Earlier this month, rumors began to fly that the Department of Justice (“DOJ”) had subpoenaed the tech giant Nvidia as part of its ongoing antitrust investigation into some of America’s largest technology companies. A spokesperson for Nvidia eventually responded and claimed that Nvidia had not received a subpoena from the DOJ, but was “happy to speak with regulators and answer any questions they may have.” This most recent legal drama between the DOJ and Nvidia reflects a developing trend of U.S. antitrust forces targeting large technology companies occupying the Artificial Intelligence (AI) sector. 

Recently, the DOJ and FTC entered into a handshake agreement to pursue some of America’s largest tech companies. The DOJ agreed to investigate Nvidia while the FTC will probe Microsoft and OpenAI. According to Assistant U.S. Attorney General Jonathan Kanter, these potential investigations aim to “preserve healthy and competitive markets.” Kanter further explained that effective antitrust enforcement not only coincides with major technological change but even spurs innovation in its wake. 

The FTC and DOJ are clearly very concerned with the monopolistic practices of “Big Tech” - and likely with good reason. Monopolies are not good for markets. They limit available alternatives for consumers and raise barriers to entry thus preventing other companies from joining the marketplace. In the AI sector, these concerns are very real. 

As the FTC notes, generative AI “depends on a necessary set of inputs”. A few of these key inputs include the data used to train AI models, skilled developers and researchers to create these models, and computational power. All these necessary inputs make the AI sector very expensive. If a small number of companies control one or all of them, those companies may be able to “squash competition” and distort the AI market.  

The questions remains though if antitrust litigation is truly the best way to address these valid concerns. Like always, there are costs to investigations and litigation. For example, Nvidia’s current market valuation is around to 3 trillion dollars and is one of America’s most valuable companies. It has been dominating the “AI race” and has been a primary driver behind AI innovation in the United States. Is this really the type of company the DOJ wants to curtail? 

Big Tech antitrust litigation has not always produced the most desirable outcomes. In the late 1990s, the DOJ filed an antitrust suit against Microsoft for monopolizing the personal computer market. Research into the aftermath of this lawsuit shows that the outcomes are mixed. This research reveals that technical innovation, in the form of patents, does increase after regulatory regulation. However, the commercialization of those products does not increase and, unfortunately, profits decline across the market. 

There are also valid concerns that overregulation of innovative AI companies could stifle innovation. For example, American companies were leaders during the Internet era in part because of America’s relaxed regulations compared to other countries in Europe and Asia.  A similar situation now presents itself within the AI sector. The United States supports AI research and development but still faces significant competition from other countries. It may not be wise to curtail the very companies that are keeping the United States competitive in this global AI market.  

 The DOJ and FTC have valid concerns regarding barriers to entry and the negative impacts of potentially monopolistic practices. In contrast, the potential negative effects of antitrust litigation could hurt the market and weaken the United States’ competitive advantage. Regulators may want to pause and consider what the true goals of these investigations are, and if antitrust litigation is truly the best tool we have to balance these competing interests.  

Nayeli Selkis is a second-year law student at Wake Forest University School of Law. She holds a B.A. in Psychology and a B.S. in Economics from George Washington University.

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