Artificial Intelligence

In new research, Christos Makridis and Andrew Johnston find that industries exposed to generative AI are seeing an increase in production, employment, and wages. However, the majority of AI-driven revenue growth is channelled back to capital as profits, rather than to workers.

An accounting rule introduced by the Financial Accounting Standards Board in 2016 was designed to address a flaw in the previous regime that contributed to the 2008 Financial Crisis. However, this same rule is enabling the circuit of investments that flows from Big Tech companies to artificial intelligence startups, whose increased valuation from these investments increases the value of the Big Tech companies, which they can then reinvest in the AI startups. The risk is an AI bubble that, if it pops, will also blow up Americans’ savings, writes Hera Hyeonseo Lee.

Artificial intelligence coding agents provide enormous value to consumers for very low fees. But the market is quickly shrinking with Anthropic in the lead. Only competition, and requiring Big Tech to build agents rather than buy them, will continue to let AI’s value flow to consumers. As such, the courts should ban SpaceX’s recently proposed acquisition of Cursor, writes Ketan Ahuja.

Artificial intelligence will change the market for economic consultants, likely reducing overall demand and shifting workers to current clients’ in-house units. However, both consulting firms and clients are still studying how to deploy AI, and there may yet be new opportunities for consultants as AI changes the broader economy, write Mona Birjandi and Mery Zadeh.

Anthropic has formed an exclusive artificial intelligence consortium to use its general purpose artificial intelligence model, Claude Mythos, to identify and fix vulnerabilities in critical internet and digital infrastructure. Madhavi Singh warns this consortium, called Project Glasswing, could contravene antitrust law and argues for regulatory oversight to ensure that it does not become a front for an illegal cartel.

In new research, Yoan Hermstrüwer and David Imhof analyze how AI can help antitrust authorities predict cartels by assessing international bidding data in countries with similar legal and market structures.

India is working on legislating new competition rules to govern artificial intelligence and other tech markets. But recommendations from a recent report by the Competition Commission of India suggest it might revert to old competition standards that will likely prove ineffectual in governing the new AI market, writes Abhineet Nayyar.

Judge Amit Mehta’s remedies for Google’s search monopoly stopped short of banning payments for default search placement, reflecting the hope that generative AI will erode the power of traditional search. Cristian Santesteban argues the opposite: in the AI era of search, defaults may matter more by steering critical data and learning signals from AI-powered search sessions to the most dominant product. This mechanism can potentially compound Google’s advantage.

The EU’s proposed Digital Omnibus to simplify digital regulation suggests repealing the 2019 Platform-to-Business Regulation. This poses a problem for the Digital Markets Act, which relies on the P2B-Regulation for how to define core platform services like search engines. Moving forward with the repeal will require legislators to renegotiate first the DMA, which is necessary anyways to adapt the law to the age of artificial intelligence, writes Jan-Frederick Göhsl.

In new experimental research, Amit Zac and Michal Gal find that users who use artificial intelligence chatbots to conduct online shopping are being directed to established brands at higher prices without a clear improvement in quality. The logic of AI algorithms risks consolidating markets around established firms while reducing consumer welfare for shoppers.