NITI Aayog’s Debjani Ghosh warns that the concentration of power and circular funding in AI creates systemic risks, potentially masking true market demand and weakening healthy competition within the technology ecosystem.
Concentration of capital, influence and funding among a handful of companies could create systemic risks for the artificial intelligence industry, with circular financing making it difficult to distinguish genuine market demand from investments supporting the same ecosystem, Debjani Ghosh, Distinguished Fellow at NITI Aayog, warned. In a post on X, Ghosh said the growing concentration of money and power among a few technology companies, along with interconnected funding arrangements, could weaken competition and create an unhealthy sense of invincibility among industry leaders.
“I have been arguing for some time that AI’s biggest risk is not the technology, but the concentration of money, power and egos behind it…and the circular nature of funding…with one company increasingly becoming the de facto bank of AI,” she said. Ghosh identified three major concerns, including concentration of power, circular capital flows and the need for a fundamental change in the way Silicon Valley develops its AI ecosystem. She said when a small number of companies and individuals become disproportionately influential, success can be mistaken for infallibility, weakening checks and balances. On funding, Ghosh cautioned that when the same companies fund, supply, buy from and validate each other, it becomes harder to assess whether business growth is supported by actual market demand or financing within the ecosystem.
“This is not necessarily fraud. It is also not the foundation of a resilient industry,” she said. Ghosh also called for a more competitive and distributed AI ecosystem supported by independent innovation, diverse sources of capital and greater transparency. She said AI leadership should be measured by the strength and resilience of the wider ecosystem rather than the scale of its biggest companies. Her remarks come amid wider concerns among policymakers about the concentration of market power in the AI industry and its implications for competition and economic inequality. Federal Reserve Governor Michael S. Barr, speaking at Yale University on Thursday, warned that the dominance of a small number of AI companies could allow them to capture a disproportionate share of the technology’s financial gains, while smaller businesses and their workers could face fewer opportunities. Barr said larger companies could afford continued investments in advanced AI systems, potentially making it harder for smaller businesses to compete.