On October 30, 2023, President Biden issued the “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” (AI EO). At 63 pages, the AI EO outlines a comprehensive framework for federal agencies to regulate all aspects of AI markets. Our team will continue to update you on portions of the AI EO that may be applicable to our clients. We covered general aspects of the AI EO in a previous blog post. This post examines how the AI EO strives to promote competition in AI markets and implications for future antitrust enforcement. 

Key Takeaways

• Through the AI EO, President Biden established the White House Artificial Intelligence (AI) Council with representatives from over a dozen federal agencies and departments, but curiously omits the U.S. Department of Justice, Antitrust Division (the Division) and the FTC from the roster. However, the Chair of the White House AI Council has the power to add representatives from other agencies and executives; therefore, the Division and FTC are expected to make meaningful contributions to AI policy.
• The AI Executive Order raises several questions about the future of antitrust enforcement:
  
  • President Biden urges the FTC to use its rulemaking authority and other enforcement powers to ensure that AI markets have “fair competition.” This mandate may encourage FTC Chair Lina Khan, who is on record about her willingness to push the envelope, [1] to test new theories of enforcement in a rapidly evolving market. 
  • The controversial “essential facilities” doctrine may gain traction as President Biden suggests that “competition-increasing measures”—including the sharing of datasets and intellectual property—for small businesses and entrepreneurs may be “appropriate . . . to the extent permitted by law.”

Section 2 of the AI EO sets forth eight principles and priorities that federal agencies should use as guideposts as they develop regulations pertaining to AI. Several of them draw upon settled tenets of antitrust law such as:

1. The federal government will promote a “fair, open, and competitive ecosystem and marketplace for AI and related technologies so that small developers and entrepreneurs can continue to drive innovation.”
2. As new industries and jobs materialize, the government “will seek to adapt job training and education to support a diverse workforce and help provide access to opportunities that AI creates.” [2]

President Biden grapples with competitive concerns throughout the AI EO. He stresses that, in order for AI markets to be competitive, government agencies must “stop unlawful collusion[3] and address risks from dominant firms’ use of key assets including data, to provide opportunities to small businesses . . . and entrepreneurs.”[4] However, the core of President Biden’s efforts to bolster competition are in Section 5.5., aptly titled “Promoting Competition.”

In Section 5.5, President Biden directs not just the Division and FTC, but the heads of all federal agencies “to promote competition in AI and related technolog[y] . . . markets.”[5] Recognizing that semiconductors and other inputs needed to train AI models are costly and present barriers to entering and competing in AI markets, President Biden orders the Secretary of Commerce to implement flexible membership structures for the National Semiconductor Technology Center and develop mentoring programs within the industry.[6] Significantly, given the U.S. Supreme Court’s retreat in Verizon v. Trinko from the “essential facilities” doctrine (which requires a company to give competitors access to an input that is necessary for operations).[7] President Biden suggests that startups and small businesses should have more access to datasets, design and process technology, and “technical and intellectual property assistance” that could accelerate commercialization of new technologies[8]—potentially from the dominant firms that own or control these “key assets.”

The AI EO is an ambitious attempt to regulate AI markets.  Ensuring that these markets remain competitive—and affording smaller firms an opportunity to compete—is critical to innovation and maintenance of a leadership position in the digital economy.  To that end, President Biden has directed federal agencies to facilitate access to funding and resources so that small businesses and entrepreneurs can compete with dominant firms in AI markets.  However, the AI EO creates uncertainty with respect to antitrust enforcement. One question is how the Division and FTC will participate in formulating AI-related antitrust policy with the newly-minted White House AI Council. Another issue is how broadly the FTC will interpret its enforcement powers under the FTC Act to effectuate competition policy in AI markets pursuant to President Biden’s mandate. Finally, any attempt to revive the essential facilities doctrine in the semiconductor and other input markets may conflict with principles articulated in Trinko and force companies to furnish competitors with technology and other resources to their own detriment.

[1] Cite Brookings Institute client alert. 

[2] AI Executive Order, supra note 1, at 2-4. 

[3] For a more detailed discussion of tacit collusion and AI, please click here.

[4] AI Executive Order, supra note 2, at 3.

[5] Id. at 32.

[6] Id. at 32-33 (citing Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022, Pub. L. 117-167). 

[7] See, e.g., Verizon Communications v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004).  The essential facilities doctrine

[8] See AI Executive Order, supra note 2, at 33.