Regulatory bodies in Japan, South Korea, and Australia are delving into the competitive landscapes of burgeoning generative AI markets, amid burgeoning concerns of market domination by a select few companies and arising anti-competitive behaviours. The rapid evolution and integration of generative AI technologies have prompted these nations to scrutinise how the market operates, ensuring fairness and robust competition.

Japan's Initiative: A Comprehensive Analysis

The Japan Fair Trade Commission (JFTC) launched a detailed market study in October 2023, to gauge the competition within different layers of the generative AI sector: infrastructure, model, and application. Recognising a projected average annual growth rate of 47.2% in Japan's generative AI market from 2023 to 2030, the JFTC aims to establish if adjustments to its Antimonopoly Act and competition policy might be warranted.

In the infrastructure layer, Japan is assessing NVIDIA's dominance in GPUs, and the disparities in training data available to international versus Japanese models. Challenge areas include the difficulty in securing AI talent against global financial competition and access to cutting-edge technology.

In terms of model development, while international large language models (LLMs) lead with multilingual capabilities, Japanese firms are carving niches through language-specific or industry-centric LLMs. The application layer analysis focuses on potential barriers businesses encounter while creating applications from diverse AI models.

Key concerns for the JFTC include the monopolistic acquisition of GPUs that could hinder new market entries and result in biased service provision favouring a company's own AI models. Additional apprehensions include binding AI model usage to service provision, parallel ordering amongst AI firms that restrict competition, and the potential 'cornering' of expert AI talent via partnerships analogous to business acquisitions.

South Korea's Inquisitive Approach

Since August 2023, the Korea Fair Trade Commission (KFTC) has been investigating the AI landscape, examining the roles of 50 domestic and international AI players. This inquiry will assess business practices within the AI sector, focusing on unfair trade operations and recognising barriers that might stifle market entry due to concentrated market power.

Similar to Japan, South Korea views generative AI as a pivotal economic propellant while acknowledging the risks posed by its capital-intensive nature. Concerns involve a limited number of powerful corporations potentially monopolising the market, with reduced access to critical AI development resources for smaller or newer entities. By leveraging its Monopoly Regulation and Fair Trade Act, the KFTC intends to foster an environment conducive to innovation alongside ensuring fair market competition. An AI Policy Report is expected to be released by the end of 2024.

Australia's Continued Observance

Australia's competition authority, the Australian Competition and Consumer Commission (ACCC), is maintaining a vigilant watch over global developments in AI. The upcoming tenth report of its Digital Platform Services Inquiry, slated for March 2025, aims to explore generative AI's competitive facets, focusing on potential barriers and the expansive market power of large digital platforms through the integration of LLMs.

Gina Cass-Gottlieb, Chair of the ACCC, highlighted the rapid expansion and adoption of generative AI, noting both the opportunities and challenges these technologies present. Her statement underscores ongoing vigilance regarding potential significant implications for competition practice.

Collectively, these regulatory insights from Japan, South Korea, and Australia illustrate a growing global awareness of the competitive dynamics within the AI industry, striving to ensure market environments remain fair and conducive to innovative growth.

Source: Noah Wire Services