Apple is a lifestyle brand. The $2.8 trillion company, founded by Ronald Wayne, Steve Wozniak and Steve Jobs, is known to the world as an innovator in consumer technology, but using Apple products is widely seen as a lifestyle choice embraced by consumers. 

I’m an Apple guy. My devices are all synced, from the iPhone to the Macbook Pro, the Apple Watch and the HomePod mini. No one coerced me into this way of living, but that hasn’t stopped the U.S. Department of Justice (DOJ) from investigating Apple and concocting yet another vast antitrust case against an American company.  

As of today, President Biden’s Federal Trade Commission (FTC) has taken Amazon and Meta to court over alleged anti-competitive practices, and the DOJ has hit Google with two antitrust suits targeting Google Search and their ad services. According to The New York Times, the DOJ is still calculating whether or not to bring its multipronged antitrust complaint against Apple.  

What stands out in the Times’s report on the investigation is that it reads like Apple’s competitors are behind the steering wheel of their very own government agency. David McCabe and Tripp Mickle write, “Rivals have said that they have been denied access to key Apple features, like the Siri virtual assistant, prompting them to argue the practices are anticompetitive.”  

Imagine the classroom slacker making the case to the teacher that the straight-A student in the front of the class is being anti-competitive by not sharing their lecture notes with them.  

It’s one thing to maliciously penalize or seek to inconvenience consumers for having a mixed assortment of technology from Apple, LG, Samsung, Nokia and Google. It’s another thing entirely for the government to say that Apple has to design its products for Samsung to piggyback on and then offer to their loyal customers as a perk of not doing business with Apple. Investigators are spending taxpayer dollars to find out why the Apple Watch works more smoothly with the iPhone than with rival brands.  

Does the DOJ work for Samsung or the American people?  

This mindset is exactly what went wrong in court for FTC chair Lina Khan when she threw the once-relevant consumer protection agency between the Microsoft and Activision-Blizzard merger, a case that District Court Judge Jacqueline Scott Corley indicated seemed to be a benefit to Sony, a Japanese firm, more than American consumers. 

None of this is to say Apple is a perfect company, or that it’s behaved like a free enterprise angel throughout every aspect of its business. It hasn’t. Its long-time reliance on manufacturing and investments in China, and how that steers its business, is a big one. But that Apple makes intentionally integrated products that foster brand loyalty and consumer satisfaction is special in the landscape of American tech. Apple is a seamless experience for consumers like myself who are not huge techies, but rather novices who place a premium on convenience and ease of use. 

The reality for Apple is that it operates in a global marketplace with different rules of the road on almost every continent. The European Union is very close to forcing open Apple’s App Store model to allow for third-party app stores on their devices, a provision of the 2022 Digital Markets Act. The EU has also directed its regulatory energies on requiring device manufacturers to have a universal charging port, further removing design distinctions between major tech brands.  

In the United States, Apple narrowly fended off the maker of Fortnite, Epic Games, in a high-profile lawsuit contending Apple held an unfair monopoly over payment processing for in-app purchases. The case failed when the courts correctly acknowledged that Apple does not hold a monopoly in the mobile games market. 

Tech firms may all be united in that they are the target of never-before-seen political scrutiny in Washington, but they are still competitors. You can see this in how they fight government regulation of their business with one hand, and request government help in slowing down their competition with the other. 

Meta reportedly “encouraged” the Justice Department to look into Apple’s new consumer privacy tool, App Tracking Transparency, which empowers iPhone owners to customize and cut off data collection by advertisers of their choosing. It is not a coincidence that Meta anticipates a $10 billion loss in revenue from this useful tool Apple designed for consumers concerned with privacy.  

None of this is new. Successful companies and established industries have always sought to use the federal government as both a cudgel and a shield to protect their interests. For those of us chiefly concerned with consumer satisfaction and welfare, there is no temptation to choose winners and losers in the market.  

Let Apple be Apple, and let consumers choose.  

Originally published here

Last week, President Joe Biden unveiled an executive order that marks the beginning of a U.S. regulatory path for artificial intelligence. The order is a prelude to forming a U.S. AI Safety Institute, housed within the Department of Commerce—announced by Vice President Kamala Harris in the UK last week. This period of “close collaboration” with the UK and EU is a considerable threat to decades of American leadership in tech.

Rather than embracing traditional hallmarks of American innovation, the Biden administration seems intent on importing some of the worst aspects of Europe’s fear-driven and burdensome regulatory regime. If the current approach continues, AI innovation will be smothered, overly surveilled, and treated as guilty until proven innocent. 

Two distinct worlds are taking shape on each side of the Atlantic regarding the future of artificial intelligence and its benefits.

The first is one with cutting-edge competition between large language model developers, open-source software coders, and investors tooling the best practical applications for AI. This comprises ambitious startups, legacy Big Tech companies, and every major global corporation looking for an edge. As anyone can guess, a high percentage of early movers in this category are based in the United States, with close to 5,000 AI startups and $249 billion in private investment. This space is hopeful, energetic, and forward-looking.

The second world, languishing behind the first, is characterized by bureaucracy, intense approval processes, and permitting. The predominant mindset around AI is threat mitigation and a fixation on worst-case scenarios from which consumers must be saved. 

Europe is that second world, guided by the nervous hand of its Commissioner for Internal Market, Thierry Breton, a key foe of American tech firms. Breton is the face of two sweeping digital EU lawsthat place additional burdens on tech firms hoping to reach European consumers. 

On AI, Breton’s distinctly European approach is entirely risk and compliance-based. It requires that generative AI products, such as images or videos, are slapped with labels, and specific applications must undergo a rigorous registration process to determine whether the risk is unacceptable, high, limited, or minimal.

This process will prove restrictive to an AI industry that is constantly changing and ensure that tech incumbents will have a compliance advantage. EU regulators are accustomed to dealing with the likes of Meta and Google and have established some precedent for subordinating these high-flying American companies. 

It’s a convoluted system that EU bureaucrats are happy to champion. They adopt burdensome rules before the industries even exist, with the hope of maintaining a certain status quo. As a result, Europe lags far behind the investment and innovation taking place in the United States and even China. 

At present, the United States hosts a significant portion of the AI industry—whether it be Meta and Microsoft’s open-source large language model known as LLAMA, OpenAI’s Chat-GPT and DALL-E products, as well as Midjourney and Stable Diffusion. This is not a fluke or bug in the international order of tech innovation. America has a specific ethos around entrepreneurial risk-taking, and its regulatory approach has historically been reactive.

While President Biden could have taken that as a signal that a light touch is needed, he has instead taken the European route of “command and control,” a way that may prove even more expansive.

For instance, Biden’s executive order invokes the Defense Production Act, a wartime law designed to help bolster the American homefront in the face of grave outside threats. Is AI already classified as a threat?

Using the DPA, Biden requires that all companies creating AI models must “notify the federal government when training the model, and must share the results of all red-team safety tests.” Like the European risk system, this means firms will have to constantly update and comply with regulators’ demands to ensure safety.

More than increasing compliance costs, this would effectively lock out many startups who wouldn’t have the resources to report how they’re using models. Larger, more cooperative firms would swoop in to buy them out, which may be the point.

Andrew Ng, a co-founder of Google’s early AI project, recently told the Australian Financial Review that many incumbent AI companies are “creating fear of AI leading to human extinction” to dominate the market by directing regulation to keep out competitors. Biden appears to have bought that line.

Another aspect that threatens existing development is that all firms creating models must report their “ownership and possession.” Considering Meta’s LLAMA, the largest model produced thus far is written as open-source software, it is difficult to see how this could be enacted. This puts the open-source nature of much of the early AI ecosystem in jeopardy.

Is any of this truly necessary? Singapore, which has a nascent but rising AI industry, has opted for a hands-off approach to ensure innovators create value first. In the early days of Silicon Valley, this was the mantra that turned the Bay Area into a global beacon for tech innovation. 

This impetus to regulate is understandable and follows Biden’s ideology. But if Washington takes the Brussels approach, as it seems to be doing now, it will risk innovation, competition, and the hundreds of billions in existing AI investments. And it could be precisely what the incumbent big players want.

Congress should step up and rebuff Biden’s “phone and pen” approach to regulating a growing industry. 

To ensure American leadership on AI, we must embrace what makes America unique to the innovators, explorers, and dreamers of the world: a risk-taking environment grounded in free speech and creativity that has delivered untold wealth and surplus value for consumers. Taking our cues from European superregulators and tech-pessimists is a risk we can’t afford.

Originally published here

The global race to develop artificial intelligence is the most consequential contest since “the space race” between the United States and the Soviet Union. The development of these tools and this industry will have untold effects on future innovation and our way of life.

The White House will soon unveil its anticipated executive order on AI, which may include a commission to develop an “AI Bill of Rights” or even form a new federal regulatory agency. In this case, the government is playing catch-up with AI innovators and ethicists.

AI in a democratic society does not mean spinning up federal AI agencies staffed by whoever won the most recent election — it means having a wide range of policies and rules made for the people, by the people, and that are responsive to the people.

AI has an almost unlimited potential to change the world. Understandably, this makes many people nervous, but we must resist handing over its future to the government at this early stage. After all, this is the same institution that has not cracked 30% in overall trust to “do the right thing most or all of the time” since 2007. The rules of the road can evolve from the people themselves, from innovators to consumers of AI and its byproducts.

Besides, does anyone really believe a government that is trying to wrap its regulatory mind around the business model and existence of Amazon Prime is prepared to govern artificial intelligence?

For an example of the rigor required to develop rules for AI in a free society, consider the recent researchpublished by Anthropic, an Amazon-backed AI startup known for the Claude generative AI chatbot. Anthropic is developing what’s known as “Constitutional AI” that looks at the question of bias as a matter of transparency. The technology is governed by a published list of moral commitments and ethical considerations.

If a user is puzzled by one of Claude’s outputs or limitations, he or she can look to the AI’s constitution for an explanation. It’s a self-contained experiment in liberalism.

As any American knows, living in a functional constitutional democracy is as clarifying as it is frustrating. You have specific rights and implied rights under American law, and when they’re violated, you can take the matter to court. The rights we have are as frustrating to some as the ones we don’t: the right to keep and bear arms, for example, along with the absence of a clear constitutional right to healthcare.

Anthropic surveyed 1,094 people and broke them up into two response groups based on discernible patterns in their way of thinking about a handful of topics. There were many unifying beliefs about what AI should aim to do.

Most people (90% or more) agree that AI should not say racist or sexist things, AI shouldn’t cause harm to the user or anyone else, and AI should not be threatening or aggressive. There was also broad agreement (60%) that AI should not be programmed as an ordained minister — though with 23% in favor and 15% undecided, that leaves quite the opening in the AI space for someone to develop a fully functional priest chatbot. Just saying.

But even agreement can be deceiving. The yearslong national debate over critical race theory, diversity, equity, and inclusion, and “wokeness” stands as evidence that people don’t really agree on what “racism” means. AI developers such as Anthropic will have to choose or create a definition that encompasses a broad view of “racism” and “sexism.” We also know that the public does not even agree on what constitutes threatening speech.

The single most divisive statement, “the AI shouldn’t be censored at all,” shows how cautious consumers are about AI having any kind of programmed bias or set of prerogatives. With a close to 50/50 split on the question, we’re a long way from when Congress could be trusted to develop guardrails that protect consumer’s speech and access to accurate information — much less so the White House.

Anthropic categorizes the individual responses as the basis for its “public principles” and goes to great lengths to show how public preferences overlap and diverge from its own. The White House and would-be regulators are not showing anywhere near this kind of a commitment to public input.

When you go to the people through elected legislatures, you find out interesting things to inform policy. The public tends to focus on maximized results for AI queries, such as saying a response should be the “most” honest or the “most” balanced. Anthropic tends to value the opposite, asking AI to avoid undesirables by asking for the “least” dishonest response or “least” likely to be interpreted as legal advice.

We all want AI to work for us, not against us. But what America needs to realize is that the natural discomfort with this emerging technology does not necessitate government action. The innovation is unfurling before our very eyes, and there will be natural checks on its evolution from competitors and consumers alike. Rather than rushing to impose a flawed regulatory model at the federal level, we should seek to enforce our existing laws where necessary and allow regulatory competition to follow the innovation rather than attempt to direct it.

Originally published here