What's The Impact of AI on Market Competition? CCI Wants to Know

Artificial intelligence (AI) has emerged as a game-changer in today's market, wielding a dual impact—both beneficial and detrimental. The Competition Commission of India (CCI) has initiated the process to conduct a groundbreaking study to assess the influence of AI on competition dynamics. The study, aimed at understanding the multifaceted implications of AI applications, invites proposals to delve into its transformative capabilities and potential competition risks.

In this regard, the CCI has invited bids from agencies and institutions to conduct detailed study of this. The last date for submission of proposals is 03.06.2024 (by 05:00 PM).

What Does CII Intend To Assess With This Study?

The CCI's call for proposals signals a significant step towards comprehending the intricate relationship between AI and competition. The objectives outlined in the study encompass a broad spectrum of inquiries, ranging from dissecting AI ecosystems to scrutinizing competition issues arising from its utilization.

The study's scope extends to various key areas, including the analysis of AI ecosystems, market sizes, entry barriers, revenue streams, and AI's application across different user industries. Moreover, it aims to explore emerging competition issues such as anti-competitive strategies facilitated by AI, novel forms of collusion, and the impact of bias in AI algorithms on competition dynamics.

"The Competition Commission of India (CCI) will launch a Market Study on Artificial Intelligence (AI) and Competition to understand the transformative capabilities of AI that have significant pro-competitive potential, as well as competition concerns emanating from the use of AI. The proposed study will be a knowledge building exercise to develop an in-depth understanding of the emerging competition dynamics in the development ecosystems of AI systems and implications of AI applications for competition, efficiency and innovation in key user industries," CCI said in a statement.

How Is CCI Incorporating Stakeholder Perspectives?

To ensure a comprehensive understanding, the study intends to engage with a diverse array of stakeholders, including technology firms, startups, researchers, investors, and industry associations. By incorporating insights from these stakeholders, the study aims to capture a holistic view of the AI landscape and its implications for competition.

According to the CCI’s Request for Proposal (RFP), AI’s transformative capabilities offer substantial pro-competitive potential on both the supply and demand sides. However, concerns exist regarding potential competition risks associated with AI usage.

Addressing Concerns and Identifying Opportunities

While acknowledging AI's potential to foster innovation and efficiency, the study also seeks to address concerns regarding its adverse effects on competition. Issues such as biased algorithms, collusion facilitated by AI, and the impact on consumer welfare will be thoroughly examined to guide regulatory decision-making effectively.

The study will delve into how AI-driven personalized recommendations, services, and pricing affect consumer welfare and choice. It will also scrutinize the synergies and risks linked with mergers and acquisitions involving AI-capable firms, identifying crucial factors for assessing competitive effects.

Additionally, the study will examine new forms of collusion enabled by AI, like self-learning algorithms, and assess if bias in AI algorithms impacts competition. This initiative follows CCI's investigation into certain fintech players to gauge the impact of their technology use on competition, amid ongoing regulatory challenges in the industry.

The Road Ahead

The CCI's proactive approach in commissioning this study underscores the significance of understanding the intersection of AI and competition in today's market landscape. By fostering dialogue, gathering empirical evidence, and engaging with stakeholders, the study endeavors to pave the way for a competitive environment conducive to innovation and fair competition.

As AI continues to reshape industries and redefine competitive dynamics, it becomes imperative for regulatory bodies to stay abreast of these developments. The CCI's initiative to conduct a comprehensive study on AI and competition marks a pivotal moment in the regulatory landscape, offering insights that will shape future policies and practices. As the deadline for proposals approaches, anticipation builds for the insights and recommendations that will emerge from this landmark study.

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