The Competition and Markets Authority (CMA) of the U.K. has issued a warning about the dominating hold of Big Tech on the rapidly growing advanced AI market. CEO Sarah Cardell expressed “real concerns” regarding the trajectory of this sector.
“We are concerned that the FM [foundational model] sector is developing in ways that risk negative market outcomes.”
– The CMA
In their newly published Update Paper on foundational AI models, the CMA cautions against the increasing level of interconnection and concentration between developers in this cutting-edge technology sector. With the rise of generative AI tools, such as Google, Amazon, Microsoft, Meta, and Apple (collectively known as GAMMA), the regulator is alarmed by their dominant presence across the entire AI value chain – from computation and data to model development, partnerships, and distribution platforms.
The CMA acknowledged that partnerships can play a beneficial role in the technology ecosystem, but also cautioned that “powerful partnerships and integrated firms” can pose a significant risk to competition, ultimately hindering open markets.
- Firstly, the CMA identified the control of “critical inputs” by these firms as a potential problem, as it could lead to restricted access and establish a competitive moat.
- Secondly, they expressed concern over how tech giants could leverage their dominant positions in consumer or business-facing markets to distort competition in the deployment of generative AI services.
- The third issue highlighted by the CMA is the role of partnerships involving these key players, which could further exacerbate their existing market power.
“We believe it is important to act now to ensure that a small number of firms with unprecedented market power don’t end up in a position to control not just the design and development of the most powerful models, but also their usage in all parts of our economy and daily lives.”
In a speech delivered in Washington, D.C., CEO Sarah Cardell stated that the CMA does not want to repeat the same mistakes from the early days of the internet, where Big Tech established their dominance while regulators remained passive. She emphasized the importance of fair competition in this emerging field and the potential negative consequences of a few powerful firms controlling it.
Cardell went on to clarify that the CMA is closely monitoring GAMMA’s partnerships and plans to increase its use of merger review to assess their potential anti-competitive nature.
“By stepping up our merger review, we hope to gain more clarity over which types of partnerships and arrangements may fall within the merger rules, and under what circumstances competition concerns may arise – and that clarity will also benefit the businesses themselves.”– Sarah Cardell
The CMA’s Update Paper also sets out some “indicative factors” that may trigger greater attention to FM partnerships, such as the power of partners over AI inputs and distribution channels, as well as the level of influence and alignment of incentives between partners. They have urged AI giants to follow the seven development principles they set out last year to promote responsible competition and consumer protection in the market.
Overall, the CMA reiterates their commitment to regulate this rapidly evolving technology sector and ensure that it fulfills its promise to deliver benefits to both businesses and consumers.
