DeepSeek is a warning about Big Tech
DeepSeek, a Chinese artificial intelligence company, shocked Silicon Valley and Wall Street in 2010 with its powerful A.I. Marc Andreessen, a Silicon Valley investor, described it as “A.I.’s Sputnik Moment.” He wanted the U.S. federal government to flood the private sector with capital to ensure that America remained technologically and economically dominating. DeepSeek is a canary in a coal mine. It’s warning us that when there isn’t enough competition, our tech industry grows vulnerable to its Chinese rivals, threatening U.S. geopolitical power in the 21st century.
Although it’s unclear precisely how much more efficient DeepSeek’s models are than, say, ChatGPT, its innovations are real and undermine a core argument that America’s dominant technology firms have been pushing — namely, that they are developing the best artificial intelligence technology the world has to offer, and that technological advances can be achieved only with enormous investment — in computing power, energy generation and cutting-edge chips. These companies have been arguing for years that the government should protect them from competitors to ensure that America remains ahead. They are headquartered in a country with the strongest economy in the world and enjoy the benefits of a free market and the rule-of-law. It is not surprising that American tech giants are being challenged by Chinese companies despite their advantages. Foreign competitors are a threat to our big tech firms. After companies like Google, Apple and Amazon helped transform the American economy in the 2000s, they maintained their dominance primarily through buying out rivals and building anticompetitive moats around their businesses.
Over the last decade, big tech chief executives have seemed more adept at reinventing themselves to suit the politics of the moment — resistance sympathizers, social justice warriors, MAGA enthusiasts — than on pioneering new pathbreaking innovations and breakthrough technologies.
There have been times when Washington has embraced the argument that certain businesses deserve to be treated as national champions and, as such, to become monopolies with the expectation that they will represent America’s national interests. These times are a cautionary tale. Boeing’s superstar status helped it gain regulatory approval to acquire its remaining U.S. competitor McDonnell Douglas. The 1997 merger had a major impact on Boeing’s culture and left it with a number of problems, such as safety concerns. The bipartisan commitment of the United States from the 1930s through the 1980s to maintain open and competitive markets — a commitment many European countries and Japan didn’t share — was crucial for generating broad-based economic and technological growth that catapulted America to the top. These companies are often mired in bureaucratic inertia and red tape, making them unable to generate the kind of efficiencies that start-ups can. Google developed the Transformer architecture, which is at the heart of today’s A.I. The technology was underutilized in 2017 until researchers left the company to start new ones or join other companies. It was independent firms that realized the technology’s transformative power, not the tech giant. Competition and openness, not centralization, drive innovation.
In the coming weeks and months, U.S. tech giants may renew their calls for the government to grant them special protections that close off markets and lock in their dominance. Indeed, top executives from these firms appear eager to curry favor and cut deals, which could include asking the federal government to pare back sensible efforts to require adequate testing of models before they are released to the public, or to look the other way when a dominant firm seeks to acquire an upstart competitor.
Enforcers and policymakers should be wary. Antitrust enforcers filed major monopolization suits against these same companies during the first Trump administration and then under the Biden Administration. They argued that by illegally buying up or excluding rivals, they had undermined innovation, and denied America the benefits of free and fair competition. Reversing the course would be a big mistake. The United States can stay competitive in the global market by promoting domestic competition.
