AI boom threatens harm to consumers and businesses, watchdog warns

The UK competition watchdog has expressed fears that consumers face being harmed or misled by AI products.

The Competition and Markets Authority (CMA) has set out guidelines to prevent artificial intelligence models like ChatGPT from being dominated by a small number of large tech firms, to the detriment of consumers and businesses.

It says AI developers must be accountable for their output, while access to services, diversity within the market, choice and flexibility are also vital. It will also push for fair dealing and transparency.

Its report warns that if competition is weak or consumer protection law is not followed, consumers and businesses could be damaged.

It warns that people could be exposed to significant levels of false and misleading information and AI-enabled fraud.

In the longer term, a handful of firms could use foundation models – AI systems with broad capabilities that can be adapted to a range of different, more specific purposes – to gain or entrench positions of market power and fail to offer the best products and services and/or charge high prices.

The CMA said competitive and responsible well-regulated AI markets could result in the better products and services being created, as well as easier access to information, scientific and health breakthroughs and lower prices.

CMA chief executive, Sarah Cardell, said there was a risk that the use of AI could be dominated by a few players who exert market power that prevents the full benefits being felt across the economy.

“The speed at which AI is becoming part of everyday life for people and businesses is dramatic. There is real potential for this technology to turbocharge 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.

“In rapidly developing markets, it’s critical we put ourselves at the forefront of that thinking, rather than waiting for problems to emerge and only then stepping in with corrective measures.”

The CMA said the review was only an initial one and issues such as copyright, intellectual property, online safety, data protection and security would be examined in future reports.

The UK is to host world leaders at a summit in November to encourage responsible development of AI. The summit will take place at Bletchley Park, where the German Enigma code was broken during the Second World War.