Y Combinator is famous for its Demo Days, during which portfolio companies pitch their apps and products in hopes of becoming the next Airbnb. However, this past Thursday, the startup incubator hosted a diverse group of founders, venture capitalists, and US policymakers in its spacious industrial space in San Francisco to address a defining topic for many startups today: AI's role as the newest battleground between Big Tech and smaller players. For numerous early-stage tech entrepreneurs, questions about AI hold immense significance. Since the release of ChatGPT in late 2022, OpenAI's technology, along with similar developments from Google and Microsoft, has dominated the conversation in this new era of artificial intelligence. Yet, the increasing availability and power of open source AI models have the potential to disrupt the current dynamics. During Thursday's event, the enthusiasm for open source extended beyond YC-backed founders who stand to benefit from a more affordable means of harnessing generative AI's capabilities. Lina Khan, the chairperson of the Federal Trade Commission, was one of the most prominent advocates for open source AI at the gathering. Addressing a crowd of approximately 200 entrepreneurs, Khan stated that it is not an exaggeration to suggest that almost all of Y Combinator's most successful companies would not exist without open source software and the supportive community behind it. The FTC has been focused on defining and exploring open-weights AI models, which are slightly less "open" than fully open source AI models. With open-weights models available, smaller players can bring their ideas to the market, according to Khan. Khan also made it clear that the stakes are high for this particular audience.

"Conditions have allowed the biggest technology companies to gain an advantage in the AI race, " she said. "If you control the raw materials, you can control the market and exclude smaller companies that lack the necessary infrastructure to compete. " Khan's statements were part of a broader argument for fair and open competition in the tech industry, as well as a defense of the regulatory actions taken against Big Tech companies by the FTC and the US Justice Department in the past four years. US assistant attorney general Jonathan Kanter also spoke at Y Combinator on Thursday, emphasizing the agencies' commitment to supporting "little tech" - a phrase that resonated with the YC audience. The presence of these two influential regulators before an audience known for its "move fast and break things" mentality might have seemed unlikely just a year ago. Y Combinator, founded in 2005 by entrepreneurs Paul Graham and Jessica Livingston, among others, is more renowned for its intense mentorship and bootcamp-like atmosphere for fledgling companies than for its ties to the DC establishment. However, this shift is intentional. In October of last year, Y Combinator CEO Garry Tan brought on policy expert Luther Lowe to facilitate discussions between YC and Washington, DC. The addition of Lowe, who has over 15 years of experience in public policy at Yelp and has been one of Google's most prominent critics, has brought a certain refinement and high-profile policy discourse to YC events. Thursday marked the second time FTC chairperson Khan spoke to YC founders since Lowe joined.