There's an interesting article at Wired called "The New Diamond Age," discussing two American companies that are producing the highest-quality artificial diamonds yet. The Wired article portrays De Beers, the giant diamond cartel, as scared of this development. (Both of the artificial-diamond companies, btw, are aiming in the long run to make computer processors out of diamond, which will allow processors to run much hotter than they currently can.)
But I read the article with a fairly large grain of salt, for two reasons:
First, Wired is in the business of overhyping technology. I tend to assume that any development that magazine says will take the world by storm in a year or two will probably take more like ten, while most developments that they say are still in the experimental stages will never get much further.
Second, and more importantly, the article makes it sound like the pure force of personality of retired brigadier general (and founder of artificial-diamond company Gemesis) Carter Clarke should be sufficient to topple the De Beers empire. I doubt De Beers will go down without a pretty good fight. Three years ago, Salon published an article ("Not Forever") which suggested that "The death of South African diamond magnate Harry Oppenheimer last month might mark the end of global domination for one of the world's most infamous cartels." I haven't seen any evidence that De Beers has lost significant ground since then. Furthermore, the Salon article draws heavily from a 1982 Atlantic article, an astonishing and eye-opening exposé of the diamond industry ("Have You Ever Tried to Sell a Diamond?"), the tag line of which read "An unruly market may undo the work of a giant cartel and of an inspired, decades-long ad campaign." Twenty-plus years later, De Beers is still going strong.
If you want more reasons to dislike De Beers after reading all that, you might take a look at Anil Dash's rant from earlier this year about De Beers advertising. (Careful following links from that piece, btw; at least one of them is definitely not work-safe.)
But despite all of the above, I'll be surprised if De Beers is in any more trouble a year from now than it is today. The company is awfully good at manipulating the public (see the Atlantic article for lots of details on how they created and controlled the demand for diamonds); I'll be surprised if they can't weather an influx of artificial diamonds.