How Big Tech Is Avoiding Hsr Reviews In Ai Race

Big Tech Avoids HSR Reviews in AI Race

FTC and DOJ Scrutinize Some Deals, but Microsoft and Others Slip Through

Concerns Over Lack of Scrutiny in AI Sector

In the rapidly evolving AI landscape, tech giants are racing to establish dominance, often avoiding the regulatory scrutiny that comes with traditional mergers and acquisitions. This raises concerns about the lack of oversight in an industry that could have far-reaching societal implications.

Deals involving AI companies typically fall below the thresholds for pre-merger reviews under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. As a result, Microsoft and others have been able to acquire AI startups without triggering HSR reviews.

The problem with this is that AI technology is prone to bias and discrimination. Without proper scrutiny, these biases could be amplified and embedded in products and services, leading to potential harm for consumers and society.

The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have expressed concerns about this issue. FTC Chair Lina Khan is actively pursuing second request reviews, which allow for deeper investigations of potential anti-competitive issues.

However, companies have found ways to avoid HSR reviews by restructuring deals as minority investments or joint ventures. This strategy allows them to gain control over target companies without triggering the mandatory reporting requirements.

The lack of oversight is particularly worrisome as AI becomes increasingly prevalent in our lives. Failure to address these issues could lead to a race to the bottom in pricing and innovation, as tech companies prioritize market share over competition.

Conclusion

The AI race is creating a regulatory vacuum that could have dire consequences. Big Tech companies are exploiting this gap to avoid HSR reviews and acquire AI startups with little or no scrutiny. It is imperative that regulators find ways to adapt to the changing landscape and ensure that the AI revolution does not come at the expense of competition and fair play.