The UK’s Competition and Markets Authority (CMA) has published draft principles for foundation models, the large-scale AI systems that can be adapted for customer applications. Its review asks how the market could affect competition and consumers, and what might help steer development toward better outcomes. The proposals are a starting point for discussion, not a settled rulebook.
A market the regulator is watching early
The CMA says foundation models sit at a point in the AI supply chain where other businesses may build apps and services on top of them. That makes access to the models and the resources used to develop them relevant to how businesses compete.
The regulator has not formed a settled view about how these fast-developing technologies will reshape markets. It sees potential benefits as well as risks, and says either could emerge quickly. Its review is an effort to understand possible market drivers while developments are unfolding, rather than assess them only after their effects become clearer.
The CMA’s work followed a UK government instruction for existing regulators to consider AI’s effects in their respective areas. The watchdog drew on early research and feedback from stakeholders. It said it received 70+ responses to its call for input, from a broad range of organisations, including AI labs, large firms, civil society, academics and experts.
Competition could move in different directions
Foundation models might help newer businesses challenge established companies by giving them access to capabilities they could build on. But the models could also reinforce the position of firms that are already strong, depending on how important inputs such as data and computing resources are accessed and controlled.
The CMA says both outcomes are possible, and the result may vary between markets. It has highlighted access to data and compute as areas to watch. Publicly available data is currently reasonably available for training models, according to the report, but proprietary data could become more important over time. The CMA says it does not believe that shift has happened yet, and it may not happen.
Computing resources are another important input. The CMA pointed to separate work by Ofcom concerning access to public cloud services, saying it would wait to see the outcome. These examples illustrate why the watchdog says market-specific evidence matters: a potential risk is not proof that a particular market problem has already taken hold.
Principles are a proposal, not a new rule
The CMA has proposed seven principles intended to put consumer protection and healthy competition at the heart of responsible foundation model development and use. The source report does not set out the principles in detail, but the regulator says it wants to use them as a framework for another round of engagement and to explore how they could be improved or adopted.
The proposals have a narrower remit than the UK government’s AI principles, which the source describes as covering safety, security and robustness; transparency and explainability; fairness; accountability and governance; and contestability and redress. The CMA’s review focuses on competition and consumer protection. It does not assess the full range of consumer concerns: security and data protection, for example, are outside this initial review.
The CMA says it will work with other regulators on AI matters. The Digital Regulatory Cooperation Forum, established by the CMA, ICO and Ofcom, with the FCA joining as a full member, is one possible setting for that cooperation. The source also notes that data security and privacy fall more obviously under the Information Commissioner’s Office.
Any response should be measured
The CMA says its report does not call for immediate regulation. Its senior director, Will Hayter, said any future rules or confirmed principles would need to be closely targeted at specific issues and supported by real evidence. The regulator wants to understand what could push markets toward either stronger competition or greater concentration before deciding whether action is needed.
The report also sits within a wider discussion about whether existing competition and consumer law tools can respond quickly enough to developments in digital markets. The Digital Markets Competition and Consumers bill, as described in the source, is intended to help address that concern through a framework that includes a high threshold for action: Strategic Market Status.
For now, the CMA is inviting organisations to discuss its initial thinking. It plans another update in early 2024. The proposals signal close attention to generative AI markets, while leaving open how those markets will develop and whether specific problems will warrant intervention.