Fierce Competition, Not Entrenchment
- Markets related to AI technologies (“AI markets”) show vigorous rivalry with rapid entry of new players, multimodal innovation, and constant differentiation.
- Users exhibit low fidelity and multi-homing, intensifying competition.
- Partnerships are a driver to enhance competition.
- Open-source expands opportunities for startups and smaller players.
Infrastructure Is Accessible
- Computing power: cloud services and efficiency breakthroughs reduce costs; smaller-scale models thrive in niche content generators.
- Data: quality matters more than quantity; private data does not guarantee dominance; synthetic and licensed datasets widen access.
- Expertise: talent is mobile and globally distributed; patent data shows that expertise is not concentrated in leading tech firms, with major contributions from China and universities worldwide.
No Proper Incentives for Foreclosure
- Foreclosure would sacrifice upstream income and slow downstream market growth in an uncertain environment about promising niches for higher profitability.
- Corporative markets for GenAI are yet underexplored
AI ≠ Digital Services
- No near-zero marginal costs: inference remains compute-intensive.
- No network effects or lock-in: users switch easily; interoperability is advancing.
- Weak feedback loops: GenAI is not based on exploiting personal data for advertising.
- No orchestrator ecosystems: suppliers compete head-to-head in overlapping market segments and there are no gains from traffic generation.
AI Disrupts Digital Services
Reverse Hypothesis
- Rather than incumbents leveraging digital leadership to control AI, evidence suggests AI is disrupting digital services.
- AI-powered search, productivity tools, and creative platforms increase pressure on entrenched players, pushing them to adapt.
Policy Recommendations
i. Avoid analogies with digital services in antitrust enforcement.
ii. Monitor market evolution with empirical evidence.
iii. Do not discourage efficiency-enhancing partnerships.
iv. Proposals like PL 2768/2022 and PL 4675/2025 must reflect the disruptive impact of AI on digital services.
v. Promote innovation and market entry with targeted incentives.
