“Regulating the Rise of AI: Navigating Its Proliferation Across Industries”

The rise of generative artificial intelligence (AI) is happening quickly. However, questions regarding accuracy, bias, security, and regulation have started to emerge. Recently, officials in Germany and Italy warned about security and privacy concerns, while US regulators are becoming skeptical. To ensure AI development and deployment is safe, open, and producing real-world benefits, regulators should scrutinize AI partnerships that lack transparency and unfair competition arrangements. The goal should be to have an innovative, transparent, and competitive marketplace that brings life-changing technology in safe and responsible ways.

One place regulators can start is with the Microsoft and OpenAI partnership. Microsoft’s initial billion-dollar investment in OpenAI largely came in the form of Azure credits, which is a de facto subsidy that led to OpenAI being built on Microsoft’s cloud exclusively and rent-free. This unusual partnership has created deep ties between Microsoft and OpenAI’s technology infrastructures, raising several pressing questions for regulators. Should this partnership not be viewed as a deft move to create a subsidiary relationship while avoiding antitrust scrutiny? If so, should the Federal Trade Commission step in immediately to examine the impact on the competitive landscape?

Digital technology often follows a predictable cycle, leading to a threshold moment that changes the world. This pattern led to the World Wide Web in the 1990s, mobile phones in the 2000s, and is happening today with AI. As AI prepares to enter into broad adoption and revolutionary technologies, the biggest risk that technology itself cannot solve for will be anti-competitive business practices.

If OpenAI can’t run its most advanced models efficiently on non-Microsoft platforms, society will lose out because foundational technologies will be limited. Foundational technologies should be available on equal terms to innovators large and small, established and otherwise. Companies should succeed by using and building on foundational technologies based on the principle that innovation and competition create previously unimaginable products that benefit customers and society. Regulators should prevent one company from serving as a gatekeeper and hoarding foundational technology.

If regulators do not act, other AI walled gardens could quickly follow, like an Oracle walled garden, a Meta walled garden, or a Google walled garden, limiting interoperability and stunting innovation. An optimist might disagree and point out that the early pathway for foundational technologies is tough to foresee. However, going backward to undo the damage in the future will be tougher, bordering on impossible.

Regulators need to ensure a broad, diverse, and competitive marketplace where the key foundational technologies are open for equal access to advance AI ethics, fairness, and values. This means taking steps now to prevent “walled gardens” from being built in the first place. Regulators should step in now and ensure the Microsoft-OpenAI partnership is not simply anti-competitive activity under a clever disguise. Otherwise, a single company’s profit could override the world-changing threshold moment that AI promises.

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