Smaller AI startups in India are increasingly voicing concerns that echo those of the Competition Commission of India (CCI) regarding potential anti-trust issues stemming from the dominance of Big Tech in the artificial intelligence (AI) landscape. These startups are warning that the significant control Big Tech companies wield over AI data and cloud services could lead to monopolies, price discrimination, and a stifling of competition within the burgeoning AI sector.
The CCI recently released a market study on AI and competition, highlighting potential risks associated with AI-driven business practices. The study suggests that enterprises should conduct self-audits of their AI systems to proactively identify and address potential competition concerns. It also advises the CCI to enhance its technical expertise and infrastructure, engage with international competition authorities, and strengthen inter-regulatory coordination.
Several factors contribute to these anti-trust concerns. Big Tech firms often possess vast datasets, advanced computing infrastructure, and proprietary AI models, which give them a considerable advantage over smaller players and startups. This disparity can create barriers to entry, hindering innovation and limiting consumer choice. Moreover, the increasing use of opaque and self-learning AI models raises the risk of "algorithmic collusion," where automated systems unintentionally align prices or strategies without explicit human direction, potentially replicating price-fixing behavior.
In a survey of AI startups, 37% expressed concerns about the possibility of AI-facilitated collusion, 32% about price discrimination, and 22% about predatory pricing. These concerns are amplified by the fact that a significant number of AI startups in India are focused on application layer AI, rather than the foundational layers, making them more reliant on the resources and infrastructure controlled by larger firms.
To address these challenges, the CCI has proposed a six-step self-audit framework for enterprises. This framework encourages regular internal evaluations of AI models, detailed documentation of algorithmic objectives and data sources, clear accountability at senior levels, and periodic reviews to detect potential anti-competitive outcomes. The CCI also plans to establish an AI-focused think tank and host workshops on AI and competition compliance.
The CCI emphasizes the importance of balancing innovation with accountability, promoting ethical governance, transparency, and self-regulation to ensure that India's AI ecosystem remains competitive, inclusive, and innovation-driven. The regulator recognizes AI's potential to optimize resource allocation and streamline operations for MSMEs, leveling the playing field, but also acknowledges the risks of algorithmic collusion, price discrimination, and increased entry barriers.
The global AI market is projected to grow from $244.22 billion in 2025 to $1 trillion in 2031, with India's AI market expected to expand from $7.84 billion to $31.94 billion during the same period. As AI adoption accelerates, the CCI's focus on competition regulation becomes increasingly crucial. The CCI aims to strike a balance between curbing market distortions and ensuring a level playing field for all technology players while fostering innovation and digital entrepreneurship.
