Who Gets the Biggest Slice of the AI?Cake?

by Mohammed Anfas, PhD Scholar in Economics at the Centre for Development Studies

This blog is produced as a part of the Reshaping Work Fellowship Programme. The opinions and views expressed in this publication are those of the author. They do not purport to reflect the opinions or views of Reshaping Work or organisations that have supported the programme.

Amid the overwhelming wave of news and hype surrounding AI technologies, it’s easy to lose track of the current shape of the AI industry and its broader implications. Headlines are filled with breakthroughs like DeepSeek, ChatGPT, and the transformative potential of AI across various fields. While the technology holds immense transformative power, the scope of its benefits remains uncertain?—?especially given the existing market structure. The AI industry is currently dominated by a few key players, including Nvidia, Amazon, Google, Microsoft, and Meta. This concentration of power raises concerns about who will truly benefit from these advancements.

As these tech giants continue to steer the direction of AI development, it’s crucial to consider how this consolidation might affect the future prospects of AI technologies and their potential to improve human well-being. Will the benefits of AI be widely distributed, or will they remain concentrated in the hands of a few? This blog will examine the current state of the AI industry, explore the implications of its market structure, and briefly discuss the way forward.

The Current Shape of the AI?Industry

The AI industry operates across four key layers: hardware, infrastructure, models, and services and applications. The hardware layer focuses on the development of specialised chips and other hardware essential for AI systems. Currently, Nvidia holds a dominant position in this sector, with near-monopoly control over the market. The infrastructure layer involves the creation of data centers and physical facilities required to support AI technology. Major players such as Amazon, Google, and Microsoft dominate this space, collectively holding a significant market share.

In the AI models sector, rapid advancements have been made in recent years. Numerous start-ups, often backed by venture capitalists and large tech firms, have created various AI models, leading to intense competition. Similarly, companies have developed a range of AI-powered applications and services, such as DeepSeek, Gemini, and ChatGPT. This sector sees fierce competition, with companies struggling to generate profits from AI models and software development. However, while there is high competition in AI models and software, the hardware and infrastructure layers exhibit oligopolistic and monopoly market structures, respectively.

The high costs associated with developing AI technologies, combined with the difficulty many companies face in generating profits from AI, force smaller AI firms and governments to rely on the resources and infrastructure provided by tech giants. This dependency further solidifies the dominance of these companies in the AI space, contributing to their continued control over the broader digital ecosystem. Therefore, the market concentration in the hardware and infrastructure layers of the AI industry raises concerns, as these firms stand to reap the majority of the benefits from such a transformative technology.

The Way?Forward

While consumers may currently enjoy AI technologies at lower costs or even for free, the growing concentration of power in the sector is a major concern. Dominant companies are creating barriers for smaller firms, stifling competition, slowing innovation, and increasing inequality. The true potential of a revolutionary technology like AI can only be realised through fair and equitable access to the technology. However, the current market structure of the AI industry makes such access uncertain. Given the dominance of a few key players in the hardware and infrastructure sectors, ensuring widespread access to AI becomes increasingly challenging, as these firms create dependency among smaller companies and less-developed countries. The existing antitrust policies, which primarily target price manipulation and consumer welfare, fall short of addressing the growing issues of market concentration and the resulting unequal distribution of power within the AI industry.

More robust antitrust and data protection policies are crucial for reshaping the future of the AI industry. As dominance in the sector allows tech giants to further solidify their tech sovereignty, antitrust laws must evolve beyond traditional consumer welfare principles to ensure a fair and equitable distribution of AI technology. Likewise, strict data protection regulations are essential to prevent dominant firms from monopolising access to data and consolidating their control over the sector. In addition, proactive government intervention is key to promoting open access to AI technologies and encouraging healthy competition. By taking these steps, governments can unlock the true potential of AI technologies, ensuring its benefits are more widely shared and used to improve society as a whole.

#AI #ArtificialIntelligence #FutureOfWork #Competition #Innovation

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Reshaping Work Fellowship is supported by Zurich Insurance.

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