CMA set to tackle interconnected web of strategic AI partnerships

The Competition and Markets Authority (CMA) has updated its paper on the market for foundation models (FMs), identifying six companies that could undermine openness and fairness as the technology evolves. 

It said Google, Apple, Microsoft, Meta, Amazon and Nvidia have established an “interconnected web” of over 90 partnerships and strategic investments.

According to the CMA, these tech giants have strong positions in both the development of FMs (including through the supply of critical inputs like compute, data and talent) and in the deployment of models (through key access points or routes to market, like apps and platforms).

The CMA is concerned that some firms may have the ability and an incentive to shape these markets in their own interests – both to protect existing market power and to extend it into new areas. This could profoundly impact fair, open and effective competition in FM-related markets, ultimately harming businesses and consumers – through reduced choice, lower quality and higher prices, for example – as well as stunting the flow of potentially unprecedented innovation and wider economic benefits from artificial intelligence (AI).

This latest move from the CMA follows its initial report on AI foundation models last year. In an update to this report, the CMA has proposed a set of principles to help sustain innovation and guide these markets towards positive outcomes for businesses, consumers and the wider economy.

Speaking at a conference in Washington DC, CMA CEO Sarah Cardell described the transformative promise of foundation models as a potential “paradigm shift” for societies and economies. She discussed how a range of fast-moving developments across FM markets, underpinned by the CMA’s deepening understanding of the FM ecosystem, have prompted a marked increase in concern.

“When we started this work, we were curious. Now, with a deeper understanding and having watched developments very closely, we have real concerns,” she said. “The essential challenge we face is how to harness this immensely exciting technology for the benefit of all, while safeguarding against potential exploitation of market power and unintended consequences.”

While the CMA recognised the huge wealth of resources, expertise and innovation capability the major tech firms can bring to bear, and their likely roles in FM markets, it warned that the powerful partnerships it identified along with mergers and acquisition activities should not reduce rival firms’ ability to compete, nor should they be used to insulate powerful firms from competition.

“Maintaining diversity and choice in the market is also vital for safeguarding against the risk of over-dependence on a handful of major firms – particularly considering the breadth of potential use for FMs across all sectors of the economy, such as finance, healthcare, education, defence, transport and retail,” the CMA said.

It believes the benefits of AI for businesses and consumers are much more likely to be realised in a world where the most powerful technology firms are subject to fair, open and effective competition. 

Cardell said the CMA was “determined to apply the lessons of history” to ensure fairness in a market that has the potential to be transformative. “We’re committed to applying the principles we have developed, and to using all legal powers at our disposal – now and in the future – to ensure that this transformational and structurally critical technology delivers on its promise,” she added.