As antitrust officials in Washington intensify their focus on Big Tech, a new factor is influencing their strategy: artificial intelligence. Recent successes, particularly against Google, illustrate that the government’s tougher approach to competition is finding some traction.
That said, the situation isn’t quite as favorable for all ongoing antitrust cases. In fact, the emergence of AI could undermine the Federal Trade Commission’s notable challenge against Amazon, especially since AI is rapidly altering market dynamics.
In a significant ruling, Judge Amit Mehta found that Google holds a monopoly over general search services and text advertising. However, he included a cautionary note: while AI may revolutionize search someday, we aren’t there yet, and certainly won’t be in the “foreseeable future.” This means that, for now, AI isn’t a strong enough competitor to influence the current landscape of search services.
The concept of what’s “foreseeable” now casts a shadow over the FTC’s case against Amazon. The agency contends that Amazon is illegally maintaining its dominance in both online superstore shopping and marketplace services, arguing that no competitor poses a genuine threat to its power now or in the foreseeable future. However, AI-powered rivals are beginning to chip away at Amazon’s stronghold in both areas.
Take Walmart, for example. Its recent partnership with OpenAI allows customers to shop directly through ChatGPT, enabling a smoother purchasing experience that brings Walmart’s online platform closer to Amazon’s well-known convenience. As competition in online retail heats up, Walmart’s advancements could significantly challenge Amazon.
Additionally, TikTok shop has emerged as a formidable player with its combination of short videos and effortless checkout, which keeps users engaged. Reports indicate that a significant portion of purchases come from repeat customers—81% in February 2024, with 75% expressing intent to buy again. This data suggests that TikTok poses a current, rather than hypothetical, competitive threat, especially now that it has secured a deal to remain operational.
Both Walmart and TikTok’s AI-enhanced platforms likely align with Judge Mehta’s idea of the “foreseeable future.” They represent real challenges to Amazon, not distant rivals.
This presents a growing dilemma for regulators. The quick pace of technological advancement is outstripping enforcement efforts. While AI might not yet be relevant in Google’s case, it exemplifies a broader type of technology that can transform markets and competition.
By the time any existing antitrust cases conclude, the basic market dynamics may have already shifted. If AI continues to change how consumers search, compare, and shop, the FTC’s lawsuit against Amazon might be viewed as an attempt to regulate an outdated model of the internet economy.
The Justice Department’s recent win against Google marks a significant shift in antitrust regulations. However, if the FTC neglects to consider the swift rise of AI in retail, it risks fighting battles from the past and overlooking the next significant challenge to market power.
Ultimately, there’s a pressing question for Washington: should the focus be on punishing success or promoting innovation? The rise of AI-driven retail suggests that market forces, rather than litigation, might serve as the best check on corporate power. Regulators must be watchful but also practical, as the pace of change is set to accelerate. It’s possible that codes rather than courtrooms could become the best means to foster open markets.
