UK’s CMA publishes report on AI Regulation 

October, 2023 - Shoosmiths LLP

The UK's recent advancements in AI governance have included the publication of an initial review by the UK's Competition and Markets Authority (CMA) regarding AI foundation models.

The country’s antitrust watchdog has taken the lead in shaping certain principles, recognising the need to harness AI’s potential while avoiding the pitfalls of unchecked power in the hands of a few tech companies, at the expense of broader competition.

In their report, the CMA has issued a warning regarding particular risks associated with foundation models, as well as presenting its own set of proposed AI principles. The seven principles cover various aspects of AI regulation, targeting foundational models like ChatGPT, as well as addressing concerns about market monopolisation and anti-competitive behaviour. The principles are not laws and currently would only potentially be binding on the CMA as regards any action it takes, such as if it were to investigate a merger between parties engaged in developing AI foundation models. However, the principles can also be said to be ‘fair warning’ to businesses that seek to engage in conduct that the CMA would regard as contradicting the principles. In this context, the Digital Markets Unit of the CMA will acquire new powers under the proposed Digital Markets, Competition and Consumers Act (currently before parliament), which when adopted would give weight to the enforceability of the principles.

Inevitably, the principles place significant emphasis on the importance of maintaining fair market competition, with a particular focus on preventing market suppression and dominance, as these are perceived as the primary threats posed by AI – seen most obviously in the scale of the tech giants that seem to be leading the pack on the emerging mass-use generative AI platforms. The CMA expresses concern that if competition remains weak or AI developers do not adhere to consumer protection laws, it could lead to potential societal harm.

Picking up on broader themes emerging from the UK government’s evolving view on AI regulation in its AI White Paper published earlier this year, there is also apprehension that the various UK regulatory bodies (who have each been tasked with policing AI in their respective regulated sectors) may interpret and emphasize societal harms differently. This diversity in interpretation could undermine the government's ability to achieve a comprehensive and consistent approach on regulation of this complex and evolving technology, with the development of overarching, consistent rules around AI being a key theme of the UK government’s upcoming AI Summit.

Reflecting on the review, Sarah Cardell, the Chief Executive of CMA, highlighted the transformative potential of AI in enhancing productivity and simplifying everyday tasks. She also, however, underscored the importance of preventing AI from becoming a tool for a select few to wield disproportionate power, ultimately hindering broader economic benefits. How that impacts the ability of global competition authorities to maintain competitive markets for AI and its related technologies remains to be seen.

The CMA will engage with identified stakeholders and plans to publish another report early 2024.


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