The standard argument is that larger regulatory burdens create fixed costs that are inconsequential for large enterprises but are barriers to entry for smaller businesses. E.g. banks and pharma continue to be profitable despite large regulatory burdens, but it's nearly impossible to start a new bank or pharmaceutical company today.
To what extent is a raised barrier to entry a feature? High regulatory costs demand greater investment, which in turn demands more third-party eyes from an early stage in a company's development.
The last time we had a largely unregulated cottage medical industry, it precipitated billions of dollars in fraud [1][2][3].
Given the cost of the computing resources, we weren't going to be seeing any mom-and-pop non-GMO free-range AI shops anytime soon anyway.
> To what extent is a raised barrier to entry a feature?
From whose perspective? It's beneficial for large, established businesses and detrimental for prospective businesses.
> The last time we had a largely unregulated cottage medical industry, it precipitated billions of dollars in fraud
I don't understand how attempts to defraud covid-related government programs [1,2,3] and Medicare overspending [3] are related to the argument that regulatory burden disproportionately harms small businesses. I would also note that the healthcare sector is among the most heavily regulated in our economy, and that covid-era programs rushed into existence are exceptional.
Lastly, the FTC authorized compulsory process can be applied to all "AI-related Products and Services". So these "mom-and-pop" AI startups can (and already do) exist. Even if that weren't the case, this would be a straw-man argument against the point that regulatory burden disproportionately harms smaller businesses.
My last two employers have been startups in the defense and medical industries - both heavily regulated fields. Both have external investors, but neither is a slave to PE. As it pertains to tech (which is the relevant scope here, since we're talking about AI), the American regulatory atmosphere is not an outright deterrent to new businesses. Far from it.
> I don't understand how attempts to defraud covid-related government programs...
It's support for the notion that blowing away most barriers to entry in critical industries (like medical) would cause more harm than good. These testing sites grew on trees, and none of them provided accurate results in a reasonable amount of time. The reason COVID testing fraud was viable was because there was no oversight - force a little bureaucracy into the works, and fraudsters wouldn't see dollar signs. Not an elegant solution, but we live in an inelegant world.
> these "mom-and-pop" AI startups can (and already do) exist.
Maybe my phrasing is little too tongue-in-cheek. My goal here is to draw a line between "small businesses" amd "small tech businesses." These are wildly different things.
When non-tech people refer to "small business" they usually mean firms worth ~$1M or less. The family-owned bodega down the street, for example. I 100% agree that bureaucratic regulation hurts these small businesses much more than it helps society at large.
"Small tech business" has a totally different meaning. A Series A AI startup could easily be worth $30-50M. Regardless of regulation, it has high cost barriers arising from its compute needs, and the personel to wrangle those computers. Basic regulatory oversight constitutes a proportionally smaller cost for such a firm.
