The U.S. Justice Department (DOJ) and Federal Trade Commission (FTC), in tandem with their fellow competition-law enforcers from Europe (the European Commission) and the United Kingdom (the Competition and Markets Authority, or CMA), issued a joint statement July 23 titled “Joint Statement on Competition in Generative AI Foundation Models and AI Products.”
This joint statement touts the enforcers’ concerns with theoretical competitive harms from AI foundation models, which are “artificial intelligence models that are trained on a broad set of unlabeled data that can be used for different tasks, with minimal fine-tuning.”
The statement, however, is highly problematic. It misrepresents AI’s competitive risks and gives short shrift to the substantial economic benefits of AI. Unless it is disavowed by American enforcers, the statement will at the margin reduce private investment in the adoption and deployment of AI, slowing innovation and harming the economy. Furthermore, its negative effects will fall disproportionately on U.S. firms, which are leaders in AI. This will undermine U.S. international competitiveness.
The Joint Statement Misrepresents AI’s Competitive Risks
The joint statement focuses on a variety of potential competitive threats arising primarily from huge high-tech firms (such as Google, Facebook, Amazon, and Microsoft). It specifically is concerned about:
- Concentrated control of key inputs. These include “[s]pecialized chips, substantial compute, data at scale, and specialist technical expertise.” This could put “a small number of companies in a position to exploit existing or emerging bottlenecks across the AI stack and to have outsized influence over the future development of these tools.” This could allow a small number of big companies to shape innovation “to their own advantage, at the expense of fair competition that benefits the public and our economies.”
- Entrenching or extending market power in AI-related markets. Foundation models purportedly benefit “digital firms [that] already enjoy strong accumulated advantages. For example, platforms may have substantial market power at multiple levels related to the AI stack. This can give these firms the ability to protect against AI-driven disruption, or harness it to their particular advantage.”
- Arrangements involving key players that could amplify risks. “Partnerships, financial investments, and other connections between firms related to the development of generative AI have been widespread to date.” These “could be used by major firms to undermine or coopt competitive threats and steer market outcomes in their favor at the expense of the public.”
- The joint statement also stresses that “common principles to enable competition and foster innovation” in AI are “fair dealing,” “interoperability” of products and services across platforms, and “choices among diverse products and business models” for businesses and consumers.
