Competition watchdog warns of AI boom’s business impact

Competition and Markets Authority warns of potential for the AI space to be dominated by a few key players, and recommends new AI development principles.

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A positive future for the integration of AI within businesses shouldn’t be assumed, according to the CEO of the UK’s competition watchdog.

The Competition and Markets Authority (CMA) has published its latest report on AI, and has proposed principles that aim to ensure consumer protection and healthy competition are at the heart of responsible development and use of foundation models (FMs).

FMs are a form of generative AI that generates output from human language instructions – the most commonly discussed platform being ChatGPT. This form of AI has been credited with the potential to positively transform businesses – but there is a need to be wary with this new technology, too.

The role of generative AI

The CMA’s report highlights how people and businesses stand to benefit if the development and use of FMs works well. This could be through new and better products and services, easier access to information, scientific and health breakthroughs and lower prices.

The impact of FMs could also allow a wider range of businesses to compete successfully and challenge existing market leaders.

Despite the potential positive impact, the report cautions that if competition is weak or developers fail to heed consumer protection law, people and businesses could be harmed. One example is the potential for people being exposed to significant levels of false and misleading information and AI-enabled fraud.

In the longer term, businesses could use FMs to gain positions of market power and fail to offer the best products and services, and/or charge high prices.

Copyright and intellectual property, online safety, data protection and security are all serious considerations for businesses when it comes to AI too. But, these factors were not covered in this new report.

“The speed at which AI is becoming part of everyday life for people and businesses is dramatic,” says Sarah Cardell, CEO of the CMA. “There is real potential for this technology to turbo charge productivity and make millions of everyday tasks easier – but we can’t take a positive future for granted.

“There remains a real risk that the use of AI develops in a way that undermines consumer trust or is dominated by a few players who exert market power that prevents the full benefits being felt across the economy.”

New AI principles

As part of the report, the CMA has listed proposed principles to guide the ongoing development and use of FMs and help businesses benefit from the innovation and growth they can offer.

The principles draw on lessons learned from the evolution of other technology markets and how they might apply to FMs as they are developed. They are:

  1. Accountability: FM developers and deployers are accountable for outputs provided to consumers;
  2. Access: ongoing ready access to key inputs without unnecessary restrictions;
  3. Diversity: sustained diversity of business models, including both open and closed;
  4. Choice: sufficient choice for businesses so they can decide how to use FMs;
  5. Flexibility: having the flexibility to switch and/or use multiple FMs according to need;
  6. Fair dealing: no anti-competitive conduct including anti-competitive self-preferencing, tying or bundling; and
  7. Transparency: consumers and businesses are given information about the risks and limitations of FM-generated content so they can make informed choices.

An update on the CMA’s thinking – including how the principles have been received and adopted – will be published early next year.

“The CMA has shown a laudable willingness to engage proactively with the rapidly growing AI sector to ensure that its competition and consumer protection agendas are engaged as early as possible,” says Gareth Mills, partner at law firm Charles Russell Speechlys.

“The principles are necessarily broad and it will be intriguing to see how the CMA seeks to regulate the market to ensure that competition concerns are addressed.

“The principles themselves are clearly aimed at facilitating a dynamic sector with low entry requirements that allows smaller players to compete effectively with more established names, whilst at the same time mitigating against the potential for AI technologies to have adverse consequences for consumers.”

In November, the UK will host the AI Safety Summit and bring together key countries, technology organisations, academia and civil society to plan national and international action on AI development.

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Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, TNW, UKTN, The Business Magazine and Maddyness UK. She also works closely with agencies such as CEW Communications to develop content for their startup and scaleup clients.

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