The Digital Economy

Responding to Mark Lemley and Jacob Noti-Victor, Shishene Jing argues that licensing deals struck by incumbent artificial intelligence firms with content owners will not disadvantage smaller AI rivals. Even if such deals establish a legal precedent requiring licenses, content owners have little incentive to actually sue small, cash-poor AI startups, making the precedent toothless in practice.

In new research, Cailtin K. Myers and Ezekiel Hooper find that birth rates in the United States have declined as a result of the introduction of the iPhone. They theorize that the smartphone is crowding out the market for attention, offering a device to fill users’ time that replaces forming in-person relationships that typically create children. 

The revived American Innovation Choice Online Act singles out a handful of Big Tech giants for unique, antitrust-like restrictions, but without the standard methodological...

In a new working paper, Benjamin Verschuere and Angus Cameron argue that the wide dispersion in economists' forecasts for the impact of artificial intelligence on the economy stems from two gaps. The first is that estimates for growth, jobs, and prices are each built in isolation, with no single framework to reconcile them. The second is that models fixate on AI’s current capabilities, rather than on how fast it spreads and how much of a given job it can eventually reach. The authors build a unified framework that predicts roughly $2 trillion in long-run output gains, the loss of about 20 million American jobs, and falling prices.

Investors have poured billions into using artificial intelligence to discover new drugs, and 2026 is the first real test of whether AI-designed medicines actually helps patients. The boom has genuinely transformed the search for molecules — but that was never the costly, failure-prone part of making a medicine, and there AI has so far had little to add. Capital, and the public subsidies have not yet priced the difference, writes Michael A. Santoro.

Microsoft CEO Satya Nadella’s argument that businesses need to be able to easily switch between artificial intelligence models is correct but elides the fact,...

The competitiveness of the artificial intelligence market at first glance masks how investment arrangements and partnerships between the largest players risks undermining their incentives to compete. Regulators must continue to monitor these arrangements for anticompetitive effects, writes Shishene Jing.

In a new working paper, Magnus Lodefalk, Lydia Löthman, Michael Koch, and Erik Engberg examine how generative AI is reshaping the labor market. They find little evidence that AI has cut the total number of jobs, but show that it has slowed hiring for the youngest workers, especially in the AI-exposed occupations where young women are concentrated. Over time, AI’s effect on entry-level roles risks thinning the next generation’s ability to build the skills and networks that careers are made of. 

The caution of Judge Amit Mehta’s remedy in the Google Search case is unlikely to open internet search to competition. Steve Salop recommends several amendments to the remedy that can improve competition without undercutting the revenue that has benefited Google’s partners to date.

Digital marketplaces make comparing credit lending options easier for potential borrowers. However, Jeromee "JJ" Johnson cautions that online platforms may be turning comparison itself into a signal to lenders—at a cost to applicants.