Introduction
Artificial intelligence (AI) startups have reacted positively to President Joe Biden’s new executive order that introduces regulations on the technology. However, some CEOs have expressed concerns over potential hindrances for smaller companies and innovation. The order grants oversight to the White House on future large language models, such as OpenAI’s GPT-5 and Google’s Gemini, before their release to the public. This move follows months of discussions between the Biden administration and the tech sector, which has seen significant investments in AI since the success of ChatGPT last year.
New Guidelines and Government’s Role
The executive order includes guidelines to promote a fair and competitive AI ecosystem, with a focus on helping developers and small businesses access technical resources and commercialization opportunities. Startup founders like Florian Douetteau, co-founder of Dataiku, commend the emphasis on fostering an open AI ecosystem. Douetteau believes that monopolization of AI by cloud vendors, similar to privatizing the electric grid, would stifle innovation and discourage smaller players from contributing to AI evolution. He also noted that the added regulation may allow the Federal Trade Commission to exert early authority in shaping the ecosystem.
Notably, while aid to incumbents is a concern, startup founders like Aidan Gomez, co-founder of Cohere, have expressed cautious optimism. Gomez attended Senator Chuck Schumer’s AI Insight Forum and believes that implementation and enforcement of the order will determine its impact on incumbents and smaller startups. Historically, enforcing antitrust laws on the tech sector has been a challenge for the Biden administration. However, the administration’s awareness of oligopoly dynamics gives some hope to entrepreneurs like Gomez.
Impact on Startups
Some startups argue that the additional regulatory burden may favor incumbents who have greater resources to manage associated costs. Founder George Sivulka of enterprise search startup Hebbia believes that overregulation, such as limits on model size and reporting requirements, will create barriers only large monopolies can overcome. Recognizing that newcomers may lack the capital needed to meet extensive testing and regulatory requirements, Evan Reiser, co-founder of cybersecurity software firm Abnormal Security, highlights the use of open-source models by startups for their affordability and flexibility. The executive order’s application to open-source AI models remains unclear, but regulation aimed at large open-source providers like Meta could affect startups’ ability to rapidly build and deploy new models.
Government’s Perspective
Ben Buchanan, AI special advisor to the White House, denies any alignment of the executive order with the interests of tech incumbents. He emphasizes that the order has been shaped by a dynamic ecosystem that includes civil society, academia, and other stakeholders. The goal is to maintain a vibrant AI landscape and avoid stifling innovation by striking the right balance.
