It’s time to admit that the profit motive—and hence the free market—is under a cloud of suspicion again, one gathered by a digital version in general and GenAI in particular. In the 20th century, sceptics arched their eyebrows at signs of labour exploitation by capital.
Now, market failure is in focus: The risk of an AI-armed Big Tech monopoly, owned by a few, exploiting us all. In India, an AI-dystopia film in Hindi titled CTRL has rung an alarm bell.
In America, artificial intelligence (AI) and its generative tools are arousing an unlikely debate, given the role of capitalism in the country’s success, on the pursuit of profits.
With the self-regulatory effect of competition having failed in online markets for search and social media, shouldn’t antitrust oversight tighten on AI—whose market impact is projected to be profound? And if online markets fail so often to stay competitive, doesn’t the profit motive itself deserve scrutiny?
The rise of OpenAI presents a test case. As the market pioneer of GenAI, its ChatGPT app claims 250 million weekly active users, with 11 million paying $20 per month for this AI chatbot service. It also has about a million business clients. The non-profit startup expects to log revenues of $3.7 billion this year and $11.6 billion next.
Last week, it raised $6.6 billion in new funds in a funding round that places its value at $157 billion. Last year, it got $10 billion plus from Microsoft. While OpenAI began in 2015 with a mission to serve humanity with safe AI, it set up a “capped profit” subsidiary in 2019, the soaring prospects of which sparked an internal rebellion over the startup’s direction within a year of ChatGPT’s late-2022 launch.
In a swirl of backroom intrigue and high drama, OpenAI’s chief Sam Altman was ousted, but only to return within days as its boss amid a shakeup of its governing board. Today, its investors want it turned into a fully profit-aimed business, with its cap on profit distribution lifted, within two years. This shift will not be easy.
If its for-profit arm is cleaved apart, valuable R&D assets may get left behind, and if Altman seeks to convert all of OpenAI into a separate company, the non-profit entity may have to be paid a staggering sum.
Although the startup does have AI rivals, speculation over Altman getting a stake worth $11 billion in a rejigged OpenAI has stoked concerns of what a lurch for profits might imply. After all, trade-offs of profit-versus-principle confront almost every business; companies with market influence, all the more so.
AI industry opacity means chatbots may be in a position to bend ethics and exploit users. Sure, corporate governance could guard the public interest, but for this to work optimally, we need boards that reflect well dispersed ownership and true shareholder democracy.
If super-normal profits beckon on the back of captive markets, private dominance of AI goes unchecked and ethical ideals get bent along the way, a scenario that looks plausible in the context of Big Tech’s ascent so far, the profit motive’s very legitimacy—as drawn from free-market theory—could face a popular backlash.
For the self-interest of a few to serve everybody well, markets must stay rivalrous so that users have choice and businesses should be transparent so that we can identify players that are up to no good.
Should these two conditions go unmet—as regulatory laxity or capture could mean—it would arguably expose the free-market formula of economic success to the risk of public resistance. In other words, we all have a stake in how the AI market evolves.