It’s good to get a gold star on your homework, particularly when that homework relates to the future of AI regulation in the UK.
On 1 June 2023, the CMA responded to the UK government’s consultation on its white paper AI Regulation: A Pro-Innovation Approach; the CMA endorsed the government’s approach and key messages in the white paper. The CMA also used its response as an opportunity to emphasise the role of competition in the government’s AI agenda and how the CMA is well-prepared to tackle new challenges arising out of digital markets.
The Government’s white paper, as discussed in a previous post on The Lens, proposed a regulatory framework for AI based on a “common-sense, outcomes-oriented” approach. The CMA’s response sets out its regulatory role and the potential risks for AI in this context including enhancing incumbency, giving consumers false or misleading information, or insufficient transparency for consumers and businesses.
Key messages from the CMA’s response:
- The CMA supports the government’s approach of placing the principles on a non-statutory basis in the first instance so effectiveness can be flexibly monitored
- The CMA is already considering how each of the principles outlined in the white paper apply to current and future CMA work. And how the CMA might be able to provide guidance on how it will interpret the principles to give firms further clarity. Possible interactions with the principles include:
- Safety, security and robustness: The CMA will look at this through the lens of acting to prevent harm to competition and consumers, including regarding infringement of consumer protection law. The CMA emphasises that work in this area is ongoing, including cases against Amazon and Google in relation to possible breaches of consumer protection law.
- Appropriate transparency and explainability: Through the lens of consumer law, this will focus on ensuring consumers have information on how companies’ use of AI influences their decision-making and ensuring that consumers are not mislead in their decision-making online. Transparency also interacts with the CMA’s remedies powers and may be relevant when considering the application of the conduct requirement objective ‘Trust and Transparency’ as set out in the Digital Markets, Competition and Consumers Bill.
- Fairness: The CMA acknowledges that It is not best placed to tackle all potential biases that may result from AI, but consumer or competition law may play into this in the context of price discrimination or exclusionary practices.
- Accountability and governance: The CMA is able to hold firm’s responsible for the effects of AI within the CMA’s remit. However, the CMA does acknowledge that there may be some novel challenges regarding the application of competition law to AI, including due to the potential for tacit algorithmic collusion. Nonetheless, the CMA also emphasises that it has established expertise around digital markets, which will apply to AI, including through its DaTA and digital markets units.
- The CMA recognises the need for central coordination to support the implementation, monitoring and development of the framework and promote coordination and coherence across regulators. The CMA explicitly urged the government to make use of existing initiatives, such as the Digital Regulation Cooperation Forum, to “test how existing functions could adapt in response to the challenges posed by AI, and enable further innovation and growth.”
Finally, the CMA reiterates that it is well-prepared for the impact of AI on competition, stressing in its response that it is already looking into AI foundation models (including large language models), which are discussed in the White Paper. As discussed in a previous post on The Lens, the CMA is aiming to publish its findings on the likely implications of the development of AI foundation models for the structure and functioning of competition and for consumer protection in the UK in September 2023.
AI is creating many opportunities for businesses...But we also see potential risks that AI can pose. To name a few examples in our remit, these include enhancing incumbent firms’ ability to self-preference at the expense of new innovators, giving consumers false or misleading information, or insufficient transparency for consumers and businesses. We are at a pivotal moment in the development of a transformative technology.