American, British monopoly watchdogs probe AI to make sure we don't get screwed

Review will also look at barriers to entry where hyperscalers hold all the cards

Britain's competition watchdog is to cast an eye over the development and use of AI, saying it wants to ensure that innovation in the field proceeds in a way that benefits consumers, businesses and the wider UK economy. In the US, the Federal Trade Commission (FTC) appears to be thinking along similar lines.

The UK's Competition and Markets Authority (CMA) said it is launching an initial review into AI, especially large language models and generative AI. This will inform understanding of the market and how the use of such models may evolve, it said, to help evaluate potential risks and what competition and consumer protection measures may be required.

This initial review will seek views and evidence from interested parties, but submissions need to reach the CMA by June 2.

The agency will then publish a report setting out its findings in September, which will inform the CMA's implementation of the government's approach to AI regulation, and any recommendations that the CMA may make to the Office for AI and other regulators.

CMA chief executive Sarah Cardell said that while AI had erupted into the public consciousness over the past few months thanks to developments like ChatGPT, it had actually been on the agency's radar for some time.

"It's crucial that the potential benefits of this transformative technology are readily accessible to UK businesses and consumers while people remain protected from issues like false or misleading information," she said in a statement.

"Our goal is to help this new, rapidly scaling technology develop in ways that ensure open, competitive markets and effective consumer protection."

The initial review is set to focus on three themes. The first is competition and barriers to entry in the development of foundation models, looking at whether access to data, compute resources, talent or funding are barriers to joining the AI club.

Secondly, it will consider the impact foundation models may have on competition in other markets, such as search engines and productivity software. In particular, products and services using foundation model capabilities may develop into ecosystems that might become more open or closed, the CMA said.

Finally, it will look at how foundation models may affect consumers, especially the range of potential risks to consumers from the use of these models in products and services, including from false and/or misleading information.

However, the CMA said it will not be looking at broader issues surrounding AI, such as the opportunities and risks of artificial general intelligence or any potential labor market impacts of foundation models.

The announcement is already drawing a variety of opinions regarding the matter, with some welcoming the review.

"It is not surprising the CMA has decided to look at AI – it has been known for some time that the CMA is keen to skill up and understand what role there is for competition law in this important new area," said Verity Egerton-Doyle, counsel and UK co-head of Technology at law firm Linklaters.

Egerton-Doyle said the EU's Digital Markets Act that came fully into force this week does not cover generative AI, and the CMA likely sees this as an opportunity to be leading the global debate on those issues.

However, TechMarketView principal analyst Simon Baxter said the UK was already playing catch-up with other territories.

"In many respects it is good to see the UK government finally making some significant moves when it comes to controlling and regulating AI development. The technology has been rapidly developing for many years, well before the current hype around ChatGPT, and the UK has lagged the EU and US in addressing the topic until now," he commented.

The challenge remains keeping pace with ongoing developments, Baxter said, while balancing the promotion of innovation with swiftly implementing regulations to protect consumers and businesses.

"So far, the current regulatory approach in the UK has been to take a softer approach than the EU, but with AI innovation a global challenge, it will be important for the UK to work closely with other nations to co-coordinate their response," he added.

Ekaterina Almasque, General Partner at venture capital investors OpenOcean, told us that the CMA review is "welcome news for the UK tech sector," and that "barriers to entry – such as skilled workers and the high compute costs to train or fine-tune models – risk stifling our domestic startup ecosystem if we do not find a new way forward".

"Hyperscalers possess enormous amounts of user data from the other sides of their business, granting them a great advantage over startups with far more limited access to training data. Steps must be taken to make it easier for early-stage AI startups to find their niche, compete, and create models to solve business problems," she said.

In the US, FTC chair Lina M Khan used an opinion piece in the New York Times to state that the agency was prepared to use its powers for similar goals when it comes to AI, namely to promote fair competition and to protect American citizens from unfair or deceptive practices.

"As these technologies evolve, we are committed to doing our part to uphold America's longstanding tradition of maintaining the open, fair and competitive markets that have underpinned breakthrough innovations and our nation’s economic success, without tolerating business models or practices involving the mass exploitation of their users," Khan wrote.

She added that the expanding adoption of AI risks "further locking in the market dominance of large incumbent technology firms" and that although such tools are new, "they are not exempt from existing rules, and the FTC will vigorously enforce the laws we are charged with administering."

Anyone interested in contributing views or evidence to the CMA review in the UK can email their submissions to [e-mail].

The CMA requests that those doing so should provide a description of their background and interest in this area, in addition to name, address, and contact details, plus whether they would be willing to be contacted by the CMA for a potential follow-up. ®