CMA issues report on foundation models

April 15, 2024

The CMA launched its AI Foundation Models initial review in May 2023. It published an initial report in September 2023, in which it proposed principles to guide the development and deployment of foundation models (FM) to positive outcomes for competition and consumer protection.

It has now published an update paper which:

  • provides an overview and discussion of key changes in the FM sector since the publication of the initial report;
  • confirms final principles for guiding the market to positive outcomes for competition and consumer protection; and
  • sets out risks to competition and consumer protection, including three key risks to fair, open and effective competition that the CMA sees arising from current and potential developments in the FM sector, assessing how they would be mitigated by the CMA’s principles and identifying the actions it is taking now, and is considering taking in the near future to seek to address these risks.

The three risks are:

  • firms controlling critical inputs for developing FMs may restrict access to shield themselves from competition;
  • powerful incumbents could exploit their positions in consumer or business facing markets to distort choice in FM services and restrict competition in deployment; and
  • partnerships involving key players could exacerbate existing positions of market power through the value chain.

The CMA has set out six principles, which cover access, diversity, choice, fair dealing, transparency and accountability.

The CMA is considering market investigations and merger review, but also consideration of developments in FMs as the CMA decides which digital activities to prioritise for investigation under the Digital Markets, Competition and Consumers Bill.

A more detailed technical update report will be published after 15 April. The CMA also intends to continue its work during 2024, including:

  • A forthcoming paper on AI accelerator chips, which will consider their role in the foundation model value chain.
  • Joint research in the Digital Regulation Co-operation Forum (DRCF) on consumers’ understanding and use of foundation model services, and participation in the DRCF AI and Digital Hub pilot due for launch in spring 2024.
  • A joint statement with the ICO on the interaction between competition, consumer protection and data protection in foundation models.

It will publish a further update on its work in Autumn 2024.