AI Is Creating “Doom Loops” All Over the Economy
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Recently unredacted legal documents and depositions in the New York Times ‘ lawsuit against Microsoft and OpenAI revealed something extraordinary: executives knew full well of the destructive powers of AI when they rushed to launch products featuring the tech in the wake of the explosive success of OpenAI’s ChatGPT.
Internal Microsoft documents quoted by the newspaper’s lawyers warned of an ugly reality now playing out across the entire economy: “doom loops,” in which AI monetizes the work of human creatives while undermining the economic systems that funded their work in the first place.
“Our AI content strategy has started a ‘doom loop’ that will hurt the performance of our models and the entire web at the same time,” one internal Microsoft document reads. “It is highly unusual that an end-product threatens the economic foundations of its essential suppliers, but that is the situation we have created for our LLM business with respect to its ‘content supply chain.'”
The closer you look, the more you see doom loops everywhere. Journalists, for example, used to publish work under the assumption that online platforms would drive readership to them. But now, tools like ChatGPT and Google’s Gemini simply summarize their articles without sending readers to their sites, sparking a crisis that seems poised to wipe out the independent media .
Similar stories are playing out across other industries, from music to filmmaking. Writ large, many are concerned that AI will eventually be strong enough to wipe out huge numbers of jobs, creating a situation in which unemployed consumers won’t have the funds to support the economy.
The irony, as the Microsoft document pointed out, is that the AI industry is a snake eating its own tail: the very products that it’s pushing on users rely on fresh cultural content even as they destroy the economic incentives to create it.
It’s also a dire situation for the open web, which recently celebrated the macabre turning point of being dominated by more AI slop than human-authored content. As companies — most notably Google — are fundamentally changing the way users interact with the web, more and more newspapers, media outlets, and local news stations are seriously struggling to make ends meet.
Worse yet, as the legal documents in the NYT ‘s copyright lawsuit showed, insiders admitted that the entire operation is built on theft.
“Millions of people around the world will soon consider large models ‘hoovering up’ all their work to be an astonishing theft of unprecedented proportions,” an internal Microsoft document admitted.
Plenty of other creative industries are also feeling the pressure as AI-related doom loops continue to undermine livelihoods. According to the latest data from the US Bureau of Labor statistics, it’s a bloodbath — with more than 200,000 jobs in “creative” industries having been lost over the last four years alone, roughly the time since OpenAI launched ChatGPT.
AI-generated music is rapidly crowding out human-produced tracks on streaming services, forcing platforms to figure out where to draw the line. Some have implemented hard and fast rules , while others continue to allow users to exploit algorithms with slop .
Hollywood studios are also doubling down on AI while protesting actors struggle to have their voices heard . Many of them fear that their likeness or voice could soon be rendered worthless, representing an existential threat to their livelihoods.
Even the job market is embroiled in its own doom loop. More and more desperate job seekers are turning to AI to brush up their resumes and manipulate AI-powered job portals, while recruiters are drowning in a wall of almost identical applications.
“We’ve got this tragic situation where each side has a problem,” applicant tracking system company Greenhouse CEO Daniel Chait told Wired . “They’re using AI to solve their own problem, but in ways that make the problem worse.”
“And so more AI use begets more AI use, to no one’s benefit,” he added. “The more it’s happening, the worse it gets.”
Similarly, the use of AI in the classroom has skyrocketed, with students using the tech to complete their homework, offloading their cognitive faculties to the machine. Meanwhile, their teachers are using AI to come up with assignments, slowly effacing the human in the loop. Educators who bristle at the idea of using the tech are finding themselves at odds with school administrators.
The effects AI has had on education has been nothing short of a disaster. A recent study by the Brookings Institution’s Center for Universal Education concluded that the risks of using generative AI in education massively outweighed the benefits . The associated dangers have never been more apparent, with educators warning that college students are rapidly losing the ability to read .
Proponents of AI, including OpenAI and Microsoft’s lawyers in the ongoing New York Times lawsuit, argue that AI brings something new to the table. They argue that the output of AI models is sufficiently differentiated from the original content it draws on, falling under “fair use,” a longstanding doctrine in US copyright law.
Whether this argument will hold up in court remains to be seen. Besides, we’ve already seen companies, like Anthropic, settle for billions of dollars after being found to have violated copyright laws.
But considering how the tech is simultaneously undermining the very economic systems that produced the data they need to exist in the first place, that may not be a winning strategy in the long run.
By ripping out the carpet from underneath many parts of the economy — and reaping all the financial gains from it — the AI industry is trapping itself in a doom loop of its own creation, a cynical strategy that won’t benefit anybody but those at the very top who kicked the ladder down behind them.
More on doom loops: Microsoft Director Admitted in Internal Document That AI Is Creating a “Doom Loop” That Destroys the News Media by Stealing Its Content Without Providing Anything in Return, in Turn Making the AI Useless
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