The AI Regulation Puzzle: Regulatory Capture, Capital Factionalism, and the Big Pharma Parallel

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This paper argues that the artificial intelligence industry is following the Big Pharma playbook of regulatory influence—but with a critical difference. Unlike the pharmaceutical industry, which presents a unified front against binding regulation, the AI industry is fractured into twoopenly warring factions: an "Accelerationist" bloc led by OpenAI and Andreessen Horowitz,which opposes binding regulation; and a "Safety" bloc led by Anthropic, which advocates for stricter guardrails. This internal fracture complicates the regulatory capture thesis. However,a third actor—the military-industrial complex, represented by the Pentagon—has resolvedthe debate in the military domain through coercive power rather than regulatory capture. Through supply-chain designations, contract coercion, and judicial victories, the Pentagonhas effectively mandated that AI companies surrender their ethical constraints for militaryuse. This paper integrates the Pentagon's position into the analysis, arguing that the AIindustry's political economy is now structured by three dynamics: the MIC's coercive authority over military AI, capital factionalism over civilian regulation, and the structural absence of Congress from both domains. The Big Pharma parallel illuminates themechanisms of influence but fails to capture the full picture: in military AI, there is noregulation to capture because the state has imposed its preferences directly throughprocurement power. Keywords: military-industrial complex, AI governance, regulatory capture, supply chain risk, autonomous weapons, Pentagon