Smaller AI startups in India are increasingly voicing concerns that mirror those of the nation's antitrust watchdog regarding the potential for anti-competitive practices within the burgeoning AI sector. These startups fear that the dominance of Big Tech companies in critical areas like data access, cloud computing resources, and the ownership of closed AI models could lead to monopolies, price discrimination, and restricted competition, ultimately stifling innovation.
The Competition Commission of India (CCI), the country's antitrust regulator, has also recognized these risks. In a recent market study on Artificial Intelligence and Competition, the CCI highlighted that the concentration of data and computing power in the hands of a few large players could create new barriers to entry and disadvantage smaller companies. The CCI's study also pointed out the risks of algorithmic collusion, AI-driven pricing strategies, and price discrimination. According to a perception survey outlined in the study, 37% of AI startups believed that AI could facilitate collusion, 32% foresaw risks of price discrimination, and 22% feared predatory pricing.
Smaller AI startups echo these concerns, emphasizing that fair access to infrastructure and support for alternative ecosystems are crucial to sustain innovation and maintain a level playing field. They argue that the current landscape favors large corporations that can afford to build and train complex AI models, creating a significant disadvantage for startups with limited resources.
Several factors contribute to these concerns. Firstly, access to high-quality, labeled data is essential for training effective AI models, but this data is often concentrated in the hands of a few major tech companies. Secondly, AI applications require significant computing power, which can be costly and potentially unaffordable for startups without substantial investor support. Thirdly, the outflow of top-tier technical talent from AI startups to Big Tech companies further exacerbates the challenges faced by smaller players.
To address these issues, the CCI has recommended that companies conduct self-audits of their AI systems to proactively identify and manage potential competition concerns. The regulatory body also intends to enhance its technical expertise and infrastructure, engage with international competition authorities, and strengthen inter-regulatory coordination. Furthermore, the CCI plans to establish a think tank to provide expertise on digital markets and AI, as well as organize workshops and conferences to raise awareness among stakeholders about AI and competition compliance.
The CCI's proactive approach to AI regulation is significant, considering the technology's rapid adoption across various industries. The Indian AI market has grown substantially in recent years and is projected to continue its rapid expansion. While AI offers numerous benefits, the CCI recognizes the importance of addressing potential anti-competitive practices to ensure a fair and competitive landscape for all players.
Globally, regulatory bodies are also increasing their scrutiny of AI and its potential impact on competition. The US Federal Trade Commission (FTC) and Department of Justice (DOJ) have stated that existing antitrust laws apply to the AI industry, including the review of mergers and acquisitions of AI companies and concerns about algorithmic collusion. Similarly, the European Union (EU) regulates AI-related competition law cases under its competition laws and the Digital Markets Act (DMA). These global trends suggest a growing recognition of the need for proactive measures to ensure that the development and deployment of AI benefit society as a whole, without creating new monopolies or exacerbating existing inequalities.
