The Japan Fair Trade Commission (JFTC) has initiated a major effort to address competition concerns in the rapidly evolving generative AI market. With the publication of a discussion paper titled “Generative AI and Competition,” the JFTC is calling for feedback from industry experts, businesses, and other stakeholders to better understand the potential impacts of generative AI on competition in Japan.
Generative AI, which includes technologies capable of creating text, images, audio, and video based on user prompts, has seen massive growth in recent years. Since the release of ChatGPT by OpenAI in 2022, generative AI has become a global phenomenon, revolutionizing industries and daily life. In Japan, the market for generative AI is still in its early stages, valued at approximately 118.8 billion yen as of 2023. However, this market is expected to grow exponentially, reaching 1,777.4 billion yen by 2030.
While generative AI promises significant benefits for productivity and innovation, the JFTC is keenly aware of the risks and challenges it poses, particularly in terms of fair competition. The discussion paper outlines several key areas of concern, including the concentration of critical resources like computing power, data, and specialized talent, which are essential for developing high-performance AI models. These resources are currently dominated by a few major players, such as Nvidia, which holds 80% of the global market for GPUs, a crucial component for AI development.
The JFTC also highlights concerns related to data access. As generative AI models rely on vast amounts of data for training, the availability of high-quality data, especially in the Japanese language, is limited. This could lead to a situation where a few companies gain a competitive advantage by controlling access to essential training data, stifling innovation and competition from smaller players.
Another issue raised in the paper is the competition for specialized talent. The development of generative AI models requires highly skilled researchers and engineers, but the talent pool in Japan is limited. Big tech companies, with their financial resources, are able to attract and retain the best talent, potentially leading to a concentration of expertise within a few dominant firms. This, in turn, could make it difficult for smaller companies to compete in the generative AI space.
The discussion paper also touches on other competition-related issues, such as self-preferencing, where companies with a dominant position in AI models could favor their own products in the results generated by their AI systems. Additionally, the JFTC is concerned about the potential for anti-competitive practices in the cloud services market, which is essential for the development and deployment of generative AI models. Many AI developers rely on cloud services provided by big tech companies, which could create barriers to entry for new players.
The JFTC is inviting feedback on these and other issues outlined in the discussion paper. Stakeholders have until November 22, 2024, to submit their comments. The feedback gathered will be used to guide the JFTC’s future actions, including potential regulatory measures to ensure fair competition in the generative AI market.
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