Competition in Generative Artificial Intelligence (cepInput)

Figure generated by DALL-E 3 via ChatGPT with own prompt

The European Commission is reviewing merger control proceedings against Microsoft. This is due to the US tech giant's close partnership with OpenAI, the world's leading generative artificial intelligence (AI) company. The Centre for European Policy (cep) warns that the US tech companies already dominates the AI value chain and calls for strict competition law controls.

cepInput

"The Commission must take action to ensure competition in a rapidly growing market and to minimise the risks of generative AI," warns cep digital expert Anselm Küsters, who authored the study with cep economist Matthias Kullas. According to the cep researchers, the Commission has already wasted a lot of time. "It will be difficult for other providers because the big US tech companies are strongly represented at many stages of the value chain for generative AI services," explains Kullas.

Amazon and Microsoft possess dominant positions in the cloud services market, while Google is expanding its own chip production. US tech companies also have privileged access to leading language models such as OpenAI, Mistral or Cohere, and the human capital that goes with them. According to the authors, this creates disadvantages for other market players: start-ups have to compete with tech giants that are already vertically integrated along the value chain. According to Küsters and Kullas, this allows the giants to incorporate the new technology into their service offerings, such as search engines, and thus benefit from their market power in these down-stream markets. In addition to greater investment in innovation-friendly conditions for AI in Europe, a holistic EU competition policy is therefore needed.