Basically the concept is that if one player is too strong for any small alliance of other players to defeat, everyone will team up against them. So if you get way ahead of the AI, they will all declare you the biggest threat to the galaxy and try to stomp you back down in a concerted effort.
This lets the AI do exactly what happens in most MP games among humans. When one guy gets too far ahead, everyone gangs up on them until they get knocked back down. Although I don't think the AI lets up on you if they succeed in bringing you down to reasonable power levels.
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