CMA Raises Concerns Over Big Tech’s Influence in AI Foundation Models

The Competition and Markets Authority (CMA) has sounded the alarm over the growing dominance of Big Tech in the market for AI Foundation Models (FMs). In CEO Sarah Cardell’s recent speech and update paper, the CMA identified three key risks to fair, effective, and open competition in this rapidly evolving sector.

The CMA’s initial report on AI Foundation Models proposed principles to guide the development of these models, emphasizing the importance of sustaining innovation while ensuring positive outcomes for businesses, consumers, and the wider economy. However, concerns have escalated as the market continues to develop at a rapid pace.

Cardell highlighted the presence of a small number of incumbent technology firms, including Google, Apple, Microsoft, Meta, Amazon, and Nvidia, across FM markets. These firms hold significant market power, not only in the development of FMs but also in their deployment through key access points like apps and platforms. The CMA is concerned that these firms may leverage their positions to shape FM-related markets in their own interests, potentially harming competition and limiting innovation.

The CMA’s update paper revealed an “interconnected web” of over 90 partnerships and strategic investments involving these tech giants, raising concerns about the potential for reduced choice, lower quality, and higher prices for businesses and consumers. While recognizing the resources and innovation capabilities these firms bring, the CMA emphasizes the importance of maintaining diversity and competition in the market.

The risks identified by the CMA include firms controlling critical inputs for FM development, powerful incumbents distorting choice in FM services, and partnerships exacerbating existing market power. To address these concerns, the CMA plans to apply its principles and legal powers to ensure fair, open, and effective competition in FM-related markets.

The CMA’s scrutiny extends to partnerships and investments involving Big Tech firms, with a focus on understanding the dynamics of these arrangements and their potential impact on competition. While the CMA does not yet have concrete measures to announce, it is closely monitoring developments and may intervene through existing merger reviews or new powers under the Digital Markets, Competition and Consumers Bill.

In conclusion, the CMA’s warning underscores the need to balance the transformative potential of AI with safeguards against the exploitation of market power. By closely monitoring the activities of Big Tech firms and promoting competition in the AI sector, the CMA aims to ensure that this critical technology delivers benefits for businesses, consumers, and society as a whole.