Germany asks if US hyperscalers hold keys to AI kingdom

Competition authorities listen to concerns over barriers to entry and reliance on AWS, Google and Microsoft

Three American hyperscalers are the gatekeepers to AI, as they possess the necessary compute infrastructure and access to the volumes of data required to train and deploy models at scale. 

This was the consensus of a group of European tech companies after a meeting called by Germany's national competition regulator, the Bundeskartellamt, to discuss challenges faced in the AI marketplace.

The meeting this week brought together 14 representatives of companies and associations based in the country that make up key parts of the AI industry, comprising a mix of large, established operations and smaller businesses and startups.

Topics covered included the hurdles standing in the way of competitors of the large cloud service providers, with the agency naming Amazon Web Services (AWS), Google Cloud and Microsoft Azure.

Cloud services have taken a central role in the way many users access AI, providing the substantial resources needed for the development, training, and deployment of models at scale.

A particular area of concern was the competitive landscape around the development and deployment of foundation models, with discussions focused on whether having access to enough data could create a barrier to entry.

For example, some estimates indicate the raw dataset used to train OpenAI's GPT-3 was 45 TB in size before filtering, with the actual training set making up about 570 GB.  The hyperscalers, with their vast stores of data, may have an advantage here.

It isn't just European bodies that are concerned the nascent AI sector could be reinforcing existing monopolies. Last year, panelists attending the FTC Tech Summit debated whether the dominance of big technology orgs in cloud computing was preventing smaller AI software and hardware startups from competing.

One point raised at that earlier meeting was a shortage of GPU accelerators, which were forcing AI developers to rely on big cloud companies to access these scarce resources, as the large players sucked up all available supplies.

However, with the Trump administration pushing for a law that would put a ten-year ban against US states regulating the AI market, it doesn't look like the FTC's concerns will be listened to anytime soon.

Last year, Google itself raised concerns about Microsoft and its cloud platform, claiming it was using anticompetitive licensing practices that could stifle competition in the AI market.

In Germany, the dialog also examined the relationships between AI firms and cloud service providers, plus the development of applications such as AI agents for end users.

There is no suggestion yet that any particular action will be taken, but it seems like the Bundeskartellamt is gathering the evidence to decide whether an antitrust complaint should be pursued.

"The cross-market presence of big tech poses various risks to competition. It may lead to dependencies for smaller competitors, for example, in terms of access to cloud services and data, and lock-ins in specific ecosystems, among other things," said the agency's President Andreas Mundt.

The Bundeskartellamt may have a point. Informa Fellow Steve Brazier has previously warned that every office worker in Europe is paying a €100-a-month "tax" to American companies for access to productivity tools, thanks to the market dominance of corporations including like Microsoft.

"And with the arrival of AI, that €100 a month is simply going to go further up," he stated.

It is crucial to identify the potential for abuse early on and ensure that AI markets remain open, Mundt said.

"Many competition authorities around the world are monitoring the developments very closely, but there have not been any relevant cases so far. The Bundeskartellamt is also keeping a close eye on the situation." ®