CMA’s Potential Competition Concerns For Foundation Models/Generative AI – Antitrust, EU Competition

The CMA has published an update paper building upon its initial review of Foundation Models (FMs) (the
technology underpinning generative AI tools such as ChatGPT).

The CMA is concerned that the ways in which the sector is
developing risk negative market outcomes. It sets out three key
risks to competition:

1. Firms that control critical inputs for developing FMs may
   restrict access to them to shield themselves from competition.




2. Powerful incumbents could exploit their positions in consumer
   or business facing markets to distort choice in FM services and
   restrict competition in FM deployment.




3. Partnerships involving key players could reinforce or extend
   existing positions of market power through the value chain.

The paper also sets out an updated set of AI Principles, with
which the CMA “urges firms to align their business
practices“. These are:

• Access – Ongoing ready access to inputs




• Diversity – Sustained diversity of business models and model
  types




• Choice – Sufficient choice for businesses and consumers so they
  can decide how to use FMs




• Fair Dealing – No anti-competitive conduct




• Transparency – Consumers and businesses have the right
  information about the risks and limitations of FMs




• Accountability – FM developers and deployers are accountable
  for FM outputs

The CMA provides some further details about each principle
(which you may be able to make out in the image taken from the
report shown below), noting for example that “Open-source
models can help reduce barriers to entry and expansion“
and the importance that consumers and businesses “are not
locked into one provider or ecosystem“.

The CMA also flags several further existing workstreams it has
on AI:

• It intends shortly to publish a more detailed technical update
  report including detail on market developments since its initial
  report on FMs and feedback received from stakeholders




• It is currently examining a number of potential critical inputs
  to FM-related markets through its Cloud Market Investigation and
  its intended examination of the competitive landscape in AI
  accelerator chips (part of the next phase of its work on FMs)




• It plans to monitor current and emerging partnerships closely
  and step up its use of merger control to examine whether such
  arrangements fall within the current rules (see for example its
  investigation of Microsoft’s partnership with OpenAI – more on
  that here)




• It is considering how it might use the new powers anticipated
  in the Digital Markets, Competition and Consumers Bill to enforce
  consumer protection law against infringing firms should unfair
  practices emerge in AI-powered markets.




• It is working on a joint statement with the ICO on the
  interaction between competition, consumer protection, and data
  protection in FMs.

A further update is expected in Autumn
2024.

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