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This week’s newsletter looks at executive branch attempts to counteract concentrated corporate power across our focus areas – from consumer protection in Big Tech, to housing, to climate regulation. While the FTC and DOJ antitrust division continue to be present in important fights to support consumers and tenants, proactive climate policy continues to be absent, as Biden’s rhetoric regarding challenging climate change rings hollow in areas where the president has considerable discretion.
Concentrated Corporate Power Wins in Silicon Valley with Reversal of OpenAI CEO Ouster
Late last week, OpenAI’s nonprofit board, which in theory controlled its for-profit business in alignment with the organization’s founding goals, ousted founder and CEO Sam Altman. Then, OpenAI’s employees (who own stock in the company) threatened to leave if Altman was not reinstated, and Microsoft (the company’s biggest backer) offered to hire Altman and poach any employees who wanted to leave. What did the Board do in response? They reinstated Altman and replaced the two board members who still opposed him with more pliable men, including the notoriously despicable Larry Summers.
While some news outlets have focused on the high drama of these events—surely several writers in Hollywood are already writing a Social Network-esque script about what transpired—the most salient story is the predictable triumph of powerful corporate actors. Even with a structure theoretically designed to prevent reckless profit-seeking in the development of powerful and dangerous technology, the incentives encouraging OpenAI staff and Microsoft executives to override the board’s decision won out.
The triumph of corporate greed in this case, and the failure of attempts at internal safeguards, only underscores the need for continued oversight by regulatory agencies, including the FTC. In July, the FTC opened a consumer protection investigation into OpenAI’s most well-known product, ChatGPT, focused on the “how the company collects, sources, and retains data, as well as how it trains ChatGPT and evaluates the accuracy and reliability of its outputs.” In theory, the investigation could result in both monetary penalties to OpenAI, if illegal activity is uncovered, and in new rules and requirements for ChatGPT to follow, as it has for Facebook and other tech companies in the past—which would be a welcome development given the slow pace of US legislation regulating artificial intelligence.
RDP, which has often noted the importance of the Commerce Department and the threat posed by Big Tech loving Commerce Secretary Gina Raimondo, will also be monitoring how well the Commerce Department’s National Institute of Standards and Technology (NIST) implements its critical assignment to establish “rigorous standards for extensive red-team testing to ensure” that “AI systems are safe, secure, and trustworthy.” We wish we were more optimistic that Raimondo was the right person to oversee this initiative. (In general, the divide within the Administration over Big Tech is fierce, as this piece from Bob Kuttner demonstrates.)
DOJ Supports Tenants Taking On Price-Gouging Landlords
Earlier this month, the DOJ filed a statement of interest in support of a class action lawsuit by tenants accusing RealPage, a rent-setting software for landlords, of engaging in illegal price-fixing to artificially drive up rents. In the statement, the DOJ takes a strong stance on its ability to challenge anticompetitive behavior, even when it’s driven by automated systems and algorithms, stating, “Automating an anticompetitive scheme does not make it less anticompetitive.”
While the FTC has previously fined RealPage for harms associated with shoddy tenant data management and record-keeping, the DOJ’s support of the lawsuit is the first significant federal action to challenge RealPage’s role in inflating rent prices. This intervention follows dozens of tenant class-action lawsuits which have proliferated after ProPublica’s pathbreaking reporting on their Yieldstar algorithm last year. This support for the tenant lawsuit is directly aimed at RealPage’s business model and efforts to extract profits at renters’ expense and is exactly the type of fight picking that the Biden Administration ought to lean into.
Biden’s Climate Policy Continues to Fall Short
This week, the Center for Biological Diversity published a report demonstrating that the Biden administration’s approval of fossil fuel projects, from the expansion of the Dakota Access Pipeline to the Willow Project, will result in emissions that fully undermine reductions from Biden’s landmark pieces climate legislation, including the Inflation Reduction Act (IRA).
Elsewhere in the administration, signs that Biden is not taking urgent action to mitigate climate catastrophe proliferate. The DOE has continued to refuse to apply clear and transparent standards to the approval process for LNG exports to non-free trade countries—which might explain why they have never rejected a request for export approval. Meanwhile, as the US government continues to fund and arm the Israeli bombardment of Gaza, Amos Hochstein, Biden’s energy security advisor, visited Israel last week to encourage them to develop an offshore gas field off the coast of Gaza in June.
So far, these are not the actions of an administration that intends to uphold its commitments to reducing fossil fuel production quickly enough to slow and reverse catastrophic climate change. With campaign season approaching in a year that has seen record-high temperatures, the pressure is on the Biden administration to demonstrate they are able to fight industry capture and take meaningful climate action. As we noted when the Willow Project was approved in April, the New York Times reported that the administration approved the permits because it did not want to fight ConocoPhillips, the fossil fuel giant behind the project. This is exactly the wrong approach: now more than ever, Biden should follow the lead of his more active federal appointees (e.g., Khan at the FTC and Kanter at the DOJ) and instigate impactful fights to protect Americans — and everyone else — from the abuses of US-based corporations. Particularly when it comes to climate change, our futures (not just Biden’s career prospects) depend on it.
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Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:
Politico Morning Money — Law and Order: Crypto
WaPo: Sam Altman reinstated as OpenAI CEO with new board members
Axios: Who is Larry Summers, the controversial pick to join OpenAI’s board
WaPo: OpenAI and X: Promises of populist technology, shaped by a single man
UPON THE CONVICTION OF THE VILLAIN SAM BANKMAN-FRIED
PRESS RELEASE: Larry Summers’ Ascent to OpenAI Board is Awful News for Humanity
Image credit: Image by the White House is in the public domain.
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