Governance by history

2026-09-08T14:58:30Z

Vinod Mukkatira Atmika:

Governance Issue

AI computing capacity and data presents the governance problem of an extreme concentration of technological infrastructure and information in a restricted number of companies that privately and globally dominate the market. This affects public and private actors - such as small and medium enterprises, potential new competitors, and Global South countries - that increasingly depend on AI systems outside their control and/or are deterred from competing with established companies because of impenetrable entry barriers - most notably initial investments and operational costs. The institutional and legal relevance of this is that it consolidates, reproduces and amplifies asymmetries of power in favor of the “Big Tech”, reverting the technological trend from digital decentralization to physical infrastructure dependency and curbing innovation and market efficiency.

The Historical Lineage

Limitation of Machine Learning

The AI revolution was built on the limitation of human capabilities to process large information and derive efficient results - where before there existed only facilitative tools to allow for human-enabled processes, AI now offered derivations and cognitive reasoning in moments and at large scales.

Revert to physical infrastructure dependency in the rush to be the best

The present AI model heavily relies on hardware in order to perform complex data processing for deep learning. The data centre models followed require larger model sizes (which require higher resource, information and capital investment) to be able to yield better results. Due to the limitation of resources and a rush to establish the best working model of an AI agent, data centres are built on a rudimentary model heavily dependent on massive amounts of electricity and fresh water.

Regulation and decentralization of information

Regulation and influence of sovereigns and institutions has resulted in data sharing and information exchange structurally through open source and cloud computing. But, while AI models claims their selling point to be accessibility for all, their information and derivations remain in a closed server, stored for the purpose of training their AI agents to be the best. Big AI contenders attract higher consumer and information flows overall resulting in a better developed AI model, proving disadvantageous in any market where early contenders have an advantage and accumulation of power.

Mechanisms of Path Dependence

Early on in the industry there is an expectation of human and capital investment from all stakeholders involved, this high cost for entry into the market and expected capital to sustain and develop a model by both consumer and enterprise makes for a high switching cost. For the AI model to run and scale there is a presumption that the rate of growth is dependent on the size of data fed, resulting in a better model and hence, more consumer usage. A closed centralised data loop is created but the requirement for storage and processing far surpasses current infrastructures capabilities - heavily relying on early market entry advantage and sustained capital investments taking away from smaller aspirants and hoarding of power within closed circles. Despite its physical dependency, AI data processing has unique requirements beyond legacy infrastructures - larger demand and production of GPUs and designed to handle immense thermal heat generated while consuming electricity beyond current capabilities.

The AI space largely remains unregulated due to its undefined form and fluid nature, however, this has given way for unethical and morality issues regarding data privacy, exploitation of labour and environmental harms.

Politics and Distribution

Concentration strengthens the values, interests, capacities, and authority of the “Big Tech” over other actors of public and private nature. In this context, Barbrook and Cameron illuminate the ethos behind AI technology development while Winner makes observable the power relations surrounding it: concentration is the consequence of an AI development anchored in the belief that it must be free from all institutional and normative restriction since it is inherently liberating and non-political which, in turn, provides a political/moral justification for the concentration (if technology is inherently liberating and non-political then there is no power relations to observe or question) that translates itself into power dynamics where the AI developer not only owns the AI technology but also decides how it is trained and deployed and which models the user can or cannot access.

Contingency and Alternatives

Concentration is due, first and foremost, to the fact that AI computing capacity requires massive and cutting-edge physical infrastructure - such as data centers and microprocessors - which, in turn, requires upfront investments that are unaffordable to most companies. In David’s language, companies that could finance the infrastructure and position themselves first obtained self-reinforcing advantages and a “lock-in” effect in the market. In other words, concentration is the consequence of the development of AI physical infrastructure privately with no mixed or public alternatives as a public service. Therefore, there was a space for an alternative future at the end of the 1980s or the beginning of the 1990s when the privatization model of the technological infrastructure was consolidated in line with the “Californian Ideology”. In that moment governments had the chance to treat technological infrastructure as a mixed or public good rendering it universally accessible as it was the case of the Internet; this would have permitted companies of all sizes to profit from economies of scale, reducing entry barriers and fostering competition. However, this alternative path did not prevail since the Californian Ideology provided the moral/political justification to exclude governments from the development of technological infrastructure in the exact moment in which such a decision would produce structural consequences. If that path had been followed it could have contributed to collective access to economies of scale, lower entry barriers, and a more competitive AI market.

Governance Implication

Considering the above, public or mixed investment on AI physical infrastructure is a necessary governance measure for market decentralization and collective access to AI computing capacity and data. From an historical perspective, the proposed measure is not merely a corrective action for a market failure but for a contingent and ideological decision made between the late 1980s and early 1990s that produced a structural “path dependence” that now is necessary to change.