The Communiqué mirrors many of the recent policy goals that the U.S. antitrust agencies have articulated with respect to competition in AI-related markets, and demonstrates how the priorities of the FTC and DOJ Antitrust Division are largely in line with their international counterparts on this issue.
Background
The Communiqué is informed by the 2023 Hiroshima Process International Guiding Principles for Organizations Developing Advanced AI Systems,2 which was issued by the G7 Digital and Tech Ministers, the Organization for Economic Cooperation and Development (OECD) and the Global Partnership on AI (GPAI) to “promote safe, secure, and trustworthy AI worldwide” by providing “guidance for organizations developing and using the most advanced AI systems, including the most advanced foundation models and generative AI systems[.]” While acknowledging the “transformative promise” of AI, the Communiqué stresses the importance of maintaining “open, fair and contestable” AI-related markets.
G7 competition authorities highlight “significant competition concerns” within AI-related markets
The Communiqué identifies several concerns related to the advantages dominant tech platforms purportedly hold in AI markets. Among these is the view that such firms maintain disproportionate access to “essential inputs” needed for generative AI development, including computing infrastructure, specialized chips, data, talent, and energy resources. The Communiqué warns that dominant firms “could exploit existing or emerging bottlenecks” to reduce competition and restrict market access for new entrants, and notes that since dominant tech platforms are “active on several layers of the AI stack,” they are well-positioned to be able to raise barriers to entry by engaging in anticompetitive conduct such as self-preferencing, tying, bunding, or other practices. The Communiqué echoes the warnings issued during the FTC Technology Summit hosted by the agency earlier this year. The FTC Summit focused on generative AI and other innovative technologies and how control over key inputs—like data, chips, and cloud computing resources—could undermine competition in AI-related markets.
The Communiqué also contends that partnership agreements between large digital market incumbents and AI firms threaten to suppress competition, since these strategic alliances may allow firms to solidify their dominance and weaken competition. This is in line with the stated motivation for the FTC’s ongoing 6(b) study into generative AI investments and partnerships, which FTC Chair Lina Khan said is intended to “shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition.”3
The G7 competition authorities also identify the risk that “AI and algorithms may facilitate collusion between firms” and allow competitors to more easily share competitively sensitive information and coordinate prices and wages. As we highlighted in our client alert discussing DOJ’s recent antitrust lawsuit against real estate company RealPage, there has been a surge in antitrust enforcement targeting algorithmic pricing and information-sharing practices in the United States. The Communiqué states that “[c]ollusion is still unlawful when it is carried out via an algorithm,” a position that has also been asserted by the FTC and DOJ in recent public statements and legal filings. The Communiqué also warns that AI technologies can be used for “surveillance pricing” and unfair price discrimination, an issue that the FTC has made the focus of a recent 6(b) study of companies “offering surveillance pricing products and services that incorporate data about consumers’ characteristics and behavior.” The FTC study is intended to examine the potential impact such practices have on privacy, competition, and consumer protection.
Looking ahead
The Communiqué describes the “important role” of international competition authorities and policymakers to foster fair competition in the AI markets by expanding access and opportunity for new market entrants, increasing consumer choice, facilitating interoperability, and promoting innovation, transparency and accountability in AI technologies. The Communiqué also encourages “vigorous antitrust enforcement” and “careful vigilance” to address the risks of “concentrated market power in AI-related markets and the potential for collusion using AI technologies,” and encourages G7 competition to focus on:
- Developing AI-specific regulation and policies and working with regulatory authorities in their respective jurisdictions to ensure that proposed regulations support competition in AI-related markets and account for their effect on entry and participation;
- Strengthening the digital capacity of competition authorities in each G7 jurisdiction, and using available technology and “horizon scanning tools” to detect emerging competition risks in AI markets and respond effectively to them;
- Enhancing international cooperation amongst G7 competition enforcers by sharing knowledge and working together to ensure that enforcement approaches in respective G7 jurisdictions remain “effective and aligned” in order to address and adapt to the challenges posed by AI technologies; and
- Employing a multidisciplinary approach to competition enforcement in the AI space by working with other regulatory and enforcement bodies at the national and international levels to impact broader AI policymaking efforts.
The G7 Competition Summit reinforces the global focus on antitrust enforcement regarding the development and use of AI tools, as well as competition enforcement agencies’ desire to address potential antitrust issues in their incipiency. This area is likely to be the subject of intense scrutiny and potential enforcement activity for years to come.
Authored by Logan Breed, Edith Ramirez, Chris Fitzpatrick, and Jill Ottenberg.
References
1 G7 Competition Authorities and Policymakers’ Summit, “Digital Competition Communiqué” (Oct. 4, 2024) available here.
2 G7 2023 Hiroshima Summit, “Hiroshima Process International Guiding Principles for Organizations Developing Advanced AI System” (Oct. 30, 2023) available here.
3 Federal Trade Commission press release, “FTC Launches Inquiry into Generative AI Investments and Partnerships” (Jan. 25, 2024) available here.
