The Competition and Markets Authority (CMA) recently updated its stance on AI Foundation Models (FMs), signalling heightened regulatory scrutiny over market dynamics that could hinder competition.
This announcement follows an initial report and a series of investigations that sketched the potential for AI to radically alter economic landscapes, dubbed a “paradigm shift” by CMA Chief Executive Officer Sarah Cardell during a Washington DC conference.
Cardell outlined three principal threats that these technologies pose to fair competition: dominant firms might limit access to essential inputs such as compute resources, data, and expertise; these incumbents could misuse their market position to unfairly influence consumer choices in FM services; and extensive networks of strategic partnerships might further cement the influence of these major players. Notable among these are tech giants like Google, Apple, Microsoft, Meta, Amazon, and Nvidia—the latter being a leader in AI accelerator chips.
The CMA’s forthcoming paper reveals an intricate “interconnected web” of over 90 partnerships involving these entities, which, while fostering innovation, also risk entrenching the market power of already dominant firms. Such concentrations of power are particularly concerning in FM markets, where their potential applications span diverse sectors including finance, healthcare, and transport.
Echoing historical digital market dynamics where few platforms emerged victorious, the CMA is poised to apply these lessons to prevent similar monopolistic outcomes in emerging FM markets. This includes employing tools such as market investigations and merger reviews more actively. The focus will be on ensuring that competition remains vibrant and that the transformative benefits of AI are widely accessible rather than being monopolised by a few.
In her address, Cardell emphasised the agency’s proactive stance: “When we started this work, we were curious. Now, with a deeper understanding and having watched developments very closely, we have real concerns.” She reassured that the CMA would leverage its full suite of regulatory powers to foster a competitive landscape that not only encourages innovation but also guards against the misuse of market power.
Reflecting on the potential of FM technologies, the CMA’s strategy represents a critical pivot towards safeguarding market fairness and consumer welfare in an increasingly AI-integrated world. As AI continues to weave into the fabric of global economies, such regulatory vigilance will be paramount in ensuring that its benefits are not overshadowed by anti-competitive practices.
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