The UK’s market watchdog has proposed guiding principles to safeguard consumer protection and healthy competition at the heart of responsible development and use of foundation models.

Foundation models (FMs), are AI systems with broad capabilities that can be adapted to a range of different, more specific purposes.

Recent developments in FMs and their rapid adoption across several user applications (such as ChatGPT and Office 365 Copilot), highlight the potential for AI’s continued growth but also give rise to several conflicting avenues for data protection, safe and responsible development, and fair market competition.

FMs have the potential to transform how we live and work, as well as a range of industries – these changes can happen quickly and have a significant impact on people and businesses, and the UK economy. The UK government appears aware of the velocity AI’s development is traveling at, and yet is still to put out more formal regulations on its emergence.

“The speed at which AI is becoming part of everyday life for people and businesses is dramatic,” Sarah Cardell, CEO of the CMA said. “There is real potential for this technology to turbo charge 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 or is dominated by a few players who exert market power that prevents the full benefits being felt across the economy.”

The Competition and Markets Authority (CMA) has released a report highlighting how people and business could stand to benefit if the development and use of FMs works “well” and offers fair competition enabling a more equitable distribution of innovation.

In the report, the CMA stressed the importance of fair access to the key inputs required to develop FMs, particularly data or computing power.

The FM market is more likely to trend toward positive outcomes, the CMA stipulated, if initial entrants continue to face competition from new entrants, and their leading position in other markets does not enable them to unduly restrict access to competing firms.

Further, a range of available FMs, from open-source to closed-source models, will lead to better competition outcomes in favour of innovation and better consumer choice.

A well-functioning market could lead to new and better products and services, easier access to information, scientific and health breakthroughs, and lower prices.

The report, however, also cautions that if competition is weak or developers fail to heed consumer protection law, people and businesses could be harmed. For example, people could be exposed to significant levels of false and misleading information and AI-enabled fraud.

In the longer term, the CMA warns that a handful of firms could use FMs to gain or entrench positions of market power and fail to offer the best products and services, or charge high prices.

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In order to mitigate market harms and increase market competition, the CMA released seven principles for AI FMs to follow as they are developed.

1. Accountability – FM developers and deployers are accountable for outputs provided to consumers.

2. Access – Companies should provide ongoing and ready access to key inputs of FMs without unnecessary restrictions.

3. Diversity – Business models should be diverse, and include both open and closed models.

4. Choice – There should be sufficient choice for businesses so they can decide how to use FMs.

5. Flexibility – Businesses and consumers should have the flexibility to switch and use multiple FMs according to their need.

6. Fair dealing – Businesses developing FMs must not conduct anti-competitive practices, including anti-competitive self-preferencing, tying, or bundling.

7. Transparency – Consumers and businesses should be given information about risks and limitations of FM-generated content so they can make informed choices.

“The CMA’s role is to help shape these markets in ways that foster strong competition and effective consumer protection, delivering the best outcomes for people and businesses across the UK,” Cardell said. “In rapidly developing markets like these, 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.”

“That’s why we have today proposed these new principles and launched a broad programme of engagement to help ensure the development and use of foundation models evolves in a way that promotes competition and protects consumers. While I hope that our collaborative approach will help realise the maximum potential of this new technology, we are ready to intervene where necessary,” she continued.

The CMA is set to engage with a range of stakeholders across the UK and internationally, to develop these principles further and foster effective competition.