Is AI empowering Tech Giants and creating monopolies?
Artificial intelligence and machine learning are evolving exceptionally. From smartphone assistants to autonomous cars, AI can be seen in every aspect of life and work. It can encompass anything from Google’s search algorithms to IBM’s Watson and autonomous weapons. Many big tech giants are making big leaps toward artificial intelligence by acquiring and merging with AI companies and startups. Big corporations across every sector, from retail to agriculture, are trying to integrate machine learning into their products.
Artificial intelligence and new technologies will undoubtedly bring about tremendous change, but on the other hand, they can also do some damage to society. When ordinary people hear of the AI threat to humankind, they usually think of two issues: massive job losses and total replacement of humans by robots and the future where algorithms will totally dominate us and may even exterminate mankind. There are, however, other menaces that are largely overlooked by people like the rising power of tech giants and the monopolization of AI.
As big tech giants are seeing AI innovation and big data acquisition as a major gateway to provide a better user experience and create more business and thus form AI-powered monopolies.
AI has revolutionised how businesses compete and grow, representing an entirely new factor of production that can ignite corporate profitability. AI companies are leading today’s corporate world and attract massive investment from venture capitalist firms and giant firms like Microsoft and Google that see the potential for further growth in corporate and personal use.
The problem with the AI-powered economy is that industries naturally tend towards monopolization because of the positive feedback loop that is generated as a result of AI’s dependence on data. If a particular company using AI gains an upper hand over its competitors, it will be very hard to resist a self-perpetuating cycle of monopolization. Such a company, thanks to an already large set of data, will have advanced algorithms. Advanced algorithms mean better user experience and more features, thereby attracting more customers. More customers, in turn, generate more data, which further improves the existing algorithms and makes the company’s products even more appealing, ultimately resulting in an even larger customer base, ad infinitum.
Tech giants like Microsoft, Apple, Facebook, IBM, Amazon, Google (so-called MAFIAG), as well as three Chinese tech giants Baidu, Alibaba, Tencent (or BAT) now dominate many facets of our lives. But they didn’t get there alone. They acquired hundreds of companies over decades to propel them to become some of the most powerful tech behemoths in the world.
US tech giants are leading the AI companies acquisition race, followed by China. According to GlobalData, the big 4 collectively undertook 60 acquisitions in the AI tech space during 2016–2020 while Apple led the race with 25 acquisitions.
The positions held by these companies have allowed them to maintain their power in the market, subjugating any alternatives to their products and thus becoming monopolies and the single distributor of the services in their respective fields. Amazon and Apple built their monopolies by having detailed access to their users’ data, which in turn allowed them to build the best AI recommendation systems for their respective ecosystems. In addition, Facebook and Google built their monopolies on the network graphs between their users and their preferred content.
Also, data is the primary driver of the economy. The race to acquire data is already on. Right now, tech giants acquire data by catching our attention with free services and information. In the short run, this data is used for targeted advertisements that make profits for corporations; and in the long run, more and more data will eventually perfect the algorithm to the extent that advertisements will not be needed because algorithms will know us so well that they will make choices for us. For better or worse, tech giants will accumulate enormous power with more and more data.
But people no longer have problems with these aspects as these companies not only provide essential services and foster innovation but also protect us in increasingly important cyberspace, the job that used to be performed by governments. Today, it is Twitter and Facebook, not the government, who regulate social media and fight misinformation and propaganda. When it comes to money, corporations are already more powerful than medium-sized countries and all the exceptional and massive projects are taken on by these corporate giants.
All this is based on only one aspect of this innovation as the world has also benefited a lot from this technology. Almost everyone will benefit from a healthy AI-powered economy where innovation and competition thrive, but where the use of data and AI is transparent, accountable and fair. As AI becomes increasingly powerful and economically valuable, the opportunities for existing and new monopolistic players to exploit it will only increase. Regulators and the AI community need to become much more aware of the potential for monopolistic practices created by the next wave of AI innovation.
