This blog post is the second in a three-part series exploring the intersection between AI and antitrust. (Part I can be found here.)
Part II: Tacit Collusion and AI
This is the second part of a three-part series on artificial intelligence and anti-trust.
In Topkins, discussed in Part I, the defendants had already entered their unlawful agreement—algorithms were a tool to implement the agreement. The more vexing question facing antitrust enforcers is the issue of tacit collusion and AI—where companies may act in response to AI without an agreement to fix prices.
When Assistant Attorney General for the Division Jonathan Kanter spoke at the South by Southwest festival earlier this year, he called the Division’s AI effort “Project Gretzky”—a reference to Wayne Gretzky’s famous quote about not skating after the puck, but rather to skate where the puck is going to go. To that end, the Division is hiring data scientists and other experts to better understand AI so that antitrust enforcers can keep pace—or at least try— with a technology that is quickly shaping how markets function. See “DOJ Has Eyes on AI, Antitrust Chief Tells SXSW Crowd,” AXIOS, Mar. 13, 2023.
FTC Chairperson Lina Khan’s recent opinion piece cautioned that firms should not be complacent.
[T]he A.I. tools that firms use to set prices for everything from laundry detergent to bowling lane reservations can facilitate collusive behavior that unfairly inflates prices . . . . The FTC is well equipped with legal jurisdiction to handle the issues brought to the fore by the rapidly developing A.I. sector, including collusion . . . and unfair methods of competition. . . . Enforcers have the dual responsibility of watching out for the dangers posed by new A.I. technologies while promoting the fair competition needed to ensure the market for these technologies develops lawfully.
Lina M. Khan, “We Must Regulate A.I. Here’s How,” N.Y. TIMES, May 3, 2023.
To summarize, unlike the Division, which is limited to enforcing Sections One and Two of the Sherman Act, the FTC has broad jurisdiction to combat abuse of AI under Section Five of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Hence, the FTC has a wider net for pursuing and curtailing AI abuse. With promises of aggressive enforcement by both agencies, Part III in this series will describe how companies can keep pace with government regulation.