France’s Competition Watchdog Scrutinizes AI Tech Giants

France’s Competition Watchdog Scrutinizes AI Tech Giants

France’s competition authority has opened a public consultation exercise on the AI sector to investigate potential dominance by big tech firms.

The authority seeks to understand the strategies that big tech firms have implemented, including the investments they have made within the sector, such as those made by Microsoft into AI startups like OpenAI.

Tech giants like Microsoft, Amazon, and Alphabet will be under scrutiny.

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Unfair competition

The competition watchdog’s move comes on the backdrop of the fast-growing generative AI technology across the globe, following the launch of OpenAI’s ChatGPT in November 2022, to immediate success.

On this account, the watchdog is paying attention to big tech firms like Microsoft, Amazon, and Amazon that have a “stronghold in cloud infrastructure” and the risk of unfairly spreading their hold into AI using their influence.

There are also concerns that big tech firms may create unhealthy competition by hindering new entrants into the AI sector. As such, the competition authority is also scrutinizing investments that were made by big firms into AI startups.

One example is Microsoft’s “backing of OpenAI’s ChatGPT, which raises questions about the influence these partnerships may have on market dynamics.”

According to Wall Street Now, the involvement of big tech firms in investing in AI startups like France’s Mistral AI SAS could signal an environment where new entrants find it difficult to survive or compete with the industry behemoths. These big techs could significantly hinder smaller companies from entering the cutthroat sector.

AI boom versus regulation

The AI sector is projected to continue growing to about a trillion dollars by 2030, according to Statista. With this growth, however, there are concerns that, without clear regulation or oversight, the existing big tech firms may take advantage of their “muscle” to spread their dominance and power into the AI sector.

However, this comes as antitrust agencies are also calling for an “assertive stance against potential anti-competitive behavior.”

The calls also come at a time when the EU finalized their AI laws, the Digital Services Act (DSA), which is pushing for regulation of the sector. Among its key objectives is to ensure the prevention of harmful activities online and the spread of misinformation.

The DSA, together with the Digital Markets Act (DMA), according to the EU, form a set of rules that apply across the region, mainly to create safer digital spaces for users and establish a level playing field fostering competitiveness, growth, and innovation.

Global concerns

Concerns by the French competition watchdog come barely a month after the Federal Trade Commission (FTC) also launched an inquiry into multi-billion-dollar investments made by tech giants into AI startups.

The likes of Microsoft and Amazon are under scrutiny over their investments in startups like Anthropic and OpenAI. The FTC and the French competition authority have similar concerns about “the corral power that tech giants can have over AI.”

Google and Amazon have poured billions of dollars into Anthropic, while OpenAI has also received billions from Microsoft.

These deals, according to the New York Times, have allowed the big tech firms to foster strong ties with smaller competitors while dodging government scrutiny. The FTC inquiry will analyze how these mega-deals affect competition in the sector.

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