G7 Adopts Communique to Regulate Tech Giants over Competition Issues Related to AI

The Yomiuri Shimbun

18:21 JST, November 9, 2023

Antitrust authorities from the G7 adopted a communique Wednesday expressing concern that tech giants hinder competition in the field of artificial intelligence.

The Japan Fair Trade Commission and its counterparts in the G7 met in Tokyo and adopted the Digital Competition Communique, which warns that tech giants are controlling resources essential to developing generative AI, urging greater cooperation to address the risks.

Because tech giants have resources such as data, workforces with special skills and cloud services needed to develop AI, the communique warns of the danger of anti-competitive behavior that could slow down innovation.

U.S. tech giants Amazon, Microsoft and Google hold large market shares in cloud services, which are the basis for allowing generative AI models to function. Startups have to use their services, too.

The act of giving preference to its own or affiliated entities’ generative AI when providing cloud services is unfair to startups and can be considered problematic under U.S. antitrust laws, according to the Federal Trade Commission.

When tech giants obligate firms to purchase generative AI services together with cloud services is considered a form of bundling that might violate the law as well, according to the FTC.

“Incumbent tech firms that control these key AI inputs or adjacent markets could harm rivals with anticompetitive conduct such as bundling, tying, exclusive dealing, or self-preferencing,” the communique says.

To address these concerns, the communique stresses the need to improve ways to grasp the current situations to understand in advance factors that may impede competition in the AI industry, as well as to improve cooperation among G7 members.

“G7 competition authorities and policymakers will continue to share updates on approaches to promoting competition in digital markets, including legal reforms, policy advances, institutional changes, and enforcement developments,” the communique says.

G7 antitrust authorities have met annually since 2021, previously publishing documents summarizing each member’s efforts. This time, the G7 adopted a communique to clarify its collective stance.

A main topic of conversation among the meeting participants was generative AI models, which have rapidly spread around the world since the end of the last year. The authorities especially found it problematic from the viewpoint of antitrust laws that tech giants can expand their market share in generative AI or exclude competitors by using their market dominance.

Governments around the world have been working together to regulate tech giants, believing that the problems surrounding them cannot be handled by one government.

Japan has also been working to set the direction of tech giant regulations through cooperation with the European Union, which has taken the lead in regulating information technology firms. Rules include requiring tech giants to allow customers to buy apps from stores of other companies.

“There was some discussion that will help us in our efforts to create new regulations,” a Japanese government source said.

The G7 communique stresses that it is essential to promote close international cooperation among members to deal with the problem of tech giants. It says that the G7 will share their knowledge on regulatory methods and AI.

The unity of the G7 is being tested to determine how to deal with the adverse effects of the dominance of tech giants.