Dirk Auer on the AI Antitrust Investigations

ICLE Director of Competition Policy Dirk Auer was quoted by Quartz in a story about news that Microsoft, Nvidia, and OpenAI are under antitrust investigation by the U.S. Justice Department and Federal Trade Commission. You can read the full piece here.

Antitrust regulators are likely taking preemptive action in the AI space because they regret being late to the game regulating internet giants, said Dirk Auer, director of competition policy at the International Center for Law and Economics. If they’d cracked down on Big Tech internet companies such as Google and Amazon earlier, there would likely be more competition in the search, online retail, and smartphones spaces today.

…A case against Nvidia would likely focus on its in-house business practices such as bundling its AI chips with services and giving rebates to customers, Auer said. Cases against Microsoft and OpenAI would focus on how their deals with other firms have consolidated the AI industry.

OpenAI and Microsoft, Auer said, represent “a crystallization of issues that antitrust authorities are worried about,” such as large, incumbent platforms like Microsoft entering into agreements with AI startups like OpenAI to “essentially protect their market position in that way, or even gain control over those AI startups, and in that way, extend their dominance [over] AI,” Auer said.

Auer thinks regulators’ case against OpenAI would be relatively weak. While OpenAI did not respond to a request for comment, Auer believes the firm would argue that while it’s competing aggressively with rivals, the AI market is too emergent for one player to hold a monopoly just yet.

“So long as that’s the case, I don’t think there’s much of an antitrust issue,” Auer said.

Nvidia, Microsoft, and OpenAI would have to devote substantial resources to compliance rather than creating the latest and greatest AI products, Auer said. That could benefit the AI market by allowing rivals to catch up to their dominant market positions. But those very competitors could catch heat from regulators, as well, given the government’s increasing scrutiny of tech and AI — which would hamper innovation.