Rethinking Antitrust for the AI Era: A Call to Action

The White House has declared artificial intelligence (AI) “non-negotiable” for America’s future, emphasizing that winning the AI race is essential for the nation’s prosperity and security. However, achieving this goal requires a fundamental reevaluation of antitrust policies. Rather than holding back innovation through litigation, the U.S. must allow fast-moving markets to address their own power dynamics organically.

A Standstill in Antitrust Enforcement

Currently, antitrust enforcers view markets as static entities, frozen in time. A notable example is the Department of Justice’s (DOJ) case against Google’s search product. While the court acknowledged that Google succeeded through innovative technology and savvy business practices, it ultimately found the company in violation mainly due to its multi-year default search engine contracts. Rather than adapting to the rapidly changing landscape, the DOJ decided to embark on a five-year legal battle aimed at dismantling Google’s operations.

The Evolving Landscape of Search

Fortunately, the court has shown a better understanding of competition than the DOJ. In its remedies decision, it pointed out that “[m]uch has changed since the end of the liability trial.” Specifically, AI is revolutionizing search. Traditional search engines, once merely providing lists of links, are now being overshadowed by AI-generated content. Surveys indicate that 80% of consumers rely on AI-generated overviews for at least 40% of their searches, with many concluding their search experience without a single click.

The Rise of AI Platforms

AI platforms are rapidly gaining traction in the search domain. Approximately two-thirds of users of large language models rely on these systems to research, gather, and summarize information. In the past six months, the use of AI for search has nearly doubled. Google’s share of general information searches has dropped by 8% this year, reflecting this dramatic shift. When AI is involved, Google and Microsoft collectively contribute to less than half of the overall search usage.

Legal Challenges and Their Impact on Innovation

Despite these advancements, the court’s remedy could slow the AI revolution. The decision for Google to share its search data with rivals might facilitate imitation rather than true innovation. This approach incentivizes companies to cling to outdated products instead of propelling the market forward.

The Federal Trade Commission’s (FTC) case against Meta presents another instance of static thinking. To justify its claims, the FTC defined a narrowly focused market termed “personal social networking services.” This approach inadequately reflected the competitive landscape that includes diverse platforms such as TikTok, YouTube, and X, each vying for user attention and advertising revenue.

The Shifting Terrain of Online Advertising

In the realm of online advertising, Google was recently found guilty of monopolizing parts of the open-web advertisement technology stack. However, digital advertising is far from static. As users migrate from traditional browsing to app-centric platforms like TikTok, advertisers increasingly view these channels as their most effective marketplace. TikTok’s ad system is considered highly effective for engaging younger audiences, perhaps even becoming essential for small businesses and content creators.

The Flawed Mindset of Regulators

A consistent flaw in these antitrust cases is an “end-of-history” mindset. Regulators often assume that current market dynamics will persist indefinitely, viewing large firms as threats to competition based solely on their size. However, the reality is that tech markets undergo rapid evolution, frequently disrupting established players long before regulators can wrap up their lawsuits.

A New Approach to Antitrust Enforcement

The DOJ and FTC need to shift away from the ideology that punishes business size as an inherent flaw. Market leadership in the digital landscape is ephemeral; what’s dominant today may become obsolete tomorrow. Antitrust enforcement should prioritize genuine threats to competition, paying close attention to the pace and impact of technological change.

Embracing Dynamic Competition

If the United States aspires to be a leader in AI and the digital economy, it must stop viewing regulation through a rearview mirror. Embracing dynamic competition, rather than stifling it through litigious measures, is crucial for fostering innovation and securing economic leadership in the age of AI.