Regulatory update: Multilateral statement sets out principles for protecting competition in the AI ecosystem

Regulatory update: Multilateral statement sets out principles for protecting competition in the AI ecosystem

Recently, the Competition and Markets Authority, the European Commission, the US Department of Justice, and the US Federal Trade Commission issued a joint statement on competition in generative AI foundation models and AI products.

The statement underscores a shared commitment to ensuring that the AI industry operates within a framework promoting fair competition, innovation, and consumer protection.

Read the guidance in full here.

Ensuring competitive global markets

The statement acknowledges the immense potential of AI foundation models to benefit society, drive economic growth, and enabling innovation. However, it also outlines several risks the signatories see associated with this rapidly evolving technology:

1. Concentrated control of key inputs: developing foundation models requires substantial and highly specialised resources such as large-scale data, chips, and technical expertise. This could concentrate power in the hands of a few companies that have access to the said resources, granting them significant influence over the future development of AI tools, potentially limiting competition and innovation.

1. Entrenching or extending market power in AI-related markets: large incumbent firms with existing market power could leverage their advantages to limit AI-driven disruption or further entrench their positions, creating challenges for new entrants.

1. Amplified risks through arrangements with key partners: existing financial investments and partnerships between companies involved in AI development can bring numerous benefits, but they also pose risks - major firms might use these collaborations to reduce competition and influence market outcomes to their advantage.

1. Potential to facilitate anti-competitive behaviour: algorithms could allow competitors to engage in anti-competitive practices, such as sharing sensitive information, or fixing pricing.

1. Consumer risks: the application of AI might lead to the misuse of consumer data during model training or expose competitively sensitive information.

To address these risks and support competition in the AI ecosystem, the regulators propose several principles.

First, companies should engage in fair dealing practices, avoiding tactics that exclude competitors and stifle innovation. Promoting interoperability between AI products and services, while safeguarding privacy and security, is also essential to encourage competition and prevent market dominance. Finally, ensuring a diverse range of choices for businesses and consumers is vital. This involves scrutinising practices that create barriers to entry or limit options, including mergers, partnerships, and other arrangements between established and emerging companies. The statement also notes the importance of clearly informing consumers about when and how AI is used in the products or services they purchase.

Next steps

The joint statement provides greater information to businesses about the potential competition risks the UK's, EU's and US's competition authorities see in the market for generative AI foundation models and AI products, as well as setting out their intended strategies to mitigate these risks. As the AI landscape rapidly evolves, it is crucial to strike a balance between encouraging innovation and implementing proportionate regulations to ensure AI's benefits are realised for the UK digital economy and society.

Achieving this will require ongoing collaboration and cooperation between the industry and the regulators, which techUK is committed to supporting. As part of our regulatory engagement, we have reached out to the CMA to understand more.

Please reach out with any questions to Samiah Anderson or Audre Verseckaite.