Executive summary

Generative Artificial intelligence (GenAI) stimulates market and regulatory developments. It has spurred competition and innovation and created new emerging markets and technologies ranging from chips, machine learning models, cloud computing, and software to answer engines.

Market developments pose competition issues. Developers need access to three key components in the value chain: computing resources, machine learning models, and data. Despite various players in the field, certain sectors face competition concerns due to market features and potential issues, such as tying.

Regulatory developments impact GenAI. In particular, GenAI raises unsolved regulatory challenges arising from the use of copyrighted data (intellectual property rights), personal data (data protection), AI risks (AI governance) and competition.

Competition authorities closely monitor GenAI developments by doing market studies. These initiatives will inform how competition in GenAI works.

Challenges for competition authorities stem from emerging markets and technologies, along with regulatory instabilities. New products and services are shaping new and existing markets, like answer engines and advertising. Regulatory uncertainties influence competition in GenAI.

At this current development stage, competition authorities should focus on understanding market and regulatory developments by cooperating among themselves and with relevant competent authorities. They should exercise formal enforcement powers and potentially update competition tools only when necessary and justified, guided by the insights gained from these market studies.

Read the full working paper by downloading it. The paper has also been published in Intereconomics, the review of European Economic Policy.