UK watchdog worries about tech giants’ AI market control

The regulator acknowledges tech partnerships’ potential benefits but warns against dominant ones, which could harm competition.

The Competition and Markets Authority (CMA) in the United Kingdom has expressed concerns over Big Tech’s increasing dominance in the advanced AI sector, with CEO Sarah Cardell expressing “real concerns” over the industry’s development.

In a paper on foundational AI models released on April 11, the CMA highlighted the increasing interconnection and concentration among developers in the cutting-edge tech sector, which is fueling the surge in generative AI tools.

The CMA’s paper highlights the consistent involvement of Google, Amazon, Microsoft, Meta, and Apple (collectively known as GAMMA) across various aspects of the AI value chain.

While acknowledging the potential benefits of partnership arrangements in the tech ecosystem, the regulator also cautioned against the risks posed by dominant partnerships and integrated firms, which may undermine competition in open markets.

The CMA wrote, referring to a form of AI leveraging extensive data and computational resources, potentially serving as the foundation for various applications: “We are concerned that the foundational model (FM) sector is developing in ways that risk negative market outcomes.”

The paper lists three linked risks to fair competition: firms controlling vital inputs for developing general-purpose AI models, tech giants leveraging dominance to influence choices in GenAI services, and partnerships potentially reinforcing market power across the value chain.

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During a legal event in Washington, D.C., focused on generative AI, Cardell highlighted the “winner-take-all dynamics” reminiscent of earlier web development eras. 

She urged regulators to avoid repeating past mistakes in overseeing this next phase of digital evolution. Cardell said:

“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,”

The CMA’s update report outlines “indicative factors” that may raise concerns regarding FM partnerships, including partners’ upstream power over AI inputs and downstream power over distribution channels.

Last May, the CMA initiated an initial examination of the high-end AI market, releasing a set of principles for the “responsible” development of generative AI. These principles are intended to inform the watchdog’s supervision of this rapidly evolving market.

Since then, the regulator has intervened to examine the close ties between OpenAI, the creator of the popular AI chatbot ChatGPT, and Microsoft, a significant investor in OpenAI. Its updated paper addresses the rapid pace of change in the market.