CMA Sets Out Key Principles For Generative AI In Business

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26 September 2023 – The UK’s Competion and Markets Authority (CMA) has published its latest report on artificial intelligence (AI), setting out key principles for generative AI to protect consumers and healthy competition.

AI has been in the news a lot lately, with many warning it could cause a lot of harm to people as well as businesses and calling for regulation of this emerging sector. Others point out the benefits of this technology for humankind.

Big corporations such as Google and Meta, the owner of Facebook, have recently released foundation models (FMs) which could transform the way we do business. An FM is a generative AI technology that can perform tasks according to human language instructions.

The most well known foundation model is ChatGPT, which has made quite a splash since it has been released.

Now the UK’s competition watchdog, the CMA, has released its latest report about AI in which it sets out principles for the development and use of this kind of technology to protect consumers and healthy competition.

Generative AI Could Transform Business

The CMA acknowledges that progress in the field of AI has advanced at pace, especially with the recent release of several large-scale foundation models that are capable of performing a wide range of tasks.

There is a wide range of possible adaptations for this technology and the world is embracing it to help in a variety of ways. It is already used for research, learning, content creation and solving problems. FMs could boost innovation and economic growth, the CMA says.

Generative AI could even help small businesses challenge bigger competitors, the CMA believes, as long as this technology is developed and used well.

There is real potential for this technology to turbo charge productivity and make millions of everyday tasks easier – but we can’t take a positive future for granted. There remains a real risk that the use of AI develops in a way that undermines consumer trust or is dominated by a few players who exert market power that prevents the full benefits being felt across the economy.

Sarah Cardell, CEO of the Competition and Markets Authority

However, the development of generative AI has already sparked concerns regarding security, safety, privacy and human rights, among others. Now the competition watchdog is looking into what impacts AI and FMs could have on consumer protection and competition.

The CMA warns that FMs can only fulfil their potential to boost innovation and economic growth if competition is strong. Weak competition can expose consumers to false information, AI-enabled fraud or fake reviews.

But it can also lead to a few companies having a monopoly over this technology, leading to high prices and/or inferior products and services for both consumers and small businesses.

Hwever, effective competition alone is not enough to ensure the development and use of FMs doesn’t have a negative impact. Compliance with existing consumer and competition laws will also have to play its part.

To further strengthen the protection of consumers and competition, the CMA has set out key principles in view of the use and development of this new technology.

CMA’s 6 Key Principles

The Competion and Markets Authority has worked with over 70 different stakeholders for their review, including developers of FM technologies, businesses who use FMs, academics in the field of generative AI and consumers.

They looked at three factors: the development of FMs, how FMs are used in other markets and user applications and how consumers experience these AI tools.

Based on the analysis of the information received from stakeholders, the CMA proposes 6 key principles that will help to ensure artificial intelligence technologies are used for the benefit of businesses and consumers, as well as economic growth.

  1. Access: everyone should have ready access to this technology, to avoid monopolies that could prevent others from competing with them.
  2. Diversity: a variety of different business models need to be maintained, including open and closed-source models.
  3. Choice: businesses have to be able to make a choice how to use FMs.
  4. Flexibility: businesses should be able to meet their needs, which means flexibility regarding switching and using multiple FMs is vital.
  5. Fair Dealing: any behaviour that restricts competition, such as self-preferencing, tying or bundling, has to be prevented.
  6. Transparency: the use of FMs has to be stated clearly, and its limitations highlighted.

Accountability on the part of the developers and users of FMs towards consumers is the overarching principle of the CMA’s proposal.

The CMA is now seeking the views of a variety of people in the UK, US and elsewhere of their key principles. An update on their thinking on the principles, how they have been received and adopted, will then be published in early 2024.

It seems clear that the CMA is keen for generative AI to play a part in the UK. But will they also be willing to regulate this new technology, as many have called for? Their report at least shows they are taking the potential risks of AI to competition and consumers seriously.

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The Business4Beginners news team consists of several writers who each have their own unique experience in businesses. By keeping their fingers on the pulse, they bring you the latest in news and trends impacting small UK businesses.
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