FTC Concerned About Generative AI Monopolies

In a blog post today, the Federal Trade Commission’s Office of Technology expressed concerns over potential anti-competitive issues in the generative AI space.

The agency wrote that LLMs and other generative AI-powered tools rely on certain critical components, including large data sets used during the technology’s training phase, a proficient engineering and research team, and high-performance computing power, which can be out of reach for some companies in the field.

If a single corporation or small group of companies were to monopolize one of these components, the FTC writes they could potentially manipulate their control to suppress or skew competition within the sector.

“Generative AI may raise a variety of competition concerns. In particular, control over one or more of the key building blocks that generative AI relies on could affect competition in generative AI markets,” the agency wrote in the post.

The FTC says companies need to acquire both engineering and professional talent to develop and deploy generative AI products. But a scarcity of such talent in that field may lead to anti-competitive practices, like locking-in workers. For instance, if Google or OpenAI barred former engineers from joining another generative AI company, it would deplete the number of engineers available to help the competition.

Some tech companies are notorious for making employees sign non-compete agreements upon exiting a company, threatening legal action if an employee goes to work for a direct competitor.

The agency also mentions incumbents in the market could use unfair methods like bundling, tying, exclusive dealing, or other discriminatory behavior to maintain their dominance.

In addition, generative AI systems require significant computational resources, which can be expensive and controlled by just a few firms, leading to potential anti-competitive practices.

For instance, Microsoft is not just an investor and partner with OpenAI, but is also the exclusive provider of computing power for OpenAI. Hypothetically, Microsoft could be putting OpenAI at an advantage in terms of pricing, performance and priority.

The FTC even touched on open-source models that aim to democratize access to AI, writing that the technology can also be misused or used to lock-out competition.

“As competition issues surrounding generative AI continue to develop, the Bureau of Competition, working closely with the Office of Technology, will use our full range of tools to identify and address unfair methods of competition,” the agency wrote.