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UK competition regulator concerned about AI foundation models

Written by Wed 17 Apr 2024

The UK’s Competition Markets Authority (CMA) has outlined growing concerns regarding artificial intelligence (AI) as it develops at a ‘whirlwind pace’.

CEO at the CMA, Sarah Cardell, said foundation models have the potential to be a ‘paradigm shift’ for societies and economies. However, Cardell said there is a rise in concern regarding these technologies, driven by fast developments in the foundation model market and the CMA’s deeper understanding of its ecosystem.

“When we started this work, we were curious. Now, with a deeper understanding and having watched developments very closely, we have real concerns,” said Cardell.

Cardell said there is growing dominance of incumbent technology firms within foundation model markets. The CMA has identified Google, Microsoft, Meta, Amazon, Apple, and NVIDIA as key players. According to the CMA, their participation in over 90 partnerships and investments may restrict market diversity and choice.

The CMA is concerned these companies exert considerable influence over both development and deployment channels. 

The CMA’s concerns centre on the possibility of these firms manipulating markets in their favour, affecting fair competition and potentially harming businesses and consumers. This manipulation could lead to reduced choice, compromised quality, and increased prices, ultimately impeding the realisation of AI’s broader economic benefits.

CMA Publishes AI Update Paper 

The CMA has published an AI Foundation Models: Update Paper discussing interlinked risks to fair, open, and effective competition acknowledged the benefits of the collaborations, yet warned against them preventing competition or consolidating market power.

The CMA said maintaining market diversity is crucial in sectors like healthcare, finance, and retail to help ensure AI benefits reach businesses and consumers.

Reflecting on past digital market dynamics, Cardell emphasised the CMA’s commitment to applying lessons learned, particularly as foundation model technology emerges. 

The paper outlined three interconnected risks to competition: limiting access to critical FM inputs, distorting choice through market power, and exacerbating market dominance through partnerships.

The announcement follows its initial report on AI Foundation Models last year. The report outlined principles aimed at encouraging innovation and promoting favourable outcomes for businesses, consumers, and the broader economy.

In December, The UK’s CMA requested comments from third parties on the partnerships between Microsoft and OpenAI. The competition regulator was particularly interested in understanding whether this partnership qualifies as a merger that could affect competition in the UK and, if so, what impact it might have.

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Written by Wed 17 Apr 2024

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