Big Tech’s Dominance in the AI Market Raises Concerns
The UK’s Competition and Markets Authority (CMA) has expressed “real concerns” about the increasing grip of Big Tech on the advanced AI market. In a recently published Update Paper on foundational AI models, the CMA warned about the interconnection and concentration between developers in the cutting-edge tech sector responsible for the boom in generative AI tools. The paper highlighted the presence of major players such as Google, Amazon, Microsoft, Meta, and Apple (referred to as GAMMA) across the AI value chain. While the CMA acknowledged that partnerships can have a pro-competitive role, it also cautioned that powerful partnerships and integrated firms can pose risks to competition.
Risks to Fair Competition
The CMA’s Update Paper identified three key risks to fair competition: firms controlling “critical inputs” for developing foundational models, tech giants exploiting dominant positions in consumer or business-facing markets, and partnerships involving key players that exacerbate existing market power. The CMA expressed concern that a small number of incumbent technology firms with significant market power could shape FM-related markets to the detriment of fair competition, reducing choice, quality, and raising prices.
Growing Concerns
The CMA’s involvement in scrutinizing the relationship between OpenAI and Microsoft, as well as its observations on the rapid pace of change in the market, indicate a shift from its initial position. The CMA is now revising its approach to the GenAI market due to the commercial whirlwind of compute, data, and talent. It recognizes the need to act now to prevent a small number of firms from controlling the design, development, and use of powerful AI models across all sectors of the economy.
The Importance of Intervention
During a speech at a legal event focused on generative AI, CMA CEO Sarah Cardell emphasized the importance of intervention to ensure fair competition. Cardell referred to previous instances in the web development era when Big Tech built and entrenched their empires while regulators failed to act. She argued that competition enforcers must not repeat the same mistakes with the next generation of digital development. Cardell stressed that fair, open, and effective competition is essential to unleash the benefits of advanced AI for businesses and consumers.
CMA’s Intervention Strategy
While the CMA does not have concrete measures to announce yet, Cardell mentioned that the authority is closely monitoring GAMMA’s partnerships. It is also increasing its use of merger review to assess whether these arrangements fall within existing merger rules. The CMA’s review of the OpenAI-Microsoft partnership is ongoing, with the potential to unlock formal powers of investigation. Cardell acknowledged the complexity and opacity of some partnerships, which may require merger control powers to understand fully. The CMA aims to gain clarity on which types of partnerships and arrangements may raise competition concerns while benefiting businesses themselves.
Encouraging Responsible Development
The CMA urges AI giants to follow the seven development principles it outlined last year. These principles emphasize accountability, access, diversity, choice, flexibility, fair dealing, and transparency. The CMA is committed to applying these principles and using all legal powers at its disposal to ensure that AI technology delivers on its promise while prioritizing competition and consumer protection.
