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April 25, 2024

CMA invites third-party views amid concerns surrounding big tech dominance of generative AI

Amazon has called the competition watchdog’s review on its collaboration with Anthropic AI “unprecedented”.

By Lauren Hurrell

The UK’s Competition and Markets Authority (CMA) has asked for comment on partnerships between big tech and AI startups. The relationships in question are between Microsoft and Mistral AI, and Amazon and Anthropic, as well as Microsoft’s hiring of former employees and related arrangements with Inflection AI.

The competition watchdog aims to determine if these partnerships comply with UK merger regulations and assess their potential impact on competition in the UK. The “invitations to comment” mark the first part of the CMA’s information-gathering process, which could lead to formal investigation.

Amazon and Microsoft are among the companies in tie-ups under scrutiny by the CMA. (Photo by Ascannio via Shutterstock)

The CMA’s review on AI partnerships is “unprecedented”

Just two weeks ago, the CMA expressed “real concerns” surrounding the increasing dominance of a handful of big tech firms in the value chain for foundation models (FMs). In the agency’s updated report on AI FMs it said it had, as part of its ongoing investigation into the market, identified an “interconnected web” of 90 investments and partnerships across the entire value chain linked to six major tech firms, including Amazon and Microsoft. It aims to regulate these so that partnerships have the potential to bring pro-competitive benefits, without incumbent technology firms using them to avoid competition.

Amazon’s tie-up with Anthropic, the developer of the Claude chatbot, has seen around $4 billion of funding pumped into the AI firm and includes agreements for purchasing computing capacity and non-exclusive commitments to make Anthropic models available on Amazon’s Bedrock service.

“It’s unprecedented for the CMA to review a collaboration of this type,” Amazon said in a statement. “Our collaboration with Anthropic includes a limited investment, doesn’t give Amazon a board director or observer role, and continues to have Anthropic running its models on multiple cloud providers.”

Microsoft also invested in the French firm Mistral AI, with a multi-year agreement through which the tech giant will supply the AI company with its Azure high-performance computing infrastructure, while also featuring Mistral’s models on the Azure platform.

The CMA said it would also like views on the tech giant’s partnership with Inflection AI, a start-up which lost its CEO and co-founder, Mustafa Suleyman, and a significant number of its staff, to Microsoft last month.

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“[FMs 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 Joel Bamford, executive director of mergers at the CMA. “So 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 UK, as well as our wider economy where technology has a huge role to play in growth and productivity.”

Global concerns over big tech influence in AI

“The CMA recently committed to step up the use of its merger control powers as part of its recent Foundation Models update,” added Bamford. “While we remain open-minded, and haven’t drawn any conclusions, our aim is to better understand the complex partnerships and arrangements at play.”

Microsoft’s collaboration with OpenAI is already under investigation by the agency. As the partnership does not meet the definition of a takeover, it is not expected to face a formal investigation by European regulators.

The European Commission is also assessing competition in ‘virtual worlds’ and generative AI, calling for information from large digital players to ‘examine the market dynamics’ of partnerships in this field.

The US Federal Trade Commission (FTC) also has an ongoing inquiry into generative AI investments by technology companies, assessing whether these ‘investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition’.

Read more: CMA expresses “real concerns” about big tech influence over generative AI

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