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Are Amazon, Google and Microsoft building AI monopolies?

I don't get it. Why does Bill trust these guys. Jeff Bezos wouldn't hurt you! Would he?

Big Tech’s Budding AI Monopoly

Microsoft and its peers have a longstanding strategy to thwart competitive upstarts.

By William P. Barr

May 27, 2024 2:42 pm ET

Microsoft, Google and Amazon are remarkably successful companies, and their ability to suppress competition in their primary and adjacent markets is unparalleled. These tech giants are now attempting to control artificial-intelligence technology. If allowed to dominate AI, they could reinforce and extend their supremacy over more of the economy. It is imperative that competition authorities carefully monitor and, where necessary, police the investments and partnerships that Big Tech is using to tighten its grip over AI.

Big Tech’s playbook for expanding its dominance is familiar. Once these platforms establish monopoly or near-monopoly power in their primary markets, they enter and gain competitive advantages in adjacent markets. As a House Judiciary Antitrust Subcommittee report found, Big Tech companies have frequently “invested” in emerging firms and technologies in adjacent markets, integrated or bundled these products with their dominant platforms, and then provided a leg up to their offerings by giving them superior access to their platforms.

Big Tech companies can thus pre-empt the normal evolution of emerging markets. Rather than evolve into their own solar systems, adjacent markets become mere satellites of the dominant firms. This not only allows tech giants to absorb new domains but also prevents the emergence of new rivals with technologies capable of disrupting the platforms’ dominance.

The strategy is intentional. Internal deliberations at dominant companies have sometimes shown that a significant reason for investing in adjacent technologies is to throttle threats to the companies’ core platforms and instead turn them into “improvements” that can insulate the firms from competitive challenges.

The latest threat Big Tech poses to competition concerns AI. We don’t yet know the potential of AI, positive or not. We’ve learned enough, however, to know that we need to scrutinize large-platform companies’ investments in and partnerships with startup AI ventures.

Microsoft has already entered into a partnership with OpenAI that includes a multibillion-dollar investment, collaboration in technology development and the provision, on an exclusive basis, of Microsoft cloud services to OpenAI. The potential for this collaboration with a dominant company like Microsoft has a well-established history of stifling competition in important startup technologies that otherwise would grow and potentially compete with top market firms. Incorporating OpenAI’s capabilities into Microsoft’s platform will doubtless reinforce the platform’s dominance.

Another concern is the possibility that AI falls into the wrong hands. Some policymakers have raised legitimate national-security issues about these large platforms’ achieving dominant positions in AI. Each firm is subject to some leverage or pressure from communist China as a condition of operating in the country.

Part of that arrangement likely includes giving Beijing and other foreign governments access to technology and code. As a Microsoft spokesperson has described it, that company has “long provided governments around the world ability to inspect limited portions of our source code.” Microsoft has other important ties to China’s development of AI through its funding of Microsoft Research Asia, established in 1998. With such cooperation comes the increased risk of being hacked and having one’s technology ransacked. The other large platforms are subject to similar pressure and thus face an elevated risk of theft and hacking.

One reason Big Tech companies have become so powerful is that regulators have been asleep at the switch over the past 25 years and allowed them to gobble up emerging firms before they posed a competitive threat. We can’t repeat these mistakes and must carefully scrutinize investments by dominant platforms on the front end so that governments aren’t left trying to undo the harms when it isn’t feasible.

Fortunately, we seem to be learning from our missteps. It’s encouraging that the Federal Trade Commission, European Union and U.K. Competition and Markets Authority have each initiated investigations to assess issues raised by Big Tech’s investment in AI.

The FTC in January issued orders pursuant to its powers in Section 6(b) of the FTC Act to Alphabet/Google, Microsoft, Amazon, Anthropic PBC and Open AI to scrutinize Big Tech “corporate partnerships and investments with AI providers to build a better understanding of these relationships and their impact on the competitive landscape.”

The European Commission is “looking into some of the agreements that have been concluded between large digital market players and generative AI developers and providers,” specifically whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation. In April the U.K. Competition and Markets Authority invited input from interested parties on investments by Microsoft and Amazon into AI. It also revealed that it had discovered an “interconnected web” of more than 90 partnerships and “strategic investments” among the same group of firms, which it said could be used to “shield themselves from competition.”

These are important, forward-thinking and balanced actions. Some of these investments may be justified—but regardless, regulators must address their potentially anticompetitive effects at the front end. And parties in relevant markets shouldn’t sit on the sidelines as these and other inquiries progress.

Mr. Barr is a co-founder of Torridon Law PLLC, a distinguished fellow at the Hudson Institute and author of the memoir “One Damn Thing After Another.” He served as U.S. attorney general, 1991-93 and 2019-20.

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