The Competition and Markets Authority (CMA) is to examine the core foundations of the AI market, as the technology becomes a focus for regulators around the world.
The UK competition watchdog announced on Thursday it has begun an initial review of the underlying systems, or foundation models, that are behind AI tools such as OpenAI’s ChatGPT or Google’ Bard Chatbot.
The CMA said that foundation models, which include large language models and generative artificial intelligence (AI), that have emerged over the past five years, have the potential to transform much of what people and businesses do.
It said that the UK government has asked regulators, including the CMA, to think about how the development and deployment of AI can be supported against five overarching principles: safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; and contestability and redress.
In line with government’s AI white paper and the CMA’s role to support open, competitive markets, the CMA review “seeks to understand how foundation models are developing and produce an assessment of the conditions and principles that will best guide the development of foundation models and their use in the future.”
This initial review will:
examine how the competitive markets for foundation models and their use could evolve;
explore what opportunities and risks these scenarios could bring for competition and consumer protection
and produce guiding principles to support competition and protect consumers as AI foundation models develop.
Rapid development
“AI has burst into the public consciousness over the past few months but has been on our radar for some time,” said Sarah Cardell, chief executive of the CMA. “It’s a technology developing at speed and has the potential to transform the way businesses compete as well as drive substantial economic growth.”
Sarah Cardell, chief executive of the Competition and Markets Authority. Image credit CMA
“It’s crucial that the potential benefits of this transformative technology are readily accessible to UK businesses and consumers while people remain protected from issues like false or misleading information,” said Cardell.
“Our goal is to help this new, rapidly scaling technology develop in ways that ensure open, competitive markets and effective consumer protection,” she said.
As part of the initial review, the CMA is seeking views and evidence from stakeholders and submissions by 2 June 2023.
After this evidence gathering and analysis, the CMA will publish a report which sets out its findings in September 2023.
Timely review
The decision by the UK competition regulator to conduct an initial review of the underlying AI foundational models has been welcomed by experts.
“The UK is at a critical inflection point in the AI space. The CMA’s timely review of the market comes as anti-fraud and anti-money laundering leaders are being pushed to embrace AI responsibly and effectively,” noted Pedro Bizarro, chief science officer at financial cybersecurity specialist Feedzai.
“A one size fits all approach to AI regulation simply won’t work in the UK, and so while a collaborative approach across regulators is sensible, the challenge will be ensuring those regulators are joined up,” Bizarro added. “There’s a delicate balance to be struck here to ensure that innovation isn’t stifled, but also that consumers are effectively protected.”
“The financial services industry is no stranger to AI; in fact, it’s at the forefront of its adoption,” Bizarro said. “To ensure consumers using these services are being protected, banks must continue to harness the power of AI to combat financial crime while fostering trust, transparency, and fairness in the process.”
“While we wait for the CMA’s review to conclude, fraud and AML leaders should review their current AI practices and adopt a proactive approach that improves fraud detection and AML processes,” Bizarro concluded.
Not surprising
Another expert, Verity Egerton-Doyle, counsel and UK co-head of technology sector at multinational law firm Linklaters, said it was not surprising the CMA has decided to look at AI.
“It has been known for some time that the CMA is keen to skill up and understand what role there is for competition law in this important new area,” wrote Egerton-Doyle. “Doubtless much of the work done will be used to support the CMA’s Digital Markets Unit in deciding the scope of the ‘Strategic Market Status’ designations it will have to make, and the rules it will have to set for those companies designated, under the DMCC introduced into Parliament last week.”
“The EU’s digital markets act that came fully into force this week does not cover generative AI and the CMA no doubt sees this as an opportunity to be leading the global debate on these issues – along with the US FTC which is already looking at the area,” Egerton-Doyle concluded.