Regulating the Algorithm: Can Antitrust Keep Up With AI?
For decades, the “invisible hand” of the market has been the accepted rule to determine success. But as economist Joseph Schumpeter famously argued, even the most entrenched market structures are eventually dismantled by a “perennial gale” of innovation resulting in “creative destruction”, clearing the way for new market players.
For years, it seemed that in markets with strong network effects, success could be permanent, dashing any hope of Schumpeterian disruption. But not all regulators and judges share this outlook.
A Glimmer of Hope in a US Courtroom
A recent decision from a US court suggests the winds of change may be upon us. On 2 September 2025, U.S. District Court Judge Amit Mehta delivered a landmark remedies decision after finding Google guilty of anti-competitive practices in online web search services.
Judge Mehta’s ruling is built on hope - that a moment of Schumpeterian destruction has finally arrived, ready to reset a long-standing economic order. Crucially, he resisted popular calls to dismantle the company, a move that would have echoed the historic 1984 breakup of AT&T’s monopoly. Instead, Judge Mehta made a striking assertion: “the emergence of generative AI has changed the course of this case”. He pointed out that AI companies are now “better placed to compete... than any... developer has been in decades”.
The AI Paradox for Regulators
This isn’t just a casual observation; it signals a critical shift for regulators worldwide who are dealing with anti-competitive allegations against technology companies. The rise of generative AI has unleashed a new wave of potential players. This technological evolution must now be a central factor in both antitrust assessments and the remedies designed to address market dominance.
However, this new landscape presents a significant complication. While new AI startups are gaining ground, it’s also the case that the very tech incumbents under regulatory scrutiny are the ones funding and driving much of this innovation. In short, the disruptors and the disrupted are often one and the same.
This duality creates a complex puzzle for regulators. On one hand, generative AI could introduce new competition and disrupt long-standing market positions. On the other, it could simply reinforce the power of players who are already best positioned to develop, deploy, and scale these new technologies.
India at a Crossroads
As this global debate intensifies, all eyes are turning to India. The Competition Commission of India (CCI) is preparing to publish a comprehensive market study report on AI. This study will likely explore how AI is impacting competition across various sectors and identify potential risks or regulatory blind spots.
The key questions now are - will the CCI acknowledge the dual role of technology leaders as both dominant forces and key innovators? Will it see generative AI as a catalyst for competition or as a new threat to market concentration? Most importantly, what enforcement tools and policy frameworks will it prioritise in response?
India is at a pivotal moment. The CCI’s decisions will not only shape the future of AI governance in the country but could also set a powerful precedent for other regulators navigating this new and challenging terrain. As the world enters an era of AI-fuelled disruption, striking the right balance between fostering innovation and preserving competition is more critical - and more difficult - than ever before.