Disclosure

• Shortly thereafter, the consensus switched to fears of an imminent nuclear holocaust.
• Similarly, today’s experts warn that an artificial general intelligence (AGI) doomsday is imminent.
• It’s difficult to argue with David Collingridge’s influential thesis that attempting to predict the risks posed by new technologies is a fool’s errand.

• Focusing on the economic risks from AI is not simply about preventing “monopoly,” “self-preferencing,” or “Big Tech dominance”.
• It’s about ensuring that the economic environment facilitating innovation is not incentivising hard-to-predict technological risks as companies “move fast and break things” in a race for profit or market dominance.
• OpenAI is already becoming a dominant player with US$2 billion (£1.6 billion) in annual sales and millions of users.

Degrading quality for higher profit

• The problems fostered by social media, search, and recommendation algorithms was never an engineering issue, but one of financial incentives (of profit growth) not aligning with algorithms’ safe, effective, and equitable deployment.
• For digital platforms, extracting digital rents usually entails degrading the quality of information shown to the user, on the basis of them “owning” access to a mass of customers.
• But over time, a misalignment between the initial promise of them providing user value and the need to expand profit margins as growth slows has driven bad platform behaviour.

Amazon’s advertising

• In our research on Amazon, we found that users still tend to click on the product results at the top of the page, even when they are no longer the best results but instead paid advertising placements.
• For social media platforms, this was addictive content to increase time spent on platform at any cost to user health.
• In the process, profits and profit margins have become concentrated in a few platforms’ hands, making innovation by outside companies harder.
• Amazon’s most recent quarterly disclosures (Q4, 2023), shows year-on-year growth in online sales of 9%, but growth in fees of 20% (third-party seller services) and 27% (advertising sales).
• Algorithms have become market gatekeepers and value allocators, and are now becoming producers and arbiters of knowledge.

Risks posed by the next generation of AI

• But how much greater are the risks for the next generation of AI systems?
• Thankfully, society is not helpless in shaping the economic risks that invariably arise after each new innovation.
• Risks brought about from the economic environment in which innovation occurs are not immutable.
• Market structure is shaped by regulators and a platform’s algorithmic institutions (especially its algorithms which make market-like allocations).
• What role might interoperability and open source play in keeping the AI industry a more competitive and inclusive market?
• Instead, we should try to recalibrate the economic incentives underpinning today’s innovations, away from risky uses of AI technology and towards open, accountable, AI algorithms that support and disperse value equitably.

• Ilan Strauss receives funding from The Omidyar Network through the UCL IIPP research project on algorithmic rents Mariana Mazzucato received funding for this project from the Omidyar Foundation.
• Rufus Rock received funding from the Omidyar Network whilst pursuing the research referenced in this piece.

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