Antitrust in the Age of AI

The development of generative artificial intelligence (AI) has ushered civilization into a new era of technological curiosity and corporate integration. “Generative AI” is a type of AI that allows machinery to create new material rather than solely assess or change current data. Using models trained on massive quantities of data, generative AI may generate material—such as text, images, music, or video—that is sometimes indistinguishable from content created by people themselves. The global excitement around the debut of OpenAI’s ChatGPT has not only captivated the public’s attention but has also fueled the widespread adoption of AI across a variety of businesses. However, as AI technologies become more integrated into business processes, some antitrust concerns increase. Recognizing AI’s revolutionary influence, antitrust enforcers in the U.S., notably at the Federal Trade Commission (FTC) and the Department of Justice’s Antitrust Division, have emphasized the need to address the junction of AI and antitrust laws.

Federal antitrust rules, which are intended to create competitive markets and protect consumers, have expanded to cover the use of AI by businesses. These rules are intended to restrict actions that may reduce competition, including agreements among market participants and single-firm activity. For example, there have been worries about AI-powered pricing algorithms exchanging industry data, which might lead to anticompetitive agreements and artificially increased costs.

Companies as well as individuals that violate antitrust rules face serious repercussions, including civil enforcement proceedings, private civil litigation, and criminal prosecutions. For responsible individuals, sanctions may include civil monetary fines and injunctions, tripled damages, significant solicitor’s costs, and even jail.

The emergence of AI adds significant difficulties to antitrust issues. Today, AI can promote pricing collusion by using price monitoring and matching algorithmic software. Companies, despite wisely adjusting their prices to those of their competitors, are unable to communicate information about future pricing plans, either directly or indirectly, creating a new compliance difficulty for companies using price matching or implementing blockchains to implement smart contracts. Furthermore, AI may enhance the exploitation of market power through discrimination and bias, as well as the foreclosure of competitors, either through mergers, exclusive collaboration agreements, or the use of significant “Big Data“. As individuals write algorithms and decide upon their application, and without diversification and rigorous testing, this algorithm (which may have subtle biases) can then enter the system which can be automated and further perpetuated by AI.

As AI evolves and antitrust enforcement intensifies, companies that use AI should conduct an antitrust risk assessment, exercise caution when disclosing AI use to avoid collusion implications, audit third-party data sources and AI tools for accuracy, update antitrust compliance policies, and incorporate antitrust counsel into AI development and licensing processes.

In summary, the confluence of AI and antitrust rules is a complicated challenge that both regulators and industry must carefully address. As U.S. regulators aggressively confront the issues posed by AI, businesses must negotiate this changing landscape, developing comprehensive compliance controls to prevent antitrust risks connected with the incorporation of AI technology into their operations. In order to mitigate such risks, businesses should focus on examining suppliers of AI services and establishing in-house protocols, tools, and training.

In an era where AI’s potential for collusion, discrimination, and market power abuse becomes increasingly apparent, regulators’ proactive engagement highlights the importance of adjusting legal frameworks to the changing terrain of technological progress. Companies must stay diligent in ensuring that their AI applications comply with antitrust rules while also promoting fair competition and innovation in the marketplace.