Former FTC AI Advisor Reflects on Tech's Tricky & Faulty Incentive Structure

Meta’s stock jumped 20% the day after the hearing before Congress, where CEO Mark Zuckerberg apologetically acknowledged the tremendous harm social media platforms have caused children. "It reflects where the [industry's] current incentive structures lie. The regulatory landscape has been light touch in this sector for well over a decade," said Sarah Myers West, in an interview with AIM.  

The core of this problem is that a hands-off approach has enabled a few companies to amass economic and political power, West stated. "That is concentrated to the point that there are companies which exceed the GDP of many countries," she rightly called out. Regulating the sector is a tough problem, West emphasised.

Interestingly, in the first week of 2024, the big tech companies had already earned enough revenue to swiftly pay off the $3.04 billion in fines for breaking laws across the globe in 2023. 

"It's a structural and institutional problem, so we need our brightest minds to figure out how to effectively shift the incentive structures to ensure the activities are accountable to the public. She commented on the current situation, "This approach to root out and mitigate long-occurred harms to the public, and figuring out paths to remediate and make people whole is not working how it needs to."

West thinks greater friction should be judiciously introduced. "Not just to have a more responsible development, but even earlier to think through what technologies we want to be released into the world," the managing director of the AI Now Institute suggested. 

The idea that innovation equates to producing tech will devalue labour and creative work and scale up control over people. "We could do better," West advised. "It's an apt moment for a real reset on how we're thinking about what counts as innovation and in whose interests it works," she added.

A Regulatory Turn  

West's term as a senior AI advisor at the Federal Trade Commission wrapped up in December of 2022, and she was expecting things to be a little quieter afterwards. On the contrary, there's been a lot of excitement and anxiety about AI. 

The policy researcher recalled that we've seen hype cycles around biometrics and facial recognition. "But this one is qualitatively different in a couple of respects," she said. "The nature and interface of generative AI gives people a more tangible touch point. You can interact with an AI system in ways that are qualitatively different to much of the current AI, which is generally used on us, not by us," she explained. 

That distinction has changed the conversation from a regulatory standpoint since agencies worldwide are much more assertive in their posturing. "They're interested in regulating the sector and ready to discuss policy interventions that can reshape the AI trajectory," noted West. 

FTC’s Here 

Some impressive enforcement actions have emerged from the FTC, which has also started inquiring about the leading AI companies. West mentioned that the Rite Aid and Amazon Alexa cases were tremendous, pointing to the antitrust cases moving forward. 

But last week, the number of dollars going into lobbying to shape the AI regulatory landscape was in the news. "The sheer extent of work to be done if we're going to change the current state of affairs meaningfully has a long road ahead," she remarked. 

The commission's latest probe in partnerships and investments between Microsoft, Alphabet, Amazon, OpenAI and Anthropic is a six-piece survey using the FTC's 6B authority.

"It's a beneficial instrument for better understanding the nature of what's happening within these companies, and how it's impacting the consumers, the market, and competition broadly," she added. 

West highlighted that if you look at the business model underpinning this newest wave of AI, the development is moving towards building AI that requires high upfront costs. "We're not in this free-VC-money-for-everybody phase, so the push to find profit is only poised to increase over time," she said. 

The predatory business model has emerged in the industry over the past two decades, most of which West has been studying for her forthcoming book Tracing Code. "Certainly, looking at the business model for these companies, how they intend to make money and how increasing pressure to turn a profit is going to change their behaviour, should be in focus," she suggested.