On 23 July 2024, the European Commission, the UK’s Competition and Markets Authority, and the U.S. Department of Justice and Federal Trade Commission issued a joint statement setting out their commitment to work together to protect competition and consumers in relation to AI Foundation Models and AI products.

The joint statement is the first time these risks have been addressed collectively by the four authorities. It reflects the authorities’ view that if the risks they have identified do materialise, then the impacts of those will be felt across international borders.

The statement identifies three key risks and three high-level principles for protecting competition:

The Risks

The three key risks to competition they have identified are:

1. control of key inputs: the perceived risk is that certain inputs which are critical for the development of foundation models (including for example specialised chips, substantial compute and data at scale), are in the control of a small number of companies, and that these companies could exploit that position. The thinking is that this could potentially harm competition in a number of ways, including by disrupting innovation
2. entrenching or extending market power in AI-related markets: the authorities are concerned that the AI revolution may further “entrench" the market positions of larger digital firms
3. arrangements involving key players could amplify risks: the apparent concern here is that the current key players in AI are well connected to each other and often work together, for example to invest and develop technology, and these arrangements could somehow undermine or diminish the threat of new competition

Principles For Protecting Competition

The agencies have also identified three principles which they consider will serve to enable competition and innovation:

1. “fair dealing” by firms with market power

2. interoperability between products and services from different providers

3. ensuring choice for customers between diverse products and business models, for example through competition authorities scrutinising: partnerships between incumbents and newcomers; and arrangements which “lock in” customers to future purchases

Comment

This statement is the first joint statement between competition agencies in respect of AI, and confirms that AI is high on these competition authorities’ agendas.

Whilst the statement clearly highlights that the perceived risks from AI are cross-border, the statement is also careful to make clear that each authority’s decision making will remain independent. Each of these authorities has already taken its own steps in respect of AI (for example the CMA issued an update paper on AI foundation models in April this year, the Commission held a workshop in June 2024 on competition and virtual worlds in GenAI, and both the CMA and the FTC have opened inquiries in relation to AI partnerships) and we expect each authority to increase its activity in this area. However, what is clear from this joint statement is that the authorities are actively seeking to work together and exchange ideas on how best to mitigate against the perceived competition law risks of AI.

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