AI Is Creating “Doom Loops” All Over the Economy

Recent legal documents from the New York Times lawsuit against Microsoft and OpenAI reveal executives' knowledge of AI's destructive potential when they rushed to launch AI-powered products following the success of ChatGPT. Internal Microsoft documents warned of a dangerous "doom loop" where AI monetizes human creativity while undermining the economic systems that funded it.

The company's AI content strategy has created a situation in which their LLM business threatens the economic foundations of its suppliers, particularly the independent media. Journalists previously assumed online platforms would drive readership, but AI tools like ChatGPT and Google's Gemini now summarize articles, hurting independent media.

Similar issues arise in music, filmmaking, and other industries, with concerns that AI may soon replace many jobs, leaving consumers unable to support the economy. The AI industry is creating a vicious cycle where the products it pushes rely on fresh cultural content even as they destroy the economic incentives to create it. This situation is causing significant job losses in creative industries, with over 200,000 jobs lost in the last four years.

AI-generated music is now competing with human-produced tracks, and Hollywood studios are using AI while protesting voice theft. The job market is also caught in a doom loop, with desperate job seekers using AI to improve resumes and recruiters drowning in identical applications. AI is also changing the way students learn, with many using it to complete homework, and teachers using it to create assignments, slowly removing the human element.

Educators warn that college students are losing the ability to read, and while proponents argue that AI output is sufficiently different from original content, the long-term consequences of this doom loop remain unclear.