The United Kingdom’s top competition regulator called for market feedback on several high-profile “partnerships” in the artificial intelligence (AI) space, with concerns about a few notable big tech companies solidifying their dominance of the industry.
On April 24, the U.K.’s Competition and Markets Authority (CMA) said it was seeking comment from interested third parties “to give their views on whether the partnerships between Microsoft and Mistral AI, and Amazon and Anthropic, as well as Microsoft’s hiring of former employees and related arrangements with Inflection AI, fall within U.K. merger rules and the impact that these arrangements could have on competition in the U.K.”
In September 2023, Amazon (NASDAQ: AMZN) announced an agreement to invest $4 billion into Anthropic, a U.S.-based AI startup company, to support its development of high-performing foundation models. Last month, the tech behemoth announced it had fulfilled its $4-billion investment commitment, revealing a minority ownership stake in the company and implementing Amazon Web Services as Anthropic’s cloud service provider.
Microsoft (NASDAQ: MSFT) is under the microscope for its multi-year partnership with Mistral AI, one of Europe’s leading AI startups, announced in February. This put the tech giant under the CMA’s spotlight even further, as the U.K. regulator had already opened an investigation last December into Microsoft’s $13 billion dollar investment with OpenAI.
The CMA also noted concerns over Microsoft’s hiring of Inflection AI co-founders Mustafa Suleyman and Karén Simonyan. Inflection AI is a technology company that develops machine learning and generative AI hardware and apps; Microsoft hired Suleyman and Simonyan to work on its ‘Copilot‘ chatbot, launched on February 7, 2023.
“We will assess, objectively and impartially, whether each of these 3 deals fall within U.K. merger rules and, if they do, whether they have any impact on competition in the U.K.,” said Joel Bamford, the executive director of mergers at the CMA, when announcing the regulator’s call for input.
“While we remain open minded, and haven’t drawn any conclusions, our aim is to better understand the complex partnerships and arrangements at play.”
The increased scrutiny from the CMA comes a couple of weeks after the agency published an updated report on AI Foundation Models (also known as generative AI), which raised concerns around three key interlinked risks to fair, effective, and open competition.
These risks included a concentration of power among just six big tech companies that “could lead to winner takes all dynamics.”
The six companies in question were Google (NASDAQ: GOOGL), Microsoft, Meta (NASDAQ: META), Amazon, Apple (NASDAQ: AAPL), and Nvidia (NASDAQ: NVDA). Through an “interconnected web” of more than 90 investments and partnerships links, these companies could limit diversity and choice in the market, according to Sarah Cardell, CEO of the CMA.
“When we started this work, we were curious. Now, with a deeper understanding and having watched developments very closely, we have real concerns,” Cardell said.
The CMA launched its initial review of AI foundation models in May 2023, publishing its analysis in a report last September. The report identified a risk that the markets could develop in ways that would cause concern from a competition and consumer protection standpoint, and so proposed the set of principles “to help sustain innovation and guide these markets toward positive outcomes for businesses, consumers, and the wider economy.”
The updated report this April proposed a set of “underlying principles to help sustain vibrant innovation and to guide the markets toward positive outcomes.”
Namely, ongoing ready access to key inputs, ensuring sustained diversity of models and model types, enabling sufficient choice for businesses and consumers to decide how to use foundation models, fair dealing (i.e., no anti-competitive bundling, tying or self-preferencing), transparency of information about risks and limitations of models, and ensuring developer and deployer accountability.
“Foundation Models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors – healthcare, energy, transport, finance and more,” said Bamford on Wednesday.
“Open, fair, and effective competition in Foundation Model markets is critical to making sure the full benefits of this transformation are realised by people and businesses in the U.K., as well as our wider economy where technology has a huge role to play in growth and productivity.”
The CMA is inviting views by May 9 on whether the partnerships and other arrangements between Microsoft and Inflection AI, Amazon and Anthropic, and Microsoft and Mistral AI result in the creation of relevant merger situations and, if so, the impact of these deals on competition in the U.K.
While it awaits industry responses to these, particularly concerning big tech partnerships, the CMA added that it would continue closely monitoring all current and emerging AI partnerships and strategic agreements.
Global efforts to curb AI monopolies
The U.K. isn’t the only jurisdiction taking notice of big tech’s dominance in the AI space.
The European Commission (EC) is currently assessing competition in “virtual worlds” and generative AI and, in January, called for information from several large digital players to “examine the market dynamics” of partnerships in the space.
The EC also said it was checking whether Microsoft’s investment in OpenAI “might be reviewable under the EU Merger Regulation.”
Meanwhile, the Federal Trade Commission (FTC)—an independent agency of the United States government that enforces civil antitrust law and promotes consumer protection—has an ongoing inquiry into generative AI investments by tech companies to assess whether the “investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”
To this end, in January, the FTC ordered five companies—Alphabet, Amazon, Anthropic, Microsoft, and OpenAI—to provide information regarding their recent investments and partnerships involving generative AI companies and major cloud service providers.
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