CMA publishes AI strategic update

Hot on the heels of its update paper on AI Foundation Models earlier this month, the CMA has published its strategic update on its approach to AI. 

The update gets straight to the point, setting out the CMA's view of the risks AI poses to competition and consumers: 

• Taking competition first, the CMA notes that firms' misuse of AI and other algorithmic systems has the potential to exacerbate “classic” competition concerns - for example, by facilitating anti-competitive self-preferencing, helping firms to set prices in ways that facilitate collusion or better enabling firms to personalise their offers to customers. It also repeats the concerns set out in its Foundation Models (FMs) update paper regarding the presence of large tech firms across the FM value chain, and the risk that they could shape the development of these markets in their own interests. 
• In terms of risks to consumers, while acknowledging the benefits that may flow for consumers from AI, the CMA notes the potential for AI to faciliate unfair consumer practices, including exposing consumers to false and misleading information (including through subscription traps, hidden advertising and fake reviews) and subjecting vulnerable consumers to hard-to-detect personalised offers.

Perhaps more interesting is what the CMA says about how it plans to approach these perceived risks. The CMA clearly sees the Digital Markets, Competition and Consumers Bill as a key tool in its armoury. It is “ready to use” new powers that will allow it directly to enforce consumer protection law in order to “tackle firms that do not play by the rules in AI-related markets”, and is considering issuing guidance on how to comply with consumer law in AI-related markets. It also anticipates that AI and its deployment by firms will be “relevant to [its] selection of SMS candidates”, and that developments in FM-related markets will be a consideration when deciding which digital activities to prioritise for investigation under the DMCC Bill. 

The CMA notes that it is monitoring current and emerging partnerships in the sector closely, and “stepping up” its use of merger control to examine whether such arrangements fall within the current rules (and if so, whether they give rise to competition concerns). It also urges firms to align their business practices with its recently-updated AI principles, which are intended to complement the UK government's cross-sectoral AI principles.

Cooperation with other regulators, both domestic and international, is another key piece of the CMA's strategy, as is continuing to work with the UK government as it develops its approach to AI regulation. In this respect, the CMA agrees with the House of Lords Communications and Digital Committee recommendation that market competition should be an explicit policy objective of the government's work on AI, and that “any policy interventions should not come at the expense of diversity and choice” - in other words, interventions should not be so burdensome as to raise barriers to entry for small or disruptive players.