UK Watchdog Raises Concerns Over Market Dominance of AI Foundation Model Developers

The UK Competition and Markets Authority (CMA) has raised concerns about the potential market dominance of artificial intelligence (AI) foundation model (FM) developers in its initial report focused on AI Foundation Models. This report analyzes the development and usage of data-driven systems that produce a variety of outputs, highlighting apprehensions regarding FM developers who possess significant market power.

The CMA cautions that these influential developers may control downstream markets, which could hinder non-FM businesses from achieving profitability. Additionally, it points out the risk for FM developers of losing access to critical competitive resources, such as computational capabilities.

Furthermore, the report predicts enhanced merger control and antitrust enforcement in the UK, referencing both the upcoming UK Digital Markets, Competition and Consumers Bill and the EU AI Act. These legislative frameworks are expected to tackle issues related to entrenched market power, access to proprietary data, availability of computing resources, and the advantages held by first- and early-movers.

The CMA emphasized the importance of open-source FMs in creating diverse business models and enhancing consumer choice. It also noted that economies of scope and the barriers to switching between FMs significantly impact competition in this domain.

To promote fair competition, the CMA has put forth principles such as accountability and the diversity of business models. The authority is also expecting to ramp up enforcement of merger control to limit the influence of dominant FM developers. The report highlights the necessity of a level playing field in the rapidly evolving AI landscape, suggesting a potential regulatory shift toward more stringent oversight of AI development in the UK.