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AI or Artificial Intelligence: A new Challenge for the Competition System in India

The more we enter into the Era of Digitization, the uses of AI, Big Data, Internet of Things, and Machine Learning is getting increase day by day. A small data published by Gartner in 2019 shows that uses of AI in industries has increased from 10% in 2015 to 37% in 2019. Which proves that the AI industry has seen over 270% of growth in last 4 years.

And the Covid-19 and worldwide lockdown play as a gasoline in this booming industry. Fortune Business in 2020 forecast that this industry will be valuation of $ 266.92 billion by 2027. And this booming industry create a huge challenge for the CCI to protect the end users from abuse of dominance. Because, there are very few companies are available there and they almost create a monopoly in this industry.

Competition law is a branch of law that assists in regulating and restoring market competition by preventing corporations from engaging in anti-competitive behaviour. Machines are gradually replacing physical labour in the workplace as the world moves toward the adoption of artificial intelligence in all spheres.

This has resulted in the emergence of an uncertain market rivalry for the time-consuming adjustment to a new normal. The market is buzzing with speculation over whether AI will completely replace human labour or whether both will coexist in the future. Globally, AI is accompanied by digitization.

This has also increased the economy's upward tendency. The disadvantage of digitalization is that organisations and startups now have access to a massive amount of important data. In simple terms, big data is a significant volume of varied data that, after being acquired at a rapid rate, is processed by software computations that aid in the creation of databases that are unique in their own right. This database is commercially valuable in and of itself. Data protection regulations apply to the entire data processing process and the generation of Big Data in the form of software.

What is AI, Big data, Machine Learning, IoT:

Artificial intelligence or AI is the simulation of human intelligence processes by machines, particularly computer systems. Expert systems, natural language processing, speech recognition, and machine vision are examples of AI applications.

Big data is a field that deals with methods for analysing, methodically extracting information from, or otherwise dealing with data volumes that are too large or complicated for typical data-processing application software to handle.

Machine learning is an artificial intelligence (AI) technology that allows computers to automatically learn and improve from experience without being explicitly designed. Machine learning is concerned with the creation of computer programmes that can access data and utilise it to learn on their own.

Whereas, The Internet of Things, or IoT, refers to the billions of physical gadgets that are now connected to the internet and collecting and exchanging data throughout the world.

What are the threats from Artificial intelligence to the Competitions?

With the growing number of using AI in the industry as well as increasing dependency of end users upon this, create a huge threat of abuse of position in the market as the majority of these products are owned by very few giants, who almost create a monopoly in their respective way.

Besides that, Artificial intelligence is a concept that has recently gained popularity in a variety of fields. The German Cartel Office and the French Competition Authority had released a paper in a recent year that outlines the challenges and risks that competition and antitrust laws face as a result of the use of algorithms.

According to those publication here are four main issues related to AI:

Artificial Intelligence can act as a facilitator in any market's horizontal collusion. This means that if a market high price is artificially created, the sole price setting will not cause competition issues. Instead, this increase in price can aid in determining the efficiency of businesses in a market.

The next question is whether competitors are aware of the anti-competitive tactics taken by the market's third party. If that's the case, can they predict it and act accordingly?
How will businesses assess what constitutes a reasonable standard of care and how they will monitor the employer's activities in the workplace?The fourth issue raises concerns about how to deal with problems that arise as a result of a company's algorithmic operation.

Besides that here are some other potential threats:

Technology markets are constantly changing and evolving as a result of fast innovation. For companies attempting to exercise market power through dominance, the constant and rapid speed of technical change can be a hindrance. In certain marketplaces, a firm's market strength may prove to be ephemeral.

Players in the digital domain may offer a wide range of new and customised services thanks to business models that rely on massive data collecting and processing in near real-time. 15 However, the benefits of technology are accompanied by the risk of market dominance by various companies as a result of innovation. AI is undoubtedly a disruptive technology that poses a threat to market dominance.

Although AI is being made to simplify the process or create shortcut for the human being to use computer ecosystem effectively. But with the rapid innovation and development in this sector. Now days AI can literally control a whole computer or ecosystem. This can be a potential threats as it directly control whole system and abuse the position.

How AI can be used to abuse the competition:

  • Messenger:
    Now days Messengers whether it is by Instagram or Facebook or WhatsApp or any other messenger are become an essential part in our life. Nowadays after this pandemic most of the communication happens through this service. Thus, it is a very much possibility that Humans may use computers and the IT environment to better execute cartels in Messenger.
  • Besides that hub and Spoke is also has huge potential of risk for the competition, where a single algorithm is utilised by several users to decide price.
  • The Predictable Agent, in which pricing algorithms behave like agents and adjust to one other's prices and markets on a continuous basis, i.e. algorithm-enhanced conscious parallelism, and
  • Besides Digital eye is also a potential anti-competitive scenario. In this scenario artificial intelligence (AI) is used in conjunction with increased market transparency, the result is anti-competitive.
Given the outdated design of the 2002 Act, preventing cooperation between self-learning algorithms will be extremely challenging. This could be one of the most difficult missions ever faced by competition law enforcers.

The study discusses concerns that emphasise the fact that current competition regulations are flexible enough to deal with new market competition developments. Despite the fact that there is currently uncertainty in the process, the reports are promising for the competition legislation to include AI in its purview. At the moment, discussions on using competition rules to regulate artificial intelligence are at an early stage.

However, competition law is important in the realm of data since mergers such as Microsoft-LinkedIn, Facebook-Instagram, and Yahoo-Verizon require special attention from law enforcement agencies, which is why competition law's potential cannot be overlooked entirely. Artificial Intelligence's arrival has prompted competition law regulators to consider and talk more. This is because, if AI is fueled by strict liability, it might be harmful not only to Competition Law but also to disciplines such as Intellectual Property, Data Protection, Privacy, and Tort Law.

Challenges for competition law in India in the AI technologies:

Artificial intelligence improves market alignment accuracy while lowering risk factors. International groups, as well as the World Intellectual Property Organization, have lauded this advancement brought about by AI. The Competition Act of 2002, which oversees market competition in India, has a number of objectives to fulfil through market regulation.
Here are some of them:
  • The abolition of practises that appear to be harmful to market competitiveness.
  • Market competitive nourishment and promotion on a worldwide scale.
  • Ensuring market freedom and fair trading practises.
  • Protecting the interests of consumers.

Because this Act excludes Artificial Intelligence from its scope, any cases arising from it will take time to resolve. Artificial Intelligence has the potential to make proposals that are predetermined by nature, which can invariably alter market competition. As a result, legislation are required to govern the movement of AI in Indian marketplaces.

Important Case laws:
International cases:
In Meyer v. Kalanick, Uber's founder defended himself by stating that the algorithm's prices simply followed natural market fluctuations. However, these changes were not observed and judged by flawed human senses and brains, but rather by a perfected PC programme.

The ruling in the Eturas case contributes significantly to the concept of concerted practises in the era of technology. The court stated that the evidence presented is capable of demonstrating the existence of the parties' concerted practise. On two reasons, the parties were deemed to have implicitly agreed to a common anticompetitive behaviour.

Taking into account subsequent behaviour and, secondly, the presence of a coincidental relationship between concentration and market behaviour. As a result, members of any entity cannot abdicate their commitments and responsibilities on the grounds that the AI system is devoid of human behaviour.

Indian scenario:
The case of Rajasthan Cylinders and Containers Limited v. Union of India, 2018 SCC OnLine SC 1718
The Supreme Court ruled that it is the Competition Commission of India's job to guarantee that competition exists in the market, that competition is healthy, and that consumers affiliated with the market can benefit from the competition that exists.

In google case:
The Competition Commission of India slapped a fine on Google for abusing its dominating position in the online search business. According to the informant, Google conducts its primary business of search and advertising in a biassed manner, causing harm to advertisers and, as a result, to end users. It was also claimed that Google is creating an unequal playing field by favouring Google's own services and partners over its vertical partners through manual manipulation of its search results.

It was also mentioned that, in addition to the search service, Google offers a wide range of vertical search options, including video. It was also observed that, in addition to the search service, Google offers a wide range of vertical search services, such as video (through YouTube), news (via Google News), maps (via Google Maps), and so on.

It has been unequivocally stated that Google began integrating many of its vertical results into its organic search results in order to promote Google's own vertical search sites. As a result of this behaviour, when a user searches for the name of a song on Google, he obtains links to videos of that song from Google Video or YouTube, both of which are Google-owned businesses.

The Commission's two grounds against Google were:

  1. Google's preferential treatment in the search engine market and discrimination against the websites of other companies.
  2. Google has access to a vast amount of personalised data.
Finally, the Commission concluded that Google must take on additional responsibilities as a search engine and accord equal weight to all other enterprises without resorting to arbitrariness. There have been countless other occurrences like this throughout the country. Companies that have mastered artificial intelligence and access to a big amount of data are thought to dominate the market.

Several corporations have violated the provisions of the Competition Act of 2002 in the process. The Competition Commission of India, like Google, has taken note of Amazon and Flipkart's operations. These internet apps have access to massive amounts of data for the way they conduct business in the market, giving them an advantage over competitors who do not have access to similar types of data. Artificial intelligence has posed a danger to the technical world's sovereignty. The threats posed by AI can be divided into three categories, as detailed below:
  • Foreclosure of market
  • New patterns and forms of collusion.
  • Strategies for implementation in price discrimination.
Many parties are requesting that the Competition Commission of India allow the use of artificial intelligence in Indian markets. Some of them are causing a slew of problems, only a few of which can be resolved while others remain unresolved. The merging of various companies adds to the belief that some competitors will be eliminated from the market because these mergers are supported by data and Artificial Intelligence.

Current Position of CCI and Scope of improvement:

The current competition law system is still looking for solutions to the problems that algorithms and AI have caused. Companies' use of sensitive data results in data protection violations, which is another part of competition law that needs to be addressed. The Artificial Intelligence system is in charge of making the market profitable, which makes it appealing to market participants. The only flaw is a system of rules and regulations that should regulate the use of artificial intelligence, which is now lacking and sorely needed.
  1. Increased transparency in how companies in the market operate.
  2. Increased collaboration among entities for public disclosure of data utilised by businesses in order to regulate algorithms.
  3. Computer programming processing in order to ensure that sensitive information that comes into question is ignored in order to avoid any complications resulting from the same. This will also assist rivals in making decisions about the market's competitive prices.
Conclusion:
Competition law, like all other laws, seeks to maintain a level playing field in global marketplaces. Different countries interpret the same in different ways. In every way, the globe is rapidly progressing and advancing technologically. The reality that Artificial Intelligence will be with us for a long time to come is unavoidable. It cannot be eradicated from the earth because that would be a loss only to humans. Because the man who created AI was also the man who addressed the obstacles posed by current statutes, the man will bear the brunt of the challenges.

The best way to resolve this contradiction is to progressively integrate AI and Big Data into regular life activities while exercising extreme caution and vigilance. When it comes to the market, which rules every nation's economic background, AI adoption can help in bringing efficiency to the market if the market operators are well informed in AI application. It is past time to make changes to the Competition Law statute, as it is in need of revision due to the rapid changes in the market sector. Technology and digitalisation must be adopted for the long term, as this is the only way to address the challenges quickly and effectively. As far as the market is concerned.

As the market changes, so do the competitors in the market; consequently, the governing law should evolve accordingly, because attempting to shoehorn the previous statute into the current market circumstances will inevitably result in problems. Digitalisation and artificial intelligence are bringing to light a slew of new fonts that are utterly novel to many of the market's players. All of these businesses should be given equal opportunities to compete properly. When rivals are fighting over their own flaws, competition can never be healthy or fair.

References:
  1. Moritz Hennemann, Artificial Intelligence and Competition Law, Regulating Artificial Intelligence, retrieved from https://www.springerprofessional.de/en/artificial-intelligence-and-competition-law/17451778
  2. Nidhi Singh, September 11, 2018, Virtual Competition: Challenges for Competition Policy in an algorithm driven market, Wolters Kluwer, retrieved from http://competitionlawblog.kluwercompetitionlaw.com/2018/09/11/virtual-competition-challenges-competition-policy-algorithm-driven-market/?doing_wp_cron=1590646660.3606929779052734375000
  3. The rise of Big Data - Intersection between Competition law and customer data, Bird & Bird, retrieved from https://www.lexology.com/library/detail.aspx?g=f8f0d454-1543-4386-97dc-b99dfa2d753f
  4. Rajkumar Dubey, 27th July 2005, India: Indian Competition Act: An Overview, Dubey & Partners Advocates, retrieved from, https://www.mondaq.com/india/antitrust-eu-competition-/33971/indian-competition-act-an-overview
  5. Florian Kache, Stefan Seuring, Jan, 2017, Challenges and opportunities of digital information at the intersection of Big Data Analytics and supply chain management, Researchgate , retrieved from https://www.researchgate.net/publication/312080790_Challenges_and_opportunities_of_digital_information_at_the_intersection_of_Big_Data_Analytics_and_supply_chain_management

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