Competitive Implications of Generative AI Terms & Conditions: An Empirical Study

Grant description:

Firms in the generative AI ecosystem offer their products with strings attached: terms and conditions that purport to impose legal restrictions on user behavior. This project will study the terms and conditions of more than 100 genAI firms and would be the first large-scale effort to document this issue systematically. Research in other digital markets and exploratory research in the genAI space indicate that these terms could pose at least two significant competition problems. First, by effectively depriving users of the right to bring private antitrust claims against genAI firms, genAI terms and conditions could erode one of the three pillars of an effective antitrust enterprise. Second, genAI firms have begun to impose noncompete restrictions on users. These restrictions could raise entry barriers and lead to more highly concentrated markets—a recipe for less dynamism and dampened innovation. Yet policymakers and researchers currently know very little about how ubiquitous or restrictive these genAI terms actually are in practice. This research will offer data-driven analysis and responsive policy prescriptions for these nascent, critically important markets.