The European market for generative artificial intelligence (GenAI) is fiercely competitive, as highlighted in a recent study by Copenhagen Economics. The study unveiled a vibrant and dynamic landscape characterized by numerous new market entrants, diverse business models, and notable success stories originating from Europe.
This assessment arrives at a pivotal moment, coinciding with the announcement of plans by various national competition authorities across the European Union to scrutinize the competitive dynamics within the generative AI market. Despite this, the authors asserted that, as of now, there are no discernible competition issues within the market that would necessitate regulatory intervention.
The Computer & Communications Industry Association (CCIA Europe), which commissioned the independent study, emphasized that any future competition-related concerns should be evaluated in light of the EU's existing competition framework or the Digital Markets Act, rather than adding new layers to the regulatory framework for AI.
According to the report, there are currently no barriers to entry into Europe's generative AI market, which includes a specific subtype of AI foundation models used to create new content such as text, audio, video, and computer code from scratch.
The authors highlighted the large and growing number of foundation model developers active in the EU, with many startups competing directly with established players. Leading European developers, including Mistral AI and Aleph Alpha, have also achieved success.
Partnerships between generative AI developers and large digital players can be mutually beneficial, but they must be assessed individually, according to CCIA Europe. To avoid tie-ups that result in a merger-like situation or competition distortion, the level of control a large player has over a startup should be central to each assessment.
All in all, Europe's generative AI scene is highly competitive and poised to significantly boost the EU economy in the near future. Thus, regulatory intervention in generative AI would be premature, slowing innovation, growth, and limiting consumer choice.
Aleksandra Zuchowska, CCIA Europe’s Competition Policy Manager, commented on the recent study, saying,
“This new study shows that Europe’s market for generative AI is highly dynamic, and that concerns expressed by some competition authorities are not supported by market trends.
“Allowing competition to flourish in the AI market will be more beneficial to European consumers than additional regulation prematurely being imposed, which would only stifle innovation and hinder new entrants.
“Instead, the impact of new AI-specific rules, such as the EU’s recently adopted AI Act, needs to be closely monitored to avoid overburdening innovative AI developers with disproportionate compliance costs and unnecessary red tape.”
