The Competition and Markets Authority (CMA) is once again concerned, as its most recent move was in the direction of its initial report on AI Foundation Models (FMs) last year. The report suggested some principles to help support innovation and guide the market toward better outcomes for businesses, consumers, and the overall economy. 

CMA CEO’s remarks on AI foundation models

Sarah Cardell, Chief Executive Officer, shared highlights of some of the updates CMA has made to its FMs work while speaking at a conference in Washington, DC. Speaking of the FMs, she describes their transformative potential as a promising paradigm shift for economies and societies as a whole in her remarks. She also points to a whole new array of rapidly happening developments across FM markets, which, backed by the CMA’s increasing understanding of the FM frameworks, have caused an increase in market concerns.

She mentioned the small number of tech firms that work on FMs and have powerful positions in the most important digital markets. Their position is strong on the development end because of the sources they have, like talent, computing power, and data, and also in the deployment of models through access routes to the market like online portals and apps. 

The CMA is also concerned about the possibility that some firms may have the ability along with a way to find incentives to mold the markets in their own favor to protect their existing market strength, and expand it to new segments. Such a scenario could have a profound impact on fair competition in FM markets and will harm consumers and businesses. For example, the impact could come from lower quality paired with less choice and higher prices. And it will also affect the flow of innovation and its wider benefits for the economy.

CMA’s concerns and initiatives

The CMA has identified an interconnected web of more than 90 partnerships and investments in strategic projects by the same firms, including Google, Meta, Apple, Amazon, Microsoft, and the leading supplier of AI chips, Nvidia. CMA also acknowledges the abundance of resources, expertise, and capability to innovate that these big companies can bring to FM markets. And also, these partnerships and agreements between companies like these can encourage competition and innovation.

However, the CMA showed concerns that these types of powerful partnerships should not be used to shield powerful firms from competition and should not affect competitors’ ability to compete. Considering the potential of FMs, maintaining the availability of choice and diversity is very important for protecting consumers and markets from the overdependence of a few big firms.

Sarah Cardell says that they have identified three interlinked risks that may influence fair, open, and effective competition. Which include,

“Firms controlling critical inputs for developing FMs may restrict access to shield themselves from competition.”

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

“Partnerships involving key players could exacerbate existing positions of market power through the value chain.”

Source: Government of UK.

The CMA’s new update paper will provide essential details on each risk and how to mitigate it by its principles. It will also include details on what CMA is taking action on now and what it plans to consider taking in the near future, including the existing steps like investigations and reviewing mergers and competition. 

The press release can be seen here, and the CMA CEO’s opening remarks are here.

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