The article specifically highlights the issue of exclusive dealing, where companies secure suppliers or customers through exclusive deals. While not inherently problematic, these arrangements can raise concerns if they enable a firm to control a critical input, distribution channel, or customer segment. In the context of generative AI, the FTC is likely to scrutinize exclusive deals involving compute resources that are key to competing in the generative AI markets. The article advises businesses to avoid using exclusive-dealing arrangements to exclude rivals and to document any pro-competitive benefits of such arrangements.
Key takeaways:
- Generative AI, which uses massive models trained on rich and diverse datasets to create new content, is reshaping how businesses interact with their customers, competitors, and partners, creating immense opportunity and great risk.
- The Federal Trade Commission (FTC) is advocating for aggressive antitrust enforcement, and businesses should familiarize themselves with common antitrust theories of harm to understand their risk when competing in markets affecting generative AI.
- In the context of generative AI, the FTC foresees antitrust exposure where incumbents that offer both compute services and generative AI products use exclusive deals to discriminate against new entrants.
- Companies should be aware that exclusive arrangements with companies whose market share exceeds 30% are riskier, and they should document any pro-competitive benefits of such arrangements, such as lower costs, higher quality, and better access to products.