Can AI distort competition?   

On May 4, the CMA announced a review of AI impacts on competition. Three areas of focus are prioritised:  

  • Opportunities to build AI Chatbots and whether there are barriers to entry such as access to data, computational capacity, and talent.  
  • The potential effects of AI on competition in other markets, like ad funded internet search.  
  • The potential use of AI to harm consumer welfare through fraud.  

The EU Commission has also agreed on a provisional AI Act. It will impose disclosure requirements on AI companies using copyrighted material and sets out a risk-based framework for the classification of AI tools and use-cases (see our post).  

Meanwhile, across the Atlantic, Lin Khan, Chair of the Federal Trade Commission, also stated her agency’s commitment to tackling AI’s developing role in fraud and price collusion in a recent New York Times op-ed. Ms Khan expressed concern that the growth of AI will likely further entrench the dominance of incumbent tech giants, who “control the necessary raw materials” needed to develop AI tools.  

Intellectual property is explicitly outside the scope of the CMA’s inquiry. This is maybe an issue for respondents concerned about the compliance or otherwise of generative AI tools like ChatGPT with copyright law – where content is ingested and copied by Large Language Model systems. This is, for instance, the single hottest issue for news publishers, many of whom have publicly challenged OpenAI for using copyrighted material in their “training”.  

The CMA may not understand the misuse of property and others’ work. Its statement that intellectual property is out of scope should be thought of as an observation on its statutory remit, and not prevent respondents pointing out precisely what is happening.   

MOW is particularly concerned about the potential for disintermediation of publishers: they risk being blocked from end user visibility and their ability to monetise via advertising will be affected. It is apparent that a shift to an AI “answer engine” model could divert significant traffic from content-creators, and thus, advertising revenue from content owners. 

Google and other browser vendors have also announced plans to integrate chat bots as an alternative to the search bar: promoting their own Chat machine to the disadvantage of rivals.  

Please contact us if you are thinking of responding.