What do they know of AI who only AI know

CLR JAMES, the Trinidadian sociologist and intellectual, famously posed a rhetorical question in his seminal work, Beyond a Boundary: “What do they know of cricket who only cricket know?" Professor James argued that to truly grasp the essence of cricket, one must explore the intricate connections with society, history, politics and culture. The game, for Professor James, was a prism through which to understand the human condition, colonial legacies and the struggle for identity. In the same spirit, one might provocatively ask: “What do they of AI know who only AI know?"

To understand artificial intelligence (AI) solely through its algorithms, data sets and computational power is to miss the profound societal, ethical and economic implications it engenders. This article argues that a narrow, purely technical understanding of AI is insufficient, particularly when confronting the complex interplay between rapid AI innovation and pressing ethical concerns. These include the rise of monopolies and challenges to antitrust frameworks, especially in the context of India’s burgeoning Big Tech landscape.

AI innovation is undeniably a powerful engine for progress. From revolutionising healthcare diagnostics and drug discovery to optimising supply chains and personalising consumer experiences, AI promises unprecedented efficiencies and capabilities.

In India, AI is poised to help leapfrog growth in various sectors — from agriculture to finance — offering solutions to longstanding developmental challenges. With the sheer scale of data available in India, combined with a burgeoning digital infrastructure and a vast talent pool, the possibilities are mindboggling.

However, the very nature of AI innovation inherently favours market concentration. Modern AI models, especially large language models (LLMs) and complex neural networks, require immense computational power, vast datasets and highly specialised talent. These resources are not evenly distributed. Big Tech companies — such as Google, Amazon, Meta and Microsoft globally, and their dominant counterparts in India — possess unparalleled access to these critical inputs. They own the cloud infrastructure, control massive user data ecosystems and can attract top AI talent through substantial investments.

This creates a self-reinforcing cycle: more data leads to better models, which attract more users, generating even more data, further solidifying their market position. In other words, what economists refer to as ‘network effects’ become even more profound in an AI ecosystem.

This dynamic creates significant barriers to entry for smaller firms and startups. It becomes very, very hard for a new entrant to build, deploy or distribute a competitive AI product without relying on the infrastructure and resources provided by these incumbents. This inbuilt advantage, driven by the scale and capital intensity of AI development, naturally leads to monopolies.

We have in the past heard self-serving arguments by giants that natural monopolies are good because they reduce cost for customers. AT&T, before its divesture in 1984, spent millions in legal fees over decades arguing against structural reorganisation. The rise of AI-driven market concentration threatens a recurrence of litigation-intensive regulation for Big Tech. The combined market capitalisation of the world’s largest technology companies, including Apple, Microsoft, Alphabet (Google), Amazon, Nvidia and Meta, now collectively is around the size of the world’s second-largest economy. This immense economic power presents novel and complex challenges for competition regulators.

Concepts such as algorithmic collusion, where pricing algorithms can tacitly coordinate market behaviour without explicit human agreement (eg, dynamic pricing on e-commerce platforms leading to synchronised price hikes), are difficult to prove under existing laws requiring overt collusion. Killer acquisitions, like Facebook’s acquisition of Instagram when it was a nascent competitor with no revenue, eliminate future competitive threats and stifle innovation, often falling below traditional merger review thresholds.

Lastly, self-preferencing and bundling, where dominant platforms favour their own products or services (eg, Google promoting its shopping results or apps like YouTube in search rankings or Apple favouring its own App Store and services), leverage their market power to disadvantage rivals and limit consumer choice. These practices create novel and complex issues for regulators worldwide as they were not designed for the unique dynamics of digital markets and AI-driven economies.

India’s antitrust watchdog, the Competition Commission of India (CCI), is actively grappling with these challenges. While the Competition Act of 2002 provides a framework for investigating anti-competitive agreements and abuse of dominant position, the unique characteristics of digital markets and AI necessitate new approaches.

Thus, the Ministry of Corporate Affairs (MCA) released a draft Digital Competition Bill in 2024, proposing to introduce ex-ante regulations — rules designed to prevent anti-competitive behaviour before it occurs — for “Systemically Significant Digital Enterprises (SSDEs)." This proactive approach, inspired by global efforts like the EU’s Digital Markets Act, sought to ensure fair competition in digital markets without stifling innovation. However, the government was compelled to withdraw this Bill after vehement opposition by the Big Tech, among others, that the “ex-ante" or pre-emptive regulatory approach is overly broad, vague and it duplicates existing provisions. What’s more, the Bill inter alia risked stifling innovation and investment and raising consumer costs, they said. To those in the know, this is an all too familiar playbook.

The Parliamentary Standing Committee on Finance, in its report “Evolving Role of CCI in the Economy, Particularly the Digital Landscape", submitted this month, recommended that the CCI strengthen its technical capacity, establish a specialised digital markets unit, shift towards an evidence-based framework and examine a nuanced ex-ante regulatory approach to address anti-competitive practices by large digital enterprises more effectively.

So, the government has decided to conduct a comprehensive market study before drafting a new legislation, aiming to balance curbing anti-competitive conduct with fostering innovation and economic growth.

India, like other countries, faces a delicate balancing act. On the one hand, there’s a strong desire to foster domestic AI innovation and achieve technological self-reliance, aligning with initiatives like ‘Make in India’. On the other hand, allowing unchecked market concentration by the Big Tech, whether foreign or domestic, could stifle nascent Indian startups and limit consumer choice. The CCI has already scrutinised the conduct of giants like Google and Meta on the alleged abuse of dominant positions in app distribution and online advertising, signalling a determination to address these issues.

CLR James’s challenge to understand cricket beyond its boundaries serves as a powerful metaphor for the AI era. To truly harness AI’s transformative potential for national development, we must move beyond a purely technical understanding. The tension between innovation and ethical concerns, particularly the rise of Big Tech monopolies and the challenges to antitrust, underscores the urgent need for a holistic approach.

Views are personal.

Rajat Kathuria is Professor of Economics, Shiv Nadar University, NCR.

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