The Silicon Valley Effect
60 Pages Posted: 28 Jan 2025
Date Written: January 16, 2025
Abstract
The most influential Artificial Intelligence (“AI”) companies are shaping AI’s legal order and regulatory discourse to protect their business interests and shift focus away from how their practices harm human beings. I call Big Tech’s influence on AI’s legal order the Silicon Valley Effect and argue that it is understudied and underestimated.
The major AI companies rely on global value chains and global markets. Capitalism drives them to exploit and experiment on vulnerable populations in permissive regulatory environments. Industry-influenced transnational legal orders – including domestic regulation and treaties –protect companies’ practices and products from regulation. Legal scholarship should account for how global informational capitalism drives the industry to influence the development of law transnationally.
Scholars who study technology’s political economy tend to advocate for localized regulation, and scholars who focus on technology’s global legal orders tend to focus on states. Focusing on isolated domestic remedies for transnational phenomena is a mistake, since it permits the industry to develop harmful products and practices elsewhere. Focusing exclusively on states’ transnational influence elides the industry’s significant influence on regulatory discourse, and on foreign and domestic policy.
As the AI industry accumulates power, it can overwhelm weakening state regulators in parts of the world that could initially resist their persuasive and material power. ‘Strong’ states like the US are one election away from vulnerability. To be resilient, they should stop relying solely on domestic regulation and develop transnationally harmonized legal orders to curtail the industry’s power and counteract the Silicon Valley Effect.
Keywords: artificial intelligence, transnational legal order, AI and the law, law and political economy
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