UK Markets Authority Warns of AI Market Capture by Big Tech – BankInfoSecurity.com

Artificial Intelligence & Machine Learning , Next-Generation Technologies & Secure Development

The British antitrust authority warned Thursday that the market for foundational models in generative artificial intelligence is taking on "winner takes all" dynamics that could entrench a small number of providers.

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U.K. Competition and Markets Authority head Sarah Cardell in a speech said the regulator won't repeat the hands-off approach that characterized its approach to digital markets over the past decade.

"Could we have responded faster to the competitive threats posed by large digital platforms, recognizing earlier that the tools we had would need adapting to address the unique challenges posed by this new breed of businesses? With the benefit of hindsight, I think the answer is almost certainly 'yes,'" she told a Washington, D.C. audience.

The same patterns of "incumbent firms leveraging their core market power to obstruct new entrants" is again present in the nascent generative AI market, Cardell said.

She pointed to a paper published that day by the CMA concluding that Google, Amazon, Microsoft, Meta and Apple - collectively dubbed the GAMMA firms - are presences up and down the foundational model value chain, raising the specter of greater levels of vertical integration.

Four firms with an outsize presence in offering compute or data resources - Amazon, Google, Meta and Microsoft - could restrict access to critical inputs. Incumbents for consumer or business facing markets could distort choices and restrict competition in foundational model deployment, the report states.

In addition to vertical integration, the regulator sounded a warning over a proliferation of partnerships and strategic investments, identifying an "interconnected web" of more than 90 firms involving GAMMA firms plus chip designer Nvidia

While partnerships could assist independent developers and increase competition, "we are also vigilant against the possibility that incumbent firms may try to use partnerships and investments to quash competitive threats, even where it is uncertain whether those threats will materialize," the report reads.

A Microsoft spokesperson said the company welcomes the "clarity and transparency provided by the report," and that the company is looking forward to engaging constructively with the UK CMA.

The report comes after some British lawmakers warned the competition regulator of potential risk arising from a small number of the largest tech companies influencing the policy developments in the country to use their products to power smaller models for market monopoly (see: UK Market Regulator Reviews Microsoft's Interest in OpenAI ).

Microsoft's close relationship with OpenAI faces similar scrutiny in the European Union. The European competition regulator is additionally investigating $16.3 million, multiyear partnership with Paris-based Mistral AI (see: EU to Analyze Partnership Between Microsoft and Mistral AI).

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UK Markets Authority Warns of AI Market Capture by Big Tech - BankInfoSecurity.com