CMA expresses “real concerns” about big tech influence over generative AI
The UK Competition and Markets Authority (CMA) says it has “real concerns” about the increasing dominance of a small number of big tech firms in the value chain for foundation models (FMs). In an update paper published yesterday, the CMA stated that it had, as part of its ongoing investigation into the market for FMs, identified an “interconnected web” of 90 investments and partnerships across the entire value chain linked to just six major firms: Google, Amazon, Microsoft, Meta, Apple and Nvidia.
These companies “already hold positions of market power in many of today’s most important digital markets [and] could profoundly shape these new markets to the detriment of fair, open and effective competition, ultimately harming businesses and consumers,” said the CMA’s chief executive Sarah Cardell in remarks delivered to the American Bar Association (ABA). Unburdened by meaningful competition, she added, such firms could warp the marketplace for FM services “by reducing choice and quality and increasing price.”
CMA concerns about big tech influence at all levels of FM value chain
Though the CMA said in its update paper that it recognised the “important role” the aforesaid firms play in the FM value chain, it also argued that their development is still contingent on the availability of useful data, expertise and compute power – all assets that the six companies have in abundance. This includes access to hyperscale cloud compute power, which “remain[s] a key route to access [the] scarce compute resources required for FM development,” and a stranglehold on the AI talent pool, individuals within which can demand salaries in the millions of dollars that few companies outside big tech can afford to pay.
The six firms have also accrued substantial influence by leveraging partnerships and licensing deals with smaller partners at multiple levels of the FM value chain, including in the provision of compute power, FM development, and downstream application areas like online search and social media. These factors, Cardell claimed, combined with previous instances of anti-competitive behaviour by big tech firms, have led to the conclusion that competition in the FM market is in danger of being stymied.
Watchdog could use merger powers to regulate new AI partnerships
In response, the CMA has proposed “stepping up” the use of its merger control powers to examine whether new strategic partnerships in the FM value chain have long-term implications for marketplace competition. Existing partnerships, meanwhile, will be monitored “closely,” said the regulator, with causes for concern including whether or not the parties in the arrangement possess disproportionate power over inputs critical in model development, whether a party has accumulated significant influence in downstream markets, and the extent to which one party has influence over the other in the conception of FMs in the first place.
At least one of these partnerships is already under investigation by the CMA. In December, the watchdog announced it was examining the alliance between Microsoft and GPT-4 creator OpenAI, with several of the latter’s models being integrated with the former’s downstream products and services. Another investigation by the CMA into alleged anti-competitive practices of hyperscalers in the UK cloud market is ongoing.
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