The Nonlinear Library EA - Should we break up Google DeepMind? by Hauke Hillebrandt
Apr 23, 2024
09:41
Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Should we break up Google DeepMind?, published by Hauke Hillebrandt on April 23, 2024 on The Effective Altruism Forum.
Regulators should review the 2014 DeepMind acquisition. When Google bought DeepMind in 2014, no regulator, not the FTC, not the EC's DG COMP, nor the CMA, scrutinized the impact. Why? AI startups have high value but low revenues. And so they avoid regulation (and tax, see below). Buying start-ups with low revenues flies under the thresholds of EU merger regulation[1] or the CMA's 'turnover test' (despite it being a 'relevant enterprise' under the National Security and Investment Act).
In 2020, the FTC ordered Big Tech to provide info on M&A from 2010-2019 that it didn't report (UK regulators should urgently do so as well given that their retrospective powers might only be 10 years).[2]
Regulators should also review the 2023 Google-DeepMind internal merger. DeepMind and Google Brain are key players in AI. In 2023, they merged into Google DeepMind. This compromises independence, reduces competition for AI talent and resources, and limits alternatives for collaboration partners.
Though they are both part of Google, regulators can scrutinize this, regardless of corporate structure. For instance, UK regulators have intervened in M&A of enterprises already under common ownership - especially in Tech (cf UK regulators ordered FB to sell GIPHY).
And so, regulators should consider breaking up Google Deepmind as per recent proposals:
A new paper 'Unscrambling the eggs: breaking up consummated mergers and dominant firms' by economists at Imperial cites Google DeepMind as a firm that could be unmerged. [3]
A new Brookings paper also argues that if other means to ensure fair markets fail, then as a last resort, foundation model firms may need to be broken up on the basis of functions, akin to how we broke up AT&T.[4]
Relatedly, some top economists agree that we should designate Google Search as 'platform utilities' and break it apart from any participant on that platform, most agree that we should explore this further to weigh costs and benefits.[5]
Indeed, the EU accuses Google of abusing dominance in ad tech and may force it to sell parts of its firm.[6]
Kustomer, a firm of a similar size to DeepMind bought by Facebook, recently spun out again and shows this is possible.
Finally, DeepMind itself has in the past tried to break away from Google.[7]
Since DeepMind's AI improves all Google products, regulators should work cross-departmentally to scrutinize both mergers above on the following grounds:
Market dominance: Google dominates the field of AI, surpassing all universities in terms of high-quality publications:
Tax avoidance: Despite billions in UK profits yearly, Google is only taxed $60M.[8] DeepMind's is only taxed ~$1M per year on average. [9],[10] We should tax them more fairly. DeepMind's recent revenue jump is due to creative accounting, as it doesn't have many revenue streams, but almost all are based on how much Google arbitrarily pays for internal services.
Indeed, Google just waived $1.5B in DeepMind's 'startup debt' [11],[12] despite DeepMind's CEO boasting that they have a unique opportunity as part of Google and its dozens of billion user products by immediately shipping their advances into[13] and saving Google hundreds of millions in energy costs.[14] About 85% of the innovations causing the recent AI boom came from Google DeepMind.[15] DeepMind also holds 560 patents,[16] and this IP is very hard to value and tax.
Such a bad precedent might cause either more tax avoidance by OpenAI, Microsoft AI, Anthropic, Palantir, and A16z setting up UK offices, or it will give Google an unfair edge over these smaller firms).
Public interest concerns: DeepMind's AI improves YouTube's algorithm and thus DeepMind indirectly polarizes voters.[17] Regulators s...
Regulators should review the 2014 DeepMind acquisition. When Google bought DeepMind in 2014, no regulator, not the FTC, not the EC's DG COMP, nor the CMA, scrutinized the impact. Why? AI startups have high value but low revenues. And so they avoid regulation (and tax, see below). Buying start-ups with low revenues flies under the thresholds of EU merger regulation[1] or the CMA's 'turnover test' (despite it being a 'relevant enterprise' under the National Security and Investment Act).
In 2020, the FTC ordered Big Tech to provide info on M&A from 2010-2019 that it didn't report (UK regulators should urgently do so as well given that their retrospective powers might only be 10 years).[2]
Regulators should also review the 2023 Google-DeepMind internal merger. DeepMind and Google Brain are key players in AI. In 2023, they merged into Google DeepMind. This compromises independence, reduces competition for AI talent and resources, and limits alternatives for collaboration partners.
Though they are both part of Google, regulators can scrutinize this, regardless of corporate structure. For instance, UK regulators have intervened in M&A of enterprises already under common ownership - especially in Tech (cf UK regulators ordered FB to sell GIPHY).
And so, regulators should consider breaking up Google Deepmind as per recent proposals:
A new paper 'Unscrambling the eggs: breaking up consummated mergers and dominant firms' by economists at Imperial cites Google DeepMind as a firm that could be unmerged. [3]
A new Brookings paper also argues that if other means to ensure fair markets fail, then as a last resort, foundation model firms may need to be broken up on the basis of functions, akin to how we broke up AT&T.[4]
Relatedly, some top economists agree that we should designate Google Search as 'platform utilities' and break it apart from any participant on that platform, most agree that we should explore this further to weigh costs and benefits.[5]
Indeed, the EU accuses Google of abusing dominance in ad tech and may force it to sell parts of its firm.[6]
Kustomer, a firm of a similar size to DeepMind bought by Facebook, recently spun out again and shows this is possible.
Finally, DeepMind itself has in the past tried to break away from Google.[7]
Since DeepMind's AI improves all Google products, regulators should work cross-departmentally to scrutinize both mergers above on the following grounds:
Market dominance: Google dominates the field of AI, surpassing all universities in terms of high-quality publications:
Tax avoidance: Despite billions in UK profits yearly, Google is only taxed $60M.[8] DeepMind's is only taxed ~$1M per year on average. [9],[10] We should tax them more fairly. DeepMind's recent revenue jump is due to creative accounting, as it doesn't have many revenue streams, but almost all are based on how much Google arbitrarily pays for internal services.
Indeed, Google just waived $1.5B in DeepMind's 'startup debt' [11],[12] despite DeepMind's CEO boasting that they have a unique opportunity as part of Google and its dozens of billion user products by immediately shipping their advances into[13] and saving Google hundreds of millions in energy costs.[14] About 85% of the innovations causing the recent AI boom came from Google DeepMind.[15] DeepMind also holds 560 patents,[16] and this IP is very hard to value and tax.
Such a bad precedent might cause either more tax avoidance by OpenAI, Microsoft AI, Anthropic, Palantir, and A16z setting up UK offices, or it will give Google an unfair edge over these smaller firms).
Public interest concerns: DeepMind's AI improves YouTube's algorithm and thus DeepMind indirectly polarizes voters.[17] Regulators s...