Indian AI startups are increasingly echoing the anti-trust concerns raised by the Competition Commission of India (CCI) regarding the dominance of Big Tech companies in the artificial intelligence landscape. These startups are warning that the control exerted by major technology firms over crucial AI resources, such as data and cloud services, could lead to the formation of monopolies, discriminatory pricing practices, and an overall stifling of competition within the sector.
The CCI recently released a report examining AI adoption in India, its impact on competition, and the regulatory frameworks guiding its development. The study, conducted through the Management Development Institute Society (MDIS), assessed AI markets and ecosystems, identified emerging competition issues, and reviewed legal and regulatory frameworks. The report highlights the potential for AI to enable anti-competitive conduct, including predatory pricing, self-preferencing, and price discrimination. It also suggests that bundling AI solutions with existing products could further consolidate market power, making it difficult for independent providers to compete.
Specifically, startups have voiced concerns about the potential for AI-facilitated collusion (37%), price discrimination (32%), new entry barriers (22%), and predatory pricing. These concerns stem from the fact that building and training AI systems demands significant financial investment, substantial computing power, and access to vast datasets. Smaller players often find themselves at a disadvantage compared to established entities that possess these resources. The CCI survey identifies the availability of data, talent, compute facilities, and the cost of cloud services as potential entry barriers.
The CCI's report underscores that the Indian AI market is expected to experience substantial growth, potentially reaching $31.94 billion by 2031. However, India's share in the global AI market may only reach 3% due to the entry barriers faced by smaller companies. To address these challenges and foster a more competitive AI ecosystem, the CCI has proposed several measures. These include organizing conferences and workshops on AI and competition compliance, creating a think tank focused on digital markets and AI, strengthening technical infrastructure, promoting inter-regulatory coordination, and engaging with international competition authorities. The CCI also encourages enterprises to conduct self-audits and adopt transparency measures to address potential competition concerns.
The CCI's study highlights the importance of government support in enhancing AI infrastructure, removing entry barriers, and promoting a level playing field. It suggests that a mix of competition and industrial policies, including a Digital Public Infrastructure paradigm, is needed to foster a competitive, inclusive, and innovative AI ecosystem in India. The report also emphasizes the need for a nuanced mix of competition and industrial policies, including a Digital Public Infrastructure paradigm, to foster a competitive, inclusive, and innovative AI ecosystem in India. It also highlights India's push for technological sovereignty through initiatives like the IndiaAI Mission and investments in indigenous AI models and supercomputing capabilities.
Moreover, the CCI plans to strengthen its technical capabilities and infrastructure, establish a think tank of experts on digital markets and AI, promote coordination with other government departments and regulators, and engage with international competition authorities to align on enforcement strategies. The commission has also prescribed a six-step self-audit framework for enterprises, including setting up a system to evaluate each AI system against competition risk factors, establishing clear responsibilities for competition compliance, and ensuring senior management involvement in high-risk AI deployments.
Ultimately, the goal is to create a regulatory environment that encourages innovation and competition while preventing anti-competitive practices that could stifle the growth and potential of the Indian AI industry.
