The Competition and Markets Authority (CMA) has released a report on its preliminary review of foundation models (FMs) and proposed guiding principles to ensure that responsible development and deployment of FMs prioritise consumer protection and healthy competition.

Foundation models, as described by the CMA, are AI systems with vast capabilities that can be tailored for varied, specific uses. Notable advancements in FMs, illustrated by applications like ChatGPT and Office 365 Copilot, emphasise their capacity to stimulate innovation and boost economic growth. The adaptability of these AI models could significantly reshape numerous industries, impacting daily life, businesses, and the UK’s economic landscape.

The CMA’s findings accentuate the positive outcomes for both individuals and businesses if FMs are aptly utilised. This includes the introduction of superior products and services, increased information accessibility, advancements in science and healthcare, and cost reductions. A positive effect of FMs could be levelling the playing field, allowing a broader spectrum of companies to successfully compete against established market giants. Such thriving competition and innovation would uplift the entire economy, augmenting productivity and spurring economic expansion.

Conversely, the report also warns of potential pitfalls if there’s a lack of competition or if developers overlook consumer protection laws. This could result in the proliferation of misleading information, AI-assisted fraud, and a few dominant firms charging exorbitant prices or providing subpar products and services.

The report clarified that issues like copyright, online safety, data protection, and security, although vital, were not part of this review, which was centred on competition and consumer protection.

The principles proposed by the CMA to guide the future of FMs are:

  • Accountability – FM developers and deployers are accountable for outputs provided to consumers.
  • Access – ongoing ready access to key inputs, without unnecessary restrictions.
  • Diversity – sustained diversity of business models, including both open and closed.
  • Choice – sufficient choice for businesses so they can decide how to use FMs.
  • Flexibility – having the flexibility to switch and/or use multiple FMs according to need.
  • Fair dealing – no anti-competitive conduct including anti-competitive self-preferencing, tying or bundling.
  • Transparency – consumers and businesses are given information about the risks and limitations of FM-generated content so they can make informed choices.


In the forthcoming months, the CMA is set to engage with stakeholders from the UK and beyond to refine these principles further. The goal is to collaboratively steer the development of these pivotal markets in a direction that promotes healthy competition and ensures consumer protection.

Sarah Cardell, the CMA’s CEO, emphasised the remarkable pace at which AI is becoming integral to both businesses and daily life. She stressed the importance of proactively shaping the market to ensure that AI’s potential benefits are maximised, while also highlighting the CMA’s readiness to intervene if required.

An update on the CMA’s thinking, including how the principles have been received and adopted, will be published in early 2024. For more information, visit the artificial intelligence case page.

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