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UK watchdog cautions over lack of competition in AI market

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The Competition and Markets Authority (CMA) claimed there is a “real risk” that a handful of firms could dominate the artificial intelligence (AI) industry if certain principles are not followed.

The UK’s competition watchdog has set out a list of principles designed to avoid any company obtaining a dominant position in the AI sector, and ensure that AI models are accountable and competitive.

In its latest report, the CMA has focused specifically on foundation models – large-scale AI models such as OpenAI’s GPT-4 and Meta’s Llama 2 that can be adapted to downstream customer applications, meaning that they are intended to be built on by developers of customer-facing apps and services.

The regulator said that AI would bring many benefits, but warned against the risk of a proliferation of false information, fraud and fake reviews. In addition, the monopolisation of the industry by one or a few firms could lead to higher prices and worse-quality products. 

“It is essential that these outcomes do not arise,” said the CMA. To keep this from happening, the watchdog proposed guiding principles that would “ensure consumer protection and healthy competition are at the heart of responsible development and use of foundation models”. 

Seven principles were highlighted: accountability, access, diversity, choice, flexibility, fair dealing and transparency. 

Sarah Cardell, CMA chief executive, stressed that AI technologies have the potential to turbocharge productivity by making millions of everyday tasks easier. 

However, she warned: “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.”

The CMA estimates that about 160 foundation models have already been released, including those belonging to big-tech firms such as Google, Meta and Microsoft. It stressed that several of these big players already own vital infrastructure for producing and distributing foundation models such as data centres, servers and data repositories. 

The regulator said it would closely monitor the impact of investments by these firms to ensure they don't incur in anticompetitive practices that would harm consumers long-term. 

“The impact of foundation models could allow a wider range of firms to compete successfully, perhaps challenging current incumbents,” the CMA said. “Vibrant competition and innovation could benefit the economy as a whole through increased productivity and economic growth.”

The principles have been released less than two months before the first global AI summit takes place in the UK. The CMA said it is engaging with AI developers and will publish an revised version of the principles in early 2024. 

Last week, the University of Bristol was chosen to host one of the most powerful supercomputers in Europe, which will serve as a national resource for AI researchers and industry experts.

The supercomputer is set to support the UK’s ambitions to become an AI superpower. However, ministers have recently warned that the country might be overtaken by rival nations, should the government fail to introduce a plan to develop AI regulations in the King’s Speech, scheduled for 7 November. 

A government spokesperson said the potential of AI should be harnessed “safely and responsibly” and the forthcoming AI summit would address the threat of risks and harms from the technology.

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