The European Commission recently published a policy brief addressing the emerging impact of generative AI and Virtual Worlds on multiple industries. Generative AI and Virtual Worlds technologies are set to have a profound impact on many sectors. While they will bring many positive changes, they could also raise significant competition concerns.
In the field of Generative AI, the report prepared by the Directorate General for Competition and Directorate for Information Technology, Communication and Media, notes the risk of market concentration due to the significant control that a few major players, like Google, Amazon, and Microsoft, have over critical inputs (data, AI chips, and cloud infrastructure) and downstream services (AI products). Their vertical integration could stifle competition, limit market entry for smaller players, and lead to potential anticompetitive practices.
Similar to Generative AI, the report expresses concerns over market concentration in Virtual Worlds. Large players with significant control over foundational technologies—such as cloud services, computing power, and data—could dominate these emerging markets. This concentration poses risks of anti competitive behaviour, where a few companies may establish control over critical inputs and services necessary for developing and operating Virtual Worlds.
The report highlights potential risks of anti competitive behaviour in the Virtual Worlds including:
- Exclusive access to infrastructure: Large players could restrict access to essential cloud infrastructure or software, preventing competitors from building or deploying their own virtual environments.
- Vertical integration: Companies that control both the infrastructure and the Virtual Worlds themselves might use their market power to limit competition by favouring their own platforms and services over those of rivals.
- Exclusivity agreements: Companies could enter into exclusive agreements that lock developers or users into specific platforms, limiting choices for consumers and other market participants.
The issue of interoperability is critical for the development of Virtual Worlds. If dominant platforms control access and set standards for interoperability (or lack thereof), they could stifle competition by locking users and developers into their ecosystems. The report suggests that a lack of interoperability could become a significant barrier for smaller competitors seeking to enter the market or expand their offerings.
The report suggests that certain collaborative models and open platforms in virtual worlds could foster innovation and competition. Encouraging standards for interoperability and open access to essential infrastructure could help maintain a more dynamic and competitive market.
Given the early stage of Virtual World technologies, the Commission emphasises the need for long-term monitoring of how competition unfolds in this space. Market dynamics may change rapidly, necessitating a flexible regulatory framework that can adapt to emerging challenges in the Virtual World market.
Together, generative AI and virtual worlds will create immersive and intelligent interactions which will have an impact on many sectors like manufacturing, retail, finance, education, energy, healthcare. Many positive changes of course, but also some concerns may arise in connection with key inputs as it is stated in the policy brief document, around data, AI accelerators chips, computing infrastructure, cloud capacity and technical expertise for example.
For more information please read the full policy brief here