Sam Altman is the CEO of the largest artificial intelligence company in the world, and he lobbied Congress this week for federal regulation of AI.
I discussed how this wasn’t unprecedented — that industries from toys to tobacco and Uber to Wall Street have all seen the biggest players calling for more regulation of themselves.
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But why do they do it? Why would OpenAI CEO’s want to be regulated?
There’s no shortage of reasons. Here are a few:
The overhead smash: Higher costs are barriers to entry
OpenAI started as a nonprofit organization, and it raised a billion dollars in donations (including from a now-slightly salty Elon Musk). It has a massive first-mover advantage and already has economies of scale.
Tech is an industry, though, where companies can typically start very small, with very little capital, and nevertheless grow into something massive or even dominant. (Consider Facebook’s origins.)
That ease of entry is no good for incumbent OpenAI. A slew of new regulations, including a law demanding preclearance for certain AI algorithms, will create a massive barrier to entry. That will protect OpenAI from competitive pressure, which could cut into its profit margin.
As a recent study laid out, costly regulation doesn’t merely decrease profits for small firms — it actually increases profits for large firms.
The big guys and incumbents will have an in with the regulators
“Big Government is a home game for Big Business,” I often say. When Congress writes the laws about regulating AI, the lawmakers and their staffers will call Altman, his lawyers, his lobbyists, and his fellow executives to ask just how to write the laws.
Then, when the federal agencies are drafting the detailed regulations, OpenAI will once again have the prime seat at the table.
As a result, the laws and regulations will be written so as to benefit OpenAI and other incumbents and so as to disadvantage any future rivals.
Then the new federal agency will staff up with former OpenAI executives. As a preview, Sen. John Kennedy (R-LA) actually asked Altman to head up a new agency regulating AI.
Then OpenAI will hire the staffers and lawmakers and bureaucrats who wrote the law.
A company’s executives, in particular, benefit from coziness with government
This is called the principal/agent problem. In the long run, OpenAI will be less innovative than it otherwise would have been thanks to these regulations — both the direct effect of the regulations and the anti-competitive effects.
It’s possible that this regulatory gambit will backfire for OpenAI, as it did for General Electric on lightbulbs. But for Altman himself, regulatory robbery might be all upside.
He will personally be put in close contact with people in government power, and he will become a media darling for embracing regulation.
The confidence game
Big Business often seeks regulation as a way of convincing investors and consumers that what they are selling is actually fine and safe.
This is why Monsanto lobbied for regulations on genetically modified food, why Mattel lobbied for regulations on toymaking, why Wall Street calls for “investor protections,” the big meat packers pushed Teddy Roosevelt to require inspection of meat, and so on. If parents or schools or local governments are tempted to protect their children or communities from certain AI technologies, these regulations will be trotted out to show that no, this is regulated technology, it must be safe.
As you see, these benefits to Altman or his company are not benefits to the consumer, and many aren’t benefits to the employees.
The collusion of Big Business and Big Government is good for the insiders — and bad for the rest of us.