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A general view of the U.S. Federal Trade Commission (FTC) building, in Washington, D.C., on Wednesday, October 20, 2021
Antitrust is coming for AI
The US government's two antitrust regulators struck a deal to divvy up major investigations into anti-competitive behavior in the AI industry. The Justice Department will look into Nvidia’s dominance over the chip market, while the Federal Trade Commission will investigate OpenAI and its lead investor, Microsoft.
In December, the FTC opened a preliminary inquiry into Microsoft's $13 billion stake in OpenAI, which makes ChatGPT. It’s an non-traditional deal, in which Microsoft receives half of OpenAI’s revenue until the investment is repaid, rather than traditional equity. But Microsoft also flexed its muscles after the sudden ouster of OpenAI CEO Sam Altman last year, offering to hire him and any defecting OpenAI employees, effectively pressuring the company to rehire him — which it did soon after. The UK’s Competition and Markets Authority also began probing the relationship between the two firms in December.
Meanwhile, Nvidia has become the undisputed leader of the AI chip industry with their powerful graphics processors powering the training and operation of generative AI models. The company recently disclosed in a filing with the US Securities and Exchange Commission that its pole position and market dominance has attracted regulatory scrutiny from the United Kingdom, though it didn’t specify the nature of the inquiry.
Noah Daponte-Smith, a United States analyst for Eurasia Group, sees this announcement “largely as a messaging exercise intended to show that DOJ [and] FTC will be just as dogged on antitrust issues in the AI space as in the rest of the Big Tech arena.” He sees the decision as more of a continuation of Biden’s aggressive antitrust regime than a policy position on the regulation of AI.
“My sense is that AI regulation will have to occur more through Congress and through executive actions not focused on competition,” he added.
The Federal Trade Commission building is seen in Washington on March 4, 2012.
Big change to small print: US bans noncompete clauses
Looking for another job at a firm that does something similar to what you do now? Now could be your chance to jump ship.
The US Federal Trade Commission, the country’s top competition regulator, voted Tuesday to ban noncompete clauses.
What are those? They’re small-print stipulations in employment contracts that forbid you from working for a competitor or starting your own business, typically for a certain period of time after you leave your current job.
Supporters of noncompete clauses say they prevent intellectual property theft and bolster employers’ incentives to invest in their workforces.
But opponents say they stifle new business formation and suppress innovation, trapping employees in jobs regulated by clauses that they are rarely given a chance to negotiate directly.
Several US states, including California (AKA the world’s fifth-largest economy), have all-but-banned noncompetes for years. The FTC ruling brings that nationwide.
Competition could bring benefits. The FTC says banning noncompetes will create more than 8,000 new businesses annually, boost average wages by more than $500 per year, and lower health care costs by nearly $200 billion over the next decade. It’s hard to compete with that!