Mint Explainer: Why is the CCI worried about the impact of artificial intelligence on competition?

It has started the process of commissioning an outer assemblage to survey caller developments and supply insights that volition assistance it make a broad knowing of the evolving scenery of AI and the exertion of AI successful markets successful India. Such inputs volition signifier the Commission’s strategies aimed astatine fostering innovation and just competition.

The regulator is acrophobic that AI could go a cardinal root of competitory vantage for a wide scope of sectors, fundamentally reshaping however firms marque decisions, successful peculiar by generating predictive analytics, automating decision-making and optimising concern processes. “The increasing usage of AI crossed industries has fixed emergence to caller questions astir its implications for competitory dynamics successful markets," the regulator said successful the tender papers inviting agencies to vie for the mandate to undertake the study.

Also Read: CCI to survey AI interaction connected competition

The Commission noted that portion the transformative capabilities of AI person important pro-competitive potential, determination whitethorn beryllium concerns astir imaginable contention risks stemming from its use. It has said that the projected survey volition beryllium a knowledge-building workout to make an in-depth knowing of the emerging contention dynamics successful the improvement ecosystems of AI systems and implications of AI applications for competition, ratio and innovation successful cardinal idiosyncratic industries, it said successful the bid document.

Earlier this year, the European Commission called connected stakeholders to stock their acquisition and supply feedback connected the interaction of AI tools connected contention and however contention instrumentality needs to respond. The Organisation for Economic Cooperation and Development (OECD) has besides turned absorption connected the interaction of AI connected contention successful caller years. 

Mint takes a look astatine the concerns of the contention regulator implicit the rising deployment of AI.

What volition beryllium the absorption of the study?

The bid papers released by the CCI stated that the survey volition absorption connected each aspects related to contention wrong the AI ecosystems (including generative AI ecosystems) and the imaginable interaction of exertion of AI connected competition, ratio and innovation successful cardinal idiosyncratic industries. This includes gaining an knowing of the relation AI plays successful shaping user behaviour and demand-side factors and however AI technologies power the introduction and exit barriers, marketplace concentration, innovation incentives and marketplace powerfulness of businesses.

What does the CCI anticipation to execute from the study?

The CCI expects the survey to assistance it recognize cardinal AI systems and their ecosystem, including the stakeholders, indispensable inputs/resources, worth chains, marketplace structures and parameters of competition. The survey is expected to analyse the scope and quality of AI applications and measure associated opportunities, risks and ramifications from a contention standpoint. 

The CCI hopes the survey volition assistance it ascertain what should beryllium its enforcement and advocacy priorities with respect to AI and its applications successful markets, and besides assistance it recognize the existing and evolving regulatory/legal frameworks governing AI systems and applications successful India and different large jurisdictions.

How tin AI impact competition?

AI tin beryllium utilized by companies to efficaciously collude to maximise profits oregon to aggressively compete. The OECD Business and Finance Outlook 2021 which focussed connected AI successful concern and concern noted that the usage of AI to enactment and automate concern decisions whitethorn “usher successful a caller property for competitory dynamics successful markets. With this caller property whitethorn travel contention harms stemming from collusion, abusive behaviour connected the portion of ascendant firms, oregon mergers".

Collusion refers to immoderate signifier of co-ordination oregon statement among competing firms with the nonsubjective of raising profits to a level higher than those erstwhile they are rivals. While collusion connected prices is rather communal successful galore sectors, agreements tin impact the allocation of antithetic segments of a marketplace among competitors, connected merchandise prime oregon full output, and adjacent harmonising the presumption and conditions to beryllium offered to consumers. For instance, successful the cement market, manufacturers whitethorn collectively hold to rise prices erstwhile request is beardown oregon they whitethorn determine to carve retired markets successful specified a mode that is mutually beneficial.

With AI deployed, it is feared that not lone would instances of collusion among ample companies that run successful aggregate markets emergence but besides go much rewarding for them. This is due to the fact that AI tin rapidly observe deviations from a collusive statement and instrumentality algorithms to instrumentality enactment connected adherence to the agreement. Companies request to pass with each different to instrumentality collusive agreements but tin usage terms signals.

Cartelisation and collusive agreements had go hard for companies erstwhile regulators kept a hawk-eye connected markets and manufacture associations. They would beryllium wary of communications linked to collusive agreements for fearfulness of being caught by the regulator and being penalised.

E-commerce companies person benefitted from large-scale deployment of AI – they are capable to rapidly respond to changes successful markets and set their prices to competitors.

For consumers, the deployment of AI by companies tin beryllium to beryllium a mixed bag. Increased contention among firms tin fetch consumers bully bargains but collusion volition often mean higher prices and/or constricted choice.

Does India modulate the usage of AI?

The ministry of electronics and accusation exertion issued a revised advisory connected regulating the usage of AI connected 15 March 2024. The archetypal 1 kicked up a contention implicit requirements specified arsenic seeking authorities support for the deployment of untested generative AI tools. The revised advisory dropped this request but directed companies to appropriately statement AI-generated content. The advisory lists measures to beryllium observed by companies deploying AI and for curbing the instauration of deepfakes and misinformation.