By Adriel N. Clayton and Cameron A. Axford

Competition Bureau Introduces AI Discussion Paper

On March 20, 2024, the Competition Bureau of Canada (the “Bureau”) released a discussion paper titled “Artificial intelligence and competition” (the “Paper”). It examines the impact of artificial intelligence (“AI”) on various sectors of the economy and emphasizes the role of governments and policymakers in understanding and addressing its implications. It also explores AI’s potential effects on competition within the framework of Canadian competition law across different market sectors, including mergers, monopolistic practices, cartels, and deceptive marketing practices. It aims to stimulate informed discussion to deepen the understanding of AI’s influence on competition and how the Bureau can promote fair competition in AI markets. While the Paper does not specifically mention the charitable and not-for-profit (NFP) sector, it will be of general interest to the charities and NFPs that use AI in their operations, which is certain to increase as AI technology develops.

The Paper is broken into three sections.

Section 1 explores definitions of AI, and examines the various technologies which employ it. The definition of AI varies across academic, industrial, and governance perspectives, contributing to a lack of consensus. Recently, efforts have been made to establish a comprehensive definition of AI, such as the Artificial Intelligence and Data Act within Canada’s Bill C-27. This governance perspective is crucial for understanding the impacts of AI on competition and marketplace dynamics. The effects of AI on competition are multifaceted, as it can both enhance competition by fostering innovation and efficiency while also raising concerns about the concentration of AI capabilities among dominant companies, potentially leading to anticompetitive behavior. Understanding and evaluating AI’s impact on competition is essential for safeguarding competition in Canada and ensuring benefits for businesses and consumers across various sectors, including AI, by examining specific AI technologies and their applications in relevant markets. Section one then goes on to examine the different categories of AI, most notably, generative AI, which includes the program ChatGPT, which is often what is meant when members of the public refer to AI in the general sense.

Section 2 outlines markets for AI technologies. The production of AI products and services involves participation from various markets, including those for AI infrastructure, AI development, and AI deployment. The markets for AI infrastructure encompass the supply of computer resources and data necessary for AI development. The markets for AI development involve the supply of AI technologies, such as models, algorithms, and architectures. Lastly, the markets for AI deployment pertain to the supply of customer-facing AI products or services.

Section 3 considers the effect that AI could have on economic competition in Canada. It acknowledges that, “[c]ertain characteristics of AI markets could affect the degree to which market concentration and market power may arise and develop.” Negative possibilities include the high barrier to entry of the AI development market, using AI technologies to identify and implement predatory, exclusionary, or discriminatory conduct, using AI technology to identify and implement opportunities for cartel agreements, and using AI for deceptive marketing purposes, all of which would limit competition and harm consumers. Positive possible aspect of AI on competition are the ability for AI to differentiate similar products via their inclusion in said product – setting them apart from competitors, and “network effects” which would see technologies create more downstream opportunities, all of which would increase competition. Ultimately, the Competition Bureau advocates that all levels of government consider policy which champions competition, recommending that the Competition Policy Assessment Toolkit be used.

The Paper offers an overview of AI’s impact on competition and the technologies integrated into AI products and services, serving as the current set of considerations monitored by the Bureau. It seeks feedback from stakeholders on potential competition impacts in Canadian markets and any additional considerations relevant to the Bureau’s attention. This would be a good opportunity for the charitable and NFP sectors to provide feedback concerning how AI might impact competition within their respective sectors.

​Read the April 2024 Charity & NFP Law Update