AI and Competition Law

Two years after the European Commission presented the first draft of the AI regulation, it can be said that legislative work is entering the home straight. However, this two-year period has shown how revolutionary a technology AI is and the complexity of legal problems it can generate. In addition to issues at the intersection of law and technology in the areas of intellectual property - as shown by recent disputes over Generative AI tools and privacy protection - including the high-profile blocking of Chat GPT by Italy's data protection authority - it is to be expected that the challenges of artificial intelligence will not bypass other areas of law as well. 

The discussion on artificial intelligence issues is taking place in the field of competition law, among others, in digitally intensive markets. AI technology, even though it is still under intense development, fundamentally changes the way companies make decisions, especially in terms of predictive analytics, automation and optimization of the decision-making process. Pricing decisions are made faster, products are more easily tailored to individual consumer needs, marketing activities are better targeted, which affects labor productivity, costs and investments, among other things.

The use of artificial intelligence probably carries as many benefits as it does risks - as AI will for example affect competition in the sphere of innovation and will create a new space for collusive pricing or abuse of dominant positions. Most e-commerce stores use software that allows automatic adjustment of prices to match those offered by competitors, based on huge volumes of analyzed data. Using AI algorithms in such a process can lead to a reduction in competitive pressure and even to collusion. The open question is: in what cases should undertakings be held liable for the operation of artificial intelligence? 

The use of artificial intelligence poses a challenge for both competition authorities and legislators. This problem is already partially addressed by the EU's Digital Markets Act, which will be enforced by the European Commission from May 2023. This regulation establishes strictly defined objective criteria for qualifying a large online platform as a "gatekeeper" i.e. controlling access to information and services.

In contrast, national competition authorities have limited tools in this regard. Similar provisions to the DMA exist in parallel in German national laws, such that the German Federal Antitrust Authority (German: Bundeskartellamt) has already begun to take some steps with regard to AI. Andreas Mundt, president of the Bundeskartellamt, is of the opinion that the development of artificial intelligence will only strengthen the dominance of the largest players, which will harm competition in the online economy. According to Mr. Mundt, in order to develop artificial intelligence, adequate financial and human resources, as well as access to data, are required. The entities that have access to the required data are the same entities that will be subject to the DMA. The Bundeskartellamt, using national regulations, is trying to determine which companies are relevant to cross-market competition and has so far identified Google, Meta and Amazon as such. It is investigating Apple, and last week launched a new investigation- on Microsoft. Among other aims, the German authority wants to investigate the integration of Microsoft services (the Bing search engine) with AI applications, such as the popular Chat GPT chatbot.¹

Artificial intelligence, like most technologies, can bring many benefits, but it can also create or contribute to strengthening market power in digitized markets and raise new antitrust issues. AI can facilitate collusion, lead to abuse of a dominant position, and reduce competitive pressure, which creates many challenges for the existing competition policy regime. It remains to be seen whether new EU regulations, including the DMA, will meet the challenges posed by AI, and how dynamically national authorities will take action in this regard.

^{1. Andreas Mundt’s speech during ABA Antitrust Spring Meeting (2023).}