AI Utopia Will Have To Wait

Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.

For once, Big Tech lost. Early Tuesday morning the U.S. Senate voted to strip out a provision preventing states from regulating artificial intelligence (AI) from the massive budget reconciliation bill the Senate passed that the House is currently working to pass. While this budget bill still shreds America’s social safety net in order to give billionaires tax breaks, the 99-1 vote to remove the AI provision was an overwhelming bipartisan rebuke of Big Tech lobbying. It was a glimpse of what is possible when efforts by monopolists to screw us all are made public and put on the record.

The language Big Tech was pushing for would have prevented states from establishing any AI regulations for the next decade and paused any current ones. What is an AI regulation? Well that is a good question, the overly broad language might have invalidated everything from consumer protections to online safety regulations for children. The language was so broad and disastrous that opposition spanned the political spectrum before the Senate’s overwhelming vote. A bipartisan group of 260 state legislators sent a letter to Congressional leaders opposing the provision as did a bipartisan group of 40 state attorneys general and the nonpartisan National Council of State Legislatures. Right wing MAGA podcast host Steve Bannon railed against an “AI apocalypse” from Big Tech in conjunction with the provision.

Silicon Valley has been pushing an AI-fueled utopian vision of the future. Consider billionaire venture capitalist Vinod Khosla who penned a piece in Time last year called “A Roadmap to AI Utopia” where he said AI offers “a near-infinite expansion of brainpower to serve humanity” but argued the biggest threat to this vision is losing the “AI race” to a hostile nation. While Khosla claims in the piece to support “strategic legislation” on AI, he paints our choices essentially as AI controlled by China or AI controlled by Big Tech CEOs. Khosla assures readers that we can mostly trust those Tech Bros to make the right decision because they have to think about markets and profitability. And yet Khosla has claimed that former Federal Trade Commission (FTC) Chair Lina Khan was the one that was “not a rational human being.”

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Khosla’s article also approvingly details all the human interaction that could be replaced by AI for free. Who needs doctors when you have a chatbot? Or consider Mark Zuckerberg’s suggestion that we could all have AI therapists and friends. What a world that would be! No more interacting with boring humans, and it would all be totally free! That is, if you consider free to be the commercialization of your personal habits tracked by a massive copyright-infringing surveillance machine. While Zuckerberg and Khosla try to paint a picture of a world enlightened by AI, some tech billionaires like Peter Thiel have been more forthright in the hope that AI will destroy all of us annoying commoners.

Instead of utopia, what we’ve been given to date with AI is copyright infringement, a deepening of corporate surveillance, annoying and sometimes dangerous chatbots, social media feeds full of AI slop and new techno-fueled monopolization schemes. This is not to say that AI cannot transform our lives for the better, but the Big Tech version of innovation is not how we will get there. The lore from Silicon Valley monopolists is often of scrappy innovators that changed the world, but as I have written about before the real innovation from Big Tech is often convincing policymakers that the usual rules of the road do not apply to tech companies. It was not technology that freed our forefathers from 90-hour work weeks in the mines though, it was public policy, and AI is no different.

With this provision dead for now, states can shift their focus back to creating much-needed guardrails around AI. One of the more critical efforts the AI moratorium would have put in jeopardy is prohibiting the practice of algorithmic price fixing, where companies are able to offload their collusion with a third-party analytics firm. The most aggressive action to date has been in housing where cities and states are taking action to prevent companies like RealPage from using its treasure trove of real-time data to make pricing decisions across major landlords and strong arm smaller ones. This type of price fixing is not limited to housing, as public and private lawsuits have been brought in the meat, sugar, frozen potato and pharmaceutical industries alleging analytics companies have been used to coordinate pricing decisions.

Last month the California Assembly passed AB325, now being considered by the Senate, which would ensure that algorithmic price fixing is considered for what it is, price fixing. Using AI to collude is not novel or innovative, it is just engaging in a practice that has long been illegal under antitrust law, but with a new name. States cracking down on this practice could also help get in front of an even more insidious issue looming around the corner, surveillance pricing. Former Acting Assistant Attorney General for Antitrust Doha Mekki told California legislators, “Surveillance pricing is the King Kong of algorithmic collusion and may evade existing legal frameworks.”

States have taken plenty of other steps to address emerging AI abuses or dangers. Last year Utah passed the Utah Artificial Intelligence Policy Act, focused on consumer protection. Utah’s law covers generative AI, which is the use of AI to generate content, such as chatbot responses and requires disclosure of AI use, particularly for licensed occupations like those AI therapists Zuckerberg is dreaming up. The law also makes companies liable for AI output, meaning a company cannot blame AI to get away with defrauding consumers.

Colorado took Utah’s framework even further passing the Colorado Artificial Intelligence Act. The law, which Governor Jared Polis has asked to be delayed, protects people from high-risk AI systems which are those that make or substantially help to make “consequential decisions.” This could include the decision to provide or deny education, employment, lending, government services, health care, housing, insurance, or legal services. Other states have gone after AI deep fakes in elections, the use of “digital replicas” of people, and AI-generated child sexual material. With Tuesday’s vote, these important laws will remain in force.

Sorry Silicon Valley, no AI utopia for now, but we do get the chance to continue fighting for a more free and fair society. Happy Independence Day!

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YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:

Food Monopolies

JD often says America needs farmers and farmers need antitrust. No better example of that than farmers' declining share of the food dollar, which National Farmers Union highlighted as we prepare for those 4th of July cookouts.

Are You Free?

Speaking of the 4th of July, it is worth remembering that antimonopoly is as American as those burgers you are grilling. Thomas Jefferson wrote to James Madison in 1787 voicing his displeasure that the Bill of Rights did not include a restriction on monopolies. Adam Smith, a right wing favorite, wrote the year before in The Wealth of Nations about the “wretched spirit of monopolies.”

Those thinkers understood that monopoly power is a threat to liberty, which is a theme of a new video from Robert Reich and Former FTC Chair Lina Khan asking a simple question. Are you free?

Food Monopolies Again

WalMart, which collects a third of America’s food dollar, wants even more control of the food we consume. The giant corporation has opened its own meat processing facility in Kansas. Move over Big Four, the Big One has entered the room.

Wall Street

Americans for Financial Reform wrote a letter to Congress urging the Senate to make Wall Street and private equity firms pay their fair share in the upcoming budget reconciliation legislation.

It’s worth a read. The highlights are (estimated generated revenue) :

1. Raise the surcharge on stock buybacks ($166 billion)

2. Close the carried interest tax loophole ($63 billion)

3. Eliminate the expansion of the business interest deduction ($60.5 billion)

4. Include the Humans Over Private Equity (HOPE) for Homeownership Act (unscored but $10s of billions)

5. Executive Compensation ($100-$150 billion)

Private Equity Buying Hospitals

Speaking of Wall Street and Private Equity, More Perfect Union made this video about “Why Private Equity Is Buying Hospitals & Shutting Them Down”

The Senate’s Version of the One Big, Beautiful Bill

This sums it up…

Income Inequality

The Bezos wedding drew a lot of attention while also highlighting how stark income inequality currently is. Here’s a write up from Untrickled by Michelle Teheux.

Even if you have never made a single purchase from Amazon, you’re still paying the price for Bezos’ greed. As the great Cory Doctorow explains: “Amazon binds its sellers over to something called Most Favored Nation status. That means that sellers can’t offer their goods more cheaply than they do on Amazon — even if it costs them (lots) less to sell in Target or direct from their websites. This means that every time a seller adds a dollar to their Amazon sale price, they have to add a dollar to the price of their goods everywhere else, too.”

SOME GOOD NEWS

JD gets Vanity Fair Treatment

The magazine has a profile of J.D. and his campaign. Not surprisingly, writer Eric Lutz had this to say about J.D. “He gets particularly animated talking about how corporate monopolies are screwing over Iowa farmers.” Give the rest a read!

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Break ‘Em Up,

Justin Stofferahn