Summary of the Conference on AI and Market Regulation
Key Note
AI is a game changer challenging traditional business models from various angles according to Constanze Buchheim, a business angel for start-ups and Member of the German Monopolies Commission. AI requires massive resources and feeds into winner-takes-most logic. U.S. and Chinese Big Tech firms have both the resources and the power to make necessary investments whereas the EU economy remains fragmented and largely depends on Big Tech resources. Thus, scale is both a precondition for progress and problem.
Panel 1
Does Europe have chances in the race for AI? The views of market participants are mixed. Europe is strong in research but the markets are driven by developments in the U.S. and China: “There is no European AI” (Greg Wheeler, Frankfurt School). However, new entry points may emerge as necessary resources across the AI tech stack become commoditized (Johannes Daxenberger, Summetix). Big Tech may play a supporting role, but Europe still has to do its homework, particularly regarding regulation (Thoralf Schwanitz, Google).
Impulse
The interplay between AI regulation and competition is complicated according to Frederick Göhsl (Univ. of Münster): The rapid development of AI makes it difficult to develop balanced regulation. AI transforms the entire economy. Regulating AI interferes with competition in this economy. Well-intentioned regulation can unintentionally reduce the competitiveness of market participants. Feedback loops may ensue. Thus, high-risk AI regulation disproportionately affects SMEs, but concentration in high-risk AI markets increases systemic vulnerability. Hence, competition may operate as a self-enforcing quality control for AI. A second challenge arises from the fact that platform companies are particularly well positioned to develop foundation models. Regulation may favor interoperability and open source solutions in order to prevent the concentration of power.
Panel 2
The panel discussed what would be the consequences if European regulations such as the AI Act and the DSA did not exist. It further explored the various regulatory approaches regarding AI – horizontal and risk based vs. sector-specific, regulatory sandboxes, self-regulation – and whether they are up to coping with AI market disruptions. Another topic where the challenges and chances of enforcing EU rules effectively in a changing market and in view of global implications. The panel was chaired by Maren Wöbbeking (Univ. of Osnabrück) and comprised Simon Gerdemann (Univ. of Göttingen), Eric Hilgendorf (Univ. of Würzburg), Bernd Holznagel (Univ. of Münster), Jan Oster (Univ. of Osnabrück), and Frederick Göhsl.
Panel 3
China and the U.S. are the main rivals in developing AI to boost their economies, according to Prof. Jiang Shan (UIBE). China’s industrial policy is directed at parallel risk mitigation and the promotion of development. Industrial policies have shifted from "vertical development" to "horizontal empowerment". In Japan, the industry needs to catch up regarding AI, but central industrial policy measures have been of limited success so far, according to Masako Wakui (Kyoto University). The power struggles between the regulators responsible for economic development push industrial policy into different directions, according to Yong Lim (SNU).
Panel 4
As AI is transforming the entire economy, comprehensive regulation is needed to avoid and reduce market failures, according to Wolfgang Kerber (Bonn Univ.). Some lessons could be learned from competition enforcement in digital markets in previous years. With AI, however, the question becomes increasingly relevant whether bigness or the power to control market dynamism is the problem (Juliane Mendelssohn, TU Ilmenau). Many new legal questions emerge AI gives rise to and blends issues under competition, data protection, cybersecurity, and potentially other rules (Andreas Engel, Univ. of Heidelberg).