Artificial Intelligence and Market Disruptions

The rapid adoption of artificial intelligence (AI) has created significant disruptions in the tech space. A prime example is ChatGPT, which achieved over one million users globally in just five days, a pace unmatched by previous technologies like telephones or even the internet.

Technological Advancements

• Speed of Adoption: ChatGPT's rapid global user adoption illustrates the accelerated pace of modern digital technology.
• Complementary Ecosystem: The existing ecosystem supports AI through advanced chips, superior algorithms, abundant storage, and comprehensive datasets.

Strategic Partnerships and Market Dynamics

Firms like Airtel are leveraging AI to explore market dynamics, even as regulatory laws attempt to catch up.

• Airtel and Perplexity Partnership:
  • Airtel, India's second-largest telecom provider, offers a free one-year subscription to Perplexity’s AI-powered search engine to its 390 million users.
  • This partnership allows wide access to advanced AI models, while providing Perplexity with massive data access, increasing its market presence.
• Competition Concerns:
  • Exclusive partnerships may democratize access to AI tools but raise competition concerns due to the network effect.
  • Telcos acting as gatekeepers can impact market competition, consumer choice, and service quality.

Regulatory Challenges and Historical Context

• Precedents:
  • Past issues include the European Commission's 2004 ruling against Microsoft for bundling its Media Player, leading to a requirement to offer a version without it.
  • In India, Facebook’s Free Basics faced regulatory action for privileging certain websites, leading to a ban and the establishment of net neutrality principles.
• Current Regulatory Actions:
  • A Standing Committee report urges proactive regulation against tech gatekeepers and practices like tying and bundling.
  • Big Tech resists regulation, emphasizing the need for competitive balance in the long term.

Implications for the Future

• Transparency and Assessment: Market authorities must ensure transparency in partnerships and rigorously assess potential anticompetitive impacts.
• Long-Term Concerns: The allure of "free" access should not overshadow the need to maintain competition and consumer choice in the digital economy.

Concluding Thoughts

While AI partnerships like those of Airtel and Perplexity may seem beneficial, they pose significant challenges to market competition and regulation. It is crucial for authorities to remain vigilant and ensure these alliances do not stifle the burgeoning digital economy.

Contributors: Rajat Kathuria (Dean, School of Humanities and Social Sciences, Shiv Nadar University) and Isha Suri (lawyer and researcher, Global AI and Market Power Fellow).