage through its significant stake in one of the sector’s leading companies.
Both Nvidia and Microsoft declined to comment on these developments, according to the news release.
This regulatory scrutiny coincides with the launch of Llama 3.1 by Meta, the parent company of Facebook. The new AI model, reportedly developed with an investment of hundreds of millions of U.S. dollars, is a recent advancement in generative AI.
Jonathan Kanter, assistant attorney general for the justice department’s antitrust division, has expressed concerns about the potential for AI to reinforce existing market dominance. He noted that AI’s reliance on vast amounts of data and computing power could give already dominant companies a significant advantage.
“Powerful network and feedback effects” could allow these companies to control emerging AI markets, Kanter warned.
One challenge for U.S. regulators is determining the most effective policy tool for overseeing the AI industry. While antitrust enforcement is currently the main focus, there is growing recognition that new legislation may be necessary to create a comprehensive governance framework for big tech companies. The rapid pace of AI development, fuelled by billions of dollars in investment, adds urgency to this regulatory debate.
As U.S. authorities continue to navigate the complexities of AI regulation, the balance between fostering innovation and preventing market dominance will remain a key focus. The outcomes of these regulatory efforts will have significant implications not only for the AI industry but for the broader tech sector as well.
Doubts expressed
Despite the proactive stance of U.S. antitrust authorities, some experts questioned whether the government fully understood the complexities of the AI ecosystem.
“I'm not sure how great a grasp we have on what seems to be a very complicated stack of distinct activities that are all being roped together, tied up in a bow with this concept of artificial intelligence,” says Daniel Swanson, past co-chair of the IBA’s antitrust section and a partner at Gibson Dunn & Crutcher in Los Angeles, U.S., in the news release.
“I am not sure that the government, with all of their excitement and zeal to jump into this area, really knows what they're doing, either,” Swanson added. “There's a lot of prejudgment, or at least a lot of suggesting the authorities have some sense something pernicious is about to happen or is happening, whereas it’s not so clear that’s the case.”
“We're in something of a state of global disarray when it comes to addressing the digital sector,” said Diana Moss, vice president and director of competition policy at the Progressive Policy Institute in Washington, DC, in the news release.
“The tech companies are very complex, they’ve posed an enormous challenge for antitrust enforcement, and they got really big, really fast,” Moss said.