by ajross 4 hours ago
Market manipulation is a crime under the Securities Exchange Act of 1934. You can't buy things to influence the price or the market, only to use or resell.
The law you refer to applies only to markets for securities. RAM is very clearly not a security, it fails the Howey test.
There are similar laws prohibiting the manipulation of commodity markets but I do not believe a US court would find RAM to be a commodity.
How is RAM not a commodity?
It doesn't really matter, because the first question is: can the government suspend the contract (injunction?) while this is sorted out.
There's also the question of if OpenAI operated In good Faith (from a search: "Another sign of bad faith is withholding crucial information..."), and- of course- the South Korean government can step in as well. In fact- as a worldwide issue- any sufficiently large State(or group of States) can take issue with it.
OpenAI will have issues if they find themselves unable to buy power equipment (Schnider, Eaton). Or, perhaps anybody associated with OpenAI management or funding is arrested the second they step foot in Europe. This is already a nightmare of an International Incident.
It may be a commodity, but there is no established commodity market for RAM in the US, as there is for energy and agricultural products. The laws relate to the manipulation of a commodity market. Commodity markets are usually established where the products are produced, not where they are consumed.
Do you think OpenAI plans to trade the semiconductor market? This would only apply in that scenario.
It's interesting that this isn't actually illegal to do except in the specific context of an exchange market. I did a very cursory search of the US Code and the Securities Exchange Act of 1934 and yeah, unless there's some additional legal precedent or other applicable law I didn't find, then this might just be a gap in the law.
It even seems to skirt around notions of illegal vertical integration. For example in this address from 1998, a former FTC commissioner describes several types of illegal "vertical alliances", all of which rely on both the upstream supplier and the downstream consumer being aligned in anticompetitive intent, which (if the article is to be believed) they couldn't have been here because there are two suppliers who were unaware of each other's deals.
Is it really not illegal to just buy up a huge chunk of a critical input for an industry and stockpile it for the purpose of locking out competitors? Seems hard to imagine that some robber baron of the 19th century didn't already do this.
Let's not forget that if it's not illegal now, it could be illegal in a matter of days. Add 12 if a president decides to sit on their thumbs, it's happened before.
No, they want DRAM to be expensive to give them a competitive advantage over their competitors.
That'd probably make more sense if there wasn't also 50 other tech companies buying up RAM for the same reason (a sudden huge spike in demand due to AI taking off).
They mean to resell them in a different form: as part of their PaaS or SaaS. Per the article, OpenAI is just hoarding the wafers, not purchasing the final product.
It's about volume, not a naive count of consumers. Article claims that OpenAI holds contracts for 40% of world DRAM production. That's just really obviously manipulation if they can't actually power those chips, come on.
So the prosecution will gamble that OpenAI won't in fact use the RAM in a relevant timeframe and they only bought them to exclude the other swath of AI companies from competing?
From the article
> OpenAI isn’t even bothering to buy finished memory modules! No, their deals are unprecedentedly only for raw wafers — uncut, unfinished, and not even allocated to a specific DRAM standard yet. It’s not even clear if they have decided yet on how or when they will finish them into RAM sticks or HBM! Right now it seems like these wafers will just be stockpiled in warehouses – like a kid who hides the toybox because they’re afraid nobody wants to play with them, and thus selfishly feels nobody but them should get the toys!
I guess we'll have to see if they in fact just keep "unfinished" RAM in warehouses like the article says and not roll them out into datacenters for a legitimate use as they are finished.
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