Author Offers Solutions for Airline and AI Regulation

CHRISTIANE AMANPOUR, HOST: And everybody should be able to wear their own symbols as well. Thank you so much, Kim Daniels. Now, holding industries to high safety standards seems like an obvious requirement, but the reality is far from it. From deep fakes to mass data collection, Vanderbilt University professor Ganesh Sitaraman says, it is time for Congress to muzzle the rampant A.I. before it gets too big and tighten regulations on the aviation industry, for instance, especially since Boeing is under the microscope again after being found at fault for last month’s door plug blowout incident on an Alaska Airlines flight. His recent book, “Why Flying is Miserable and How to Fix” it details how guardrails could improve airline businesses. And Ganesh Sitaraman joins Hari Sreenivasan now for this conversation.

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HARI SREENIVASAN, CORRESPONDENT: Professor Ganesh Sitaraman, thanks so much for joining us. You wrote an op-ed recently that talked about the, it is time for the government to regulate A.I. There’s a lot of conversation about that very question right now. So, let’s kind of dive into a little bit of it. And perhaps also your expertise in the airline industry that will kind of dovetail here. So, how should we be looking at regulating A.I.?

SITARAMAN: Well, I think one of the real challenges is just getting our handle around what is A.I. and how does it work? And I think one of the things that I’ve found very helpful is understanding how we get to the A.I. applications that people have found so exciting like ChatGPT. And so, when you use ChatGPT and you put in an input asking it to write you a letter or provide some information, that system works because the application is operating on top of what’s called a foundation model, which is run by a company called OpenAI. And those models are training on lots of data, billions and billions of pieces of data that have been collected. And the reason they’re able to work is because they can train all that data on extraordinarily large server farms that are called Cloud computing or Cloud infrastructure. And that Cloud infrastructure only works because of processing power from semiconductors, which are computer chips that are just very, very sophisticated. And what’s really striking is when you work your way down these layers in the tech stack from applications to models to Cloud to computer chips, you see that there’s more and more concentration as we go down in terms of the number of companies that are in those models. So, at the level of computer chips, there’s really only one company that manufactures them at the most sophisticated levels in the whole world. And there’s only one company that designs the most sophisticated chips. When you think about Cloud infrastructure, the processing power, there’s only three companies, and they’re the biggest tech companies in the world. Amazon, Google, Microsoft. And so, one of the challenges, I think, that we need to think about is how do we deal with the concentration in the technology companies that we’ve already seen is causing lots of big problems from antitrust lawsuits against these companies, to hearings in Congress about all the harms that they’ve done to children in some cases of social media, for example. And when we have that bigness and it goes unregulated, we’ve seen the harms already in the tech context. And as we move into A.I., I think that really needs to be a big focus.

SREENIVASAN: So, how does government step in and help even a playing field? Because this is something that even somebody who is very pro free market would probably disagree with so much consolidation of power.

SITARAMAN: I think that’s right. And part of the hope that I have is that we actually have a great tradition in the United States of regulating big, powerful companies that are monopolies or oligopolies, which is just fancy way of saying a couple of companies in the sector. And we’ve done that for hundreds of years. We did it for railroads. We did it for airlines. We did it for the telephone. You know, your electric utility is a monopoly, but it’s not abusive because we have regulations in place to make sure you get a fair price for energy coming to your house and that everyone in your neighborhood has access to energy. So, we found ways to do that, and I think that’s what we need to do again. And there are simple ways we could do this. So, one policy rule is called a nondiscrimination rule. And what that just means is there’s a level playing field. If you’re a Cloud provider who is offering all this computing access, you should offer it on even terms to everyone. Don’t price discriminate. Same deal for everybody. Everyone should be able to get access. You shouldn’t be able to give preferences to companies you like or dislike, or maybe have an investment in. And you don’t want these entities picking winners and losers, because what we want is for small companies, for startups, for new entrants to be able to thrive. And for that, they’re going to rely on these core infrastructures like services at these lower layers in the tech stack if we want A.I. to be a generative, innovative, and exciting field in the future.

SREENIVASAN: You know, you drew a parallel to seeing some of the technologies that are working here like utilities, right? And so, how would you look at access to A.I. tools as something that would fall into that category? Because I can immediately see the tech companies saying — similar to, say, big pharma or anybody else and say, no, no, no, no, no, no. Hold on. We spent all the money. We are doing all the R&D. It takes tons of computing power. It costs us millions and billions of dollars to do this and create this language model that you can enjoy. You can’t force us to give some of that away to all the entrance in the field.

SITARAMAN: So, I think one of the important things is there’s nothing being given away in many of the regulatory proposals. So, when you think about Cloud computing or fair access to models, any users would still have to pay for it. The key thing about a nondiscrimination rule is that the level — the playing field has to be level when you’re paying for it. You can’t charge one person higher than another, or one business higher than another. And part of the concern that I think many people are worried about is that if the company, like Microsoft runs its own Cloud service, but also has a huge investment in OpenAI, which runs a model, and also runs ChatGPT, and Microsoft has Microsoft Word and Excel and all these other services, you know, they could integrate all of the A.I. services directly in their system, run everything on their Cloud. And if there’s a new entrant who comes in with a big idea for how to do something, they might not be able to get any market share or get an edge wise at all because Microsoft has controlled the whole stack, up and down. And that’s the concern, is that if you’re providing that Cloud service and there’s some other model that wants to use it, you’ve got to have equal terms. You can’t favor your own businesses. You can’t favor the company that you have a deal with, OpenAI, over someone else who wants access.

SREENIVASAN: When you looked at the research on historically how the government has chosen to regulate different monopolies, how did the government in the past figure out that electricity should be deemed a utility, and this is how it should be used, this is how competitive it should be, this is how it should allow access, versus probably the companies that tried to get that energy out of a river and hydroelectric or whoever said, no, no, no, no, we’re, we’re pouring all this money into it. We’re pouring all this time into it. You can’t just turn that into a utility.

SITARAMAN: Yes. So, there really have been two ways in which this has happened. You now, one of my favorite cases from the 19th century is just five years after the telephone was invented, a telephone company was denying service to a carriage company. And the reason was because they owned another carriage company, and they didn’t want their competitor to be able to, you know, have folks call them and get rides to different places. And a judge looked at that and said, that’s unfair. You know, this telephone company is kind of like a utility. It should have to serve everyone equally. And that was only five years after the telephone was invented. So, judges were willing to say, we analogize by seeing other situations that look similar. And the core things they were looking at were, is this likely to be competitive? Is it an essential service or an important input into lots of different kinds of activities? And is this an area where, as you suggested, there are really high investment costs to get in? And you didn’t have to have all of these factors, but these were some of the factors that were really important in thinking about whether something would likely be a monopoly, whether literally or pretty close to it, or whether this was an industry that was actually extremely competitive. The second way we did it was that same kind of analysis, but Congress stepped in and actually just passed laws doing that. And the real benefit of having Congress do it as opposed to judges is it meant you had a uniform set of rules across the whole country? And it also meant that you prevented bad things from happening in the first place. Because the problem with lawsuits is you have to wait till someone’s injured before you can sue. Whereas Congress can stop bad activities from happening before they ever happen.

SREENIVASAN: Look, that sounds theoretically very plausible, but, you know, what also happens in Washington is an army of lobbyists. So, on the one hand, you have the CEOs kind of testifying in front of Congress every once in a while, saying, hey, hey, absolutely, guys, go ahead and regulate this. And at the same time, they’re funding an army of people who are coming up and either watering down that legislation or saying, no, no, no, this is going to be a job killer or phrasing it in some way where that kind of law doesn’t pass.

SITARAMAN: You know, one of the really striking things that we’ve seen is people on both right and left getting together. So, you know, Lindsey Graham and Elizabeth Warren have a bill on regulating big tech companies. Amy Klobuchar and Chuck Grassley have a bill on regulating big tech companies. You have people on both the right and the left interested. And when you look at some of these hearings, including a recent one where Facebook CEO Mark Zuckerberg apologized to families who had been harmed by their Children using the platform Facebook, you know, he — when you see that hearing, there are people on the Republican side and on the Democratic side who are outraged at the things that have been going on in the tech space. And so, I think that commonality suggests maybe there could be an opportunity if people can get together and actually make this work now.

SREENIVASAN: So, what is something that Congress can, and in your opinion, should do in the place that we’re in when it comes to regulating A.I.?

SITARAMAN: So, I think the 1st thing is that Congress could pass these nondiscrimination type of rules that would say for Cloud providers and others, you have to serve everyone in equal terms. There can be no favoritism or special deals, and that we really want this level playing field so that there’s access for lots of companies to these really critical services. I think if Congress was really being bold, they could go a step further. You know, in a lot of these other sectors, one of the rules that was in place was if you own one of these infrastructure businesses, you really shouldn’t own the businesses that depend on it also. You know, we can have a rule like that, you know, just a prohibition. So, you don’t have this conflict of interest where companies would be favor — you know, favoring their own businesses. That would be a step further. I think the third thing that Congress could do is create a public option for this Cloud provision. And that’s something that some people have proposed. And the reason why you might want a public option is, first, so that the government would be able to use it for its own purposes, military, national security needs, and other things without being dependent on one or a few companies, which can mean higher prices, which means higher cost to taxpayers. But it’s also a thing that we could use for scientific development and for researchers. And, you know, if we really want to have cutting-edge research that is not in service of just making more profits but is actually about solving public problems and just advancing the frontiers of science, you know, public option might be another possible way to democratize the use of A.I. so that there’s really access to these important utility-like services for a wider range of people who are not big companies, but are nonprofits or researchers.

SREENIVASAN: Well, one of the reasons we’re having this conversation with you right now is because you took a very close look at the airline industry and the steps that the government took to regulate and deregulate it. And you’ve got a new book out that’s called “Why Flying is Miserable and How to Fix It.” Do you see analogies in what has happened to the airline industry and what we could do about the industry or the tech sector?

SITARAMAN: Certainly. And, you know, of course, every industry is different and has its own characteristics to some degree, but there are also a lot of similarities. And one that I think is important is that the airline industry is not very competitive. You know, we have four big airlines right now, and they have a bigger market share today under our competitive system, so-called competitive system, than they did during the period of regulation in the 1970s. At some airports we now have airlines that have 70, 80 percent share of that airport. In regulation, they had 30 percent. You know, that was actually a more competitive period than we have now. And so, one of the challenges, I think, is when we unleashed airlines to do whatever they want, fly wherever they want, charge us whatever they want, we didn’t get a system of real competition with hundreds of airlines flying around all operating efficiently, what we actually ended up with was deep consolidation, which is similar in the tech context, where — it’s an area where we don’t have a lot of competition.

SREENIVASAN: You know, it seems that the goals of our status quo of regulation or lack thereof have not worked. I mean, I — just, as a consumer and a flyer, the prices aren’t drastically lower. The service has certainly gone downhill. So, it doesn’t seem like what we did achieved any of the things that we wanted to create this marketplace. So, how do we change that?

SITARAMAN: I think that’s right. And part of the challenge is, you know, the promises of deregulation, as you suggested, just haven’t been born out. You know, the pitch was you’re going to get lower prices, more competition, no worse quality service, it’ll be better for labor, better for safety, or at least as good. And cities wouldn’t lose service. Everything will be fine. And it’ll be more competitive and cheaper. And where we ended up is in a place that’s less competitive, where airlines are now having boom years, where they’re flush with cash, like, in the 2010s. But then after crises come running to Congress asking for taxpayer support and bailouts. Then, you know, we add to that, if you live in one of the 74 cities that has lost service from a major carrier, it’s even hard just to get on a plane to go anywhere. And there’s some cities, you know, Dubuque, Iowa, Toledo, Ohio that have lost all big carrier service altogether. And these aren’t small places. I mean, these are pretty hefty cities. And so, I think we have a real problem in this country in the airline industry, and we need to have a national conversation about how to fix it. And that starts with recognizing that our system right now isn’t working, but that really started with deregulation.

SREENIVASAN: How do we prevent it from being kind of a unified command and control structure from sort of central authority where there is still an ecosystem where these private companies can function or public companies can function, but at the same time, the service can be improved for the end users?

SITARAMAN: Yes, I have three principles for how I think about this. And, you know, my principles are based on learning about the pros and cons of regulation and the pros and cons of deregulation and both had positives, both have had negatives. And I think we should learn from the past, but we shouldn’t go backwards. We should try to go forward. And so, my three big principles are first, no more fly over country. We should have a system in which people can get around, including to mid-size cities, including to smaller places that are a little bit more remote and there should be access to those places. You know, an easy analogy here to think about is the post office. You know, you can send a letter from New York to D.C., but you can also send a letter from New York to Topeka, Kansas, or to, you know, somewhere in South Dakota and it’s the same price for that stamp to go anywhere. You know, we can have a system where if you’re in a smaller place, the airlines have some obligation to serve some number of those smaller places. And one of the ideas I proposed is we have a sort of NFL style draft where there’s a number of smaller cities and the airlines are like the sports teams and they get to pick cities out of the out of the draft. And they would have to serve those cities, and it would be an obligation because, you know, you can’t just start an airline. It’s a privilege that we, the people, give them to be able to fly over our airspace and to land and to fly over our homes. So, you know, with some privileges should come some obligations to serve the public too. My second principle is no more bailouts and no more bankruptcies. We need a stable airline system that is going to do better overall, including in big crises. And I think one easy way to do that is we should require that the airlines have crisis management plans. You know, they should have to have a plan that they publicly put out and show to the Department of Transportation about what they are going to do the next time there’s a big crisis, like 9/11, like COVID, and demand goes way down for six months or for a year and how they’re going to manage that and how they’re going to bounce back. And then third, we need a fairer and transparent — more transparent pricing system. And I think that also will be something that helps passengers. So, for example, you know, we’ve seen that as airlines have unbundled their systems, you now get bigger or smaller seats and you can pay more or less for those. You pay if you want to take one bag or no bags. You know, what’s striking is I’ve never met anybody who’s flown, you know, halfway around the world, or 4,000 or 5,000 miles and had no need for any bags whatsoever, you know. If you’re traveling a long way, you’re going to need a bag, but they can charge extra for that. So, I think we need some minimum standards. You know, what are we getting for our prices? And that can also include minimum seat standards so that there’s a little room, which is, you know, partly a safety issue, but it’s also about convenience. You know, when somebody puts their seat back and that starts a brawl on the plane, that’s not a good thing for anybody. And so, you know, we should have some basic rules around those things as well.

SREENIVASAN: Author and law professor from Vanderbilt University, Ganesh Sitaraman, thanks so much for joining us.

SITARAMAN: Thanks so much for having me.