Testimony Before the House Judiciary Committee Regarding Artificial Intelligence Trends in Innovation and Competition
Joseph Coniglio testified before the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust, at a hearing on “Artificial Intelligence: Examining Trends in Innovation and Competition.” His written testimony is attached. His oral remarks follow.
Oral Remarks
Chairman Fitzgerald, Ranking Member Nadler, Chairman Jordan, Ranking Member Raskin, and esteemed members of the Subcommittee: I’m honored to be here today. In my remarks, I will highlight three key areas where AI and antitrust overlap and critique three competition policy frameworks for dealing with AI.
AI-Antitrust Overlaps
In my view, AI provides no reason at this time for either heavy-handed enforcement of our antitrust laws or fundamental changes to them.
▪ First, the AI industry is highly competitive and developing in a way consistent with the healthy innovation competition that typifies high-tech markets: Firms like Nvidia reinvented themselves with huge success to lead and recoup their investments in chips, while a number of newer players like OpenAI and Anthropic are flourishing at the model level—in part due to partnerships with large digital incumbents. Indeed, not only is robust competition among cloud providers a testament to big tech firms not resting on their laurels, but they are aggressively competing throughout the AI stack.
▪ Second, AI is already being heralded as the next general-purpose technology that, like the Internet, will transform our economy. And, as the past forty years make clear, the stakes for getting competition policy right are high: whereas the U.S. pursued deregulation and a consumer welfare antitrust model conducive to the innovation and growth that helped preserve its share of global wealth despite China’s rise, Europe continued with an antitrust framework more suited to protecting competitors, missed the digital revolution, and saw its share of global wealth fall by almost half. Importing a European-style competition policy to America risks repeating this mistake with AI and ultimately benefiting China in its own quest for AI dominance.
▪ Third is the question of how AI will affect the antitrust enterprise itself. For example, when it comes to combatting collusion, some have suggested that AI algorithms may make it easier for firms to form and police cartel agreements, as well as facilitate oligopoly outcomes without any agreement and thus avoid antitrust scrutiny. On the other hand, not only has the Department of Justice already brought AI-related algorithmic collusion cases using its existing tools—which in the future could even be enhanced by AI technologies that make it easier to detect cartels—but AI may also increase firms’ incentives to disrupt cartel behavior, resulting in less collusion throughout the economy.
Flawed Competition Policy Frameworks
In the face of these complex issues, I want to now discuss three flawed antitrust enforcement approaches policymakers may be tempted to adopt in light of AI.
▪ First is the idea that antitrust is more important than ever before. Some worry that AI will increase concentration throughout the economy by virtue of network effects and increasing returns to scale in ways that make it hard for markets to self-correct. These concerns, which are as old as antitrust laws themselves, overlook that the cost reducing potential of AI may also lower barriers to entry for small- and medium-sized businesses and create competition. Moreover, increased concentration not only isn’t bad when it is driven by lower costs that reduce prices for consumers, but it often empowers the incentives and abilities that spur innovation.
▪ Second, there is the contrary view that because AI is so disruptive, there’s little need to enforce the antitrust laws at all. Indeed, a similar debate was had during the Internet Revolution and noted in the seminal Microsoft case, where the court discussed how, in technologically dynamic markets, monopoly power may be only temporary. While like the Internet, AI is poised to bring tremendous benefits and disruption, the past forty years have taught us to be wary of formalizing theoretical assumptions of market self-correction. Antitrust still matters, and we should continue to carefully examine market realities for anticompetitive conduct in the age of AI.
▪ Third, there is the notion that AI may undermine the very market competition upon which antitrust law is premised. Specifically, some commentators have claimed that AI may render markets obsolete through more sophisticated calculation techniques that could make regulation superior. The central problem with this perspective is that it is based on a static understanding of how market competition works: more dynamic competitive processes will undercut the justification for state central planning and regulation in a way that reaffirms the importance of healthy, well-functioning markets.
The Right Approach
I think the right approach is to maintain antitrust law’s traditional focus on promoting competition and innovation by proscribing collusive and exclusionary anticompetitive conduct. This has, since the passage of the Sherman Act, withstood and helped manage the creative destruction that worked to make America the world leader that it is today. Ensuring that competition policy remains tethered to these principles is essential for preserving American leadership into the 21st century amidst the new wave of general-purpose technical change that is AI.
Thank you. I look forward to your questions.