Commercial Awareness Digest - 15th November 2025

The Creation of an AI Bubble

By Esme Glover

The term “AI bubble” has become increasingly prominent in financial and business commentary. As artificial intelligence continues to dominate global headlines, concerns are emerging about whether investment in this sector will result in a prosperous future economy. With the world economy becoming increasingly reliant on the success of a relatively small number of AI and technology companies, particularly in Asian and U.S. markets, the stakes are high.

Most recently, the U.S. technology sector has undergone significant shifts with regards to AI investment, suggesting a change in investor sentiment. Technology shares have been dropping, pointing to the prevalence of uncertainty in the AI sector. A notable example is the Softbank Group’s decision to sell its entire stake in Nvidia for $5.83 billion. Nvidia, whose chips support the majority of today’s AI innovation, has been a critical company in the sector’s recent rapid expansion.

The Japanese multinational investment holding company, Softbank’s, exit has initially raised concerns about the diminishing confidence in Nvidia. However, the consequences of this appear to be more nuanced as Softbank aims to funnel their previous investment into OpenAI instead. Paradoxically, this may benefit Nvidia in the long-term as OpenAI’s demand for Nvidia’s chips will increase through their expansion.

Why is so much investment going into AI if there is so much uncertainty regarding its success? Despite this volatility, AI has been promised to have the ability to completely alter the ways in which businesses function, rapidly changing economies and also automating significant amounts of work. Taking the legal industry as an example, firms’ incorporation of AI into their standard legal tasks, including document review or research, has challenged the traditional billable-hour model. Lawyers will have the ability to allocate more time to pressing and bespoke tasks, potentially increasing both productivity and profits. Similar stories are unfolding in various other industries including finance, healthcare and manufacturing.

However, many analysts warn that the current AI market behaviour exhibits similarities with the dotcom bubble in the late 1990s. During this period, enthusiasm for internet-based businesses resulted in a rise in US tech stock valuations. The NASDAQ experienced a five-fold increase between 1995 and 2000 as a result of this. However, when the dotcom bubble burst, the index fell by almost 77% in October of 2002. Analysts are thus raising these questions about AI early, so as to not encounter the same situation again.

The potential of AI to positively shape the world’s future is not unknown. However, the growing debate around the AI bubble highlights a tension between optimism in this field and realism. It is important that all parties, including investors and regulators, maintain an awareness of the limitations of AI, in order to prevent it from purely being ‘speculative hype’.

Developments in Modern Antitrust: The ISS-Glass Lewis Scrutiny

By Zuha Malik

Antitrust - or competition law - is the set of rules designed to stop companies from gaining or abusing excessive market power. Traditionally, that meant tackling obvious issues like price-fixing, cartels as well as mergers that would create outright monopolies. But over the last decade, regulators globally have started to rethink what “market power” looks like. Instead of focusing purely on prices, authorities are increasingly paying attention to influence: who controls access to data, who shapes digital markets, who sets the rules in financial services and who effectively determines governance standards across an industry. This shift is widening the scope of antitrust and pulling many more sectors into regulatory focus.

That broader approach provides important context for a new development in the US. The Federal Trade Commission has opened an antitrust investigation into Institutional Shareholder Services (ISS) and Glass Lewis - the two dominant proxy advisory firms used by institutional investors. These firms issue recommendations on how shareholders should vote on things like executive pay, board elections and ESG resolutions. Because so many large investors rely on them, their assessments can influence voting outcomes at thousands of listed companies, effectively giving them a central role in shaping corporate governance norms across the country.

Regulators are now examining whether this level of concentration limits meaningful choice for investors and creates barriers for smaller proxy advisers. They are also looking at whether the methodologies and influence of ISS and Glass Lewis have broader effects on market behaviour that fall within the modern conception of competition law. The political context matters too: as reported by the Financial Times, several business leaders and figures close to Donald Trump argue that proxy advisers and large passive asset managers hold too much sway over the direction of corporate America, especially on ESG-related matters. This adds a cultural and ideological dimension to what might once have been a narrow market-structure inquiry.

For commercial lawyers in the UK, developments like this are relevant because the same shift in antitrust thinking is happening here. The Competition and Markets Authority increasingly looks at concentrated influence - over data or key market functions - rather than just consumer prices. This kind of scrutiny is becoming a normal part of advising clients, even in sectors that previously had little competition risk. For future trainees, this emphasises the importance of paying attention to how regulators think: tracking CMA and FTC press releases and understanding how competition risk shapes client strategy long before a dispute or merger filing.

Edited by Artyom Timofeev