{"id":659,"date":"2026-02-24T15:20:24","date_gmt":"2026-02-24T13:20:24","guid":{"rendered":"https:\/\/yadin.com\/notes\/?p=659"},"modified":"2026-03-09T21:32:40","modified_gmt":"2026-03-09T19:32:40","slug":"moat","status":"publish","type":"post","link":"https:\/\/yadin.com\/notes\/moat\/","title":{"rendered":"Altman’s Moat"},"content":{"rendered":"\n

Sam Altman has been calling for strict AI regulation<\/a> again. The head of AI market forerunner OpenAI suggested establishing a global enforcement body for AI along the lines of the International Atomic Energy Agency (IAEA), equating AI development with nuclear technology. In the past, Altman suggested<\/a> imposing licensing requirements on AI, standardized testing, and enforcement of safety standards by a federal or global agency.<\/p>\n\n\n\n

Now, why would the CEO of the largest AI technology developer call publicly for strict government and international regulation of his own company? Regulation costs a lot of money in compliance, audits, and legal fees. It introduces considerable friction, slowing down technology development and hindering innovation. It diverts attention and resources from creativity to bureaucracy.<\/p>\n\n\n\n

Altman did not call for regulating OpenAI; he called for regulating the AI industry. He is trying to build what some call a regulatory moat<\/em>, greatly raising the barriers to entry to the AI market. As a market leader, OpenAI can handle the costs and burdens of regulation better than most of its competitors. Smaller AI developers may find themselves strangled by red tape before they can effectively compete with OpenAI and the other major players in the market. That is why the leaders of other big AI developers have expressed similar views about AI regulation. Anthropic’s Dario Amodei warned against the risks<\/a> of unregulated AI development, and Google’s Sundar Pichai called for US national AI regulation<\/a>.<\/p>\n\n\n\n

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Altman’s moat serves purposes beyond simply maintaining OpenAI’s market advantage by keeping smaller competitors out. It is worth taking a closer look at the nuances of his motivations and position. In medieval times, moats were constructed around castles to control access points, delay and exhaust attackers, prevent enemy tunneling, and also as status symbols. Likewise, Altman’s regulatory moat cannot completely prevent competition, but it can increase his control over the market, slow and discourage direct competitors, effectively hinder stealthy, fast-moving rival AI start-ups, and better position his company to influence national and global AI policy.<\/p>\n\n\n\n

When OpenAI leverages its market-leading position to advocate for AI regulation, it invites government regulators to collaborate with it in setting AI development standards. This sets the stage for what regulation scholars call regulatory capture<\/em>: a situation in which a regulatory authority that is supposed to oversee a company or an industry instead advances the interests of that company or industry, often because of close relationships, information dependence, lobbying, or revolving-door employment. A close relationship between government regulators and OpenAI, an AI technology pioneer and a private company currently valued at more than $850 billion<\/a>, cannot help but favor OpenAI. Altman can use this influence to slow competitors in different ways. For example, he can ensure that new government AI standards and their enforcement align with his company’s existing standards. If the government adopts OpenAI’s internal standards as the industry-wide legal requirement, OpenAI won’t have to change anything, while competitors who use different architectures or methods might find their specific ways of building AI suddenly deemed “unsafe” or illegal under the new rules.<\/p>\n\n\n\n

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Just as a castle’s moat discourages tunneling, Altman’s regulatory moat addresses open-source AI, a major threat to OpenAI’s business. Altman recently warned<\/a> specifically about the dangers of unregulated open-source AI models, saying that they could help create bioweapons or launch cyberattacks. Just like medieval tunnelers can undermine the foundations of a castle, open-source AI technology has the potential to undermine OpenAI’s paid subscription business model. If high-quality base AI technology becomes widely accessible, the underlying AI model’s core capabilities may no longer create a significant competitive advantage. Value may shift to distribution, integration, or specialized applications rather than model access. This may have wide-reaching effects on the industry, particularly regarding deployment costs and pricing, directly disadvantaging established major players like OpenAI. Altman seeks to eliminate this threat through strict regulations that will brand open-source AI systems as dangerous.<\/p>\n\n\n\n

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Bodiam Castle East Sussex England UK (image: WyrdLight.com)<\/figcaption><\/figure>\n\n\n\n

Bodiam Castle, a 14th-century castle in East Sussex, England, is known for its impressive moat. Bodiam’s moat was constructed specifically to make the castle appear larger and more impressive by isolating it in its landscape. Likewise, Sam Altman’s regulatory moat is meant to amplify OpenAI’s influence and better position the company and Altman himself. <\/p>\n\n\n\n

Publicly advocating for AI regulation positions Altman as a cautious, responsible leader who prioritizes humanity and the public interest over profit. This makes it harder for politicians and journalists to cast him as a tech villain, as they did with social media CEOs. Furthermore, by asking for regulation now, he limits OpenAI’s and his personal responsibility. If something goes wrong with AI in the future, he can say that he told the government that rules were needed, but they didn’t act fast enough. If laws were enacted, he could say they were insufficient, poorly implemented, or improperly enforced.<\/p>\n\n\n\n

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By specifically advocating for international AI rules and oversight, Altman is trying to secure a seat for OpenAI at the global AI policy table. This is especially important for OpenAI, given the current geopolitical climate. In 2024, the European Union approved a comprehensive AI Act<\/a>. OpenAI was deeply involved with the legislative process in Europe, lobbying to shape the Act to its purposes. At one point, Sam Altman threatened to pull out of Europe<\/a> if the Act placed on OpenAI a regulatory burden it could not comply with. <\/p>\n\n\n\n

The change in administration in the US created a policy gap between Washington and Brussels, with the new US administration focusing on deregulation and preserving the competitive advantage of US firms. Early in 2025, President Trump revoked<\/a> a Biden administration executive order addressing AI risks. Altman spoke last year against EU AI legislation<\/a>, warning it may hold Europe back, possibly seeking to leverage this policy gap. <\/p>\n\n\n\n

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It is worth stressing that OpenAI is a private growth company, albeit a very well-funded one, which means it must maintain its incredibly high valuation to survive. When Altman talks dramatically about how AI, the technology his company pioneered, will change humanity, and also about how dangerous it can be if uncontrolled, it makes headlines, helps build the hype around AI technology, and serves to maintain OpenAI’s valuation. It is likely that Sam Altman truly believes that AI technology can be dangerous if left unregulated. It makes sense. However, when tech tycoons call for government intervention in their own industry, we should consider that they may have some hidden agendas. I agree with Sam Altman that stricter AI regulation is needed. I am just not sure that Altman should be the one to shape it.<\/p>\n\n\n

\n \n \n \n <\/svg>122\n |<\/span>\n \n \n \n <\/svg>\n 2<\/span>\n <\/span>\n |<\/span>\n Published: Feb. 24, 2026\n |<\/span>\n Updated: Mar. 9, 2026 |<\/span> Topics: AI<\/a>, Markets<\/a>, Policy<\/a> |<\/span> Follow<\/a>\n <\/p>\n\n\n\n

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