The Korea Fair Trade Commission (KFTC) has initiated a probe into the domestic artificial intelligence (AI) sector. Specifically, the KFTC will scrutinize the ChatGPT and Google Gemini dominant-generative AI market to ascertain if monopolization and consumer harm are occurring.
According to the government announcement on Apr. 8, the KFTC recently ordered research services for the AI market survey. Given the increasing integration of AI technology into various aspects of daily life, industries, and markets, its future influence is anticipated to grow significantly. In this regard, the administrative body is to gain a comprehensive understanding of the competitive landscape in this domain through the investigation.
In particular, the KFTC intends to direct its attention toward foreign AI companies that are actively involved in the domestic market. OpenAI, renowned for developing ChatGPT, holds a prominent position in the global generative AI market. Following closely behind is Google’s “Gemini”.
South Korean internet giants, such as Naver, Kakao, and SK Telecom have ventured into the generative AI market as well. Naver launched “CLOVA X”, which the company claims, is a Korean version of ChatGPT, in August last year, but it is still in the beta service phase. Kakao has been teasing the release of “KoGPT 2.0″ since the first half of last year but has repeatedly delayed its release.
The KFTC is poised to address the challenges arising from the monopolization of the domestic AI market by foreign companies, which often hinders the competitiveness of local firms.
The generative AI market experiences exponential growth, with projections from MarketsandMarkets Research indicating an average annual growth rate of 35.6% from $11.3 billion (14.9 trillion won) in 2023 to $51.8 billion (68.1 trillion won) by 2028.
In response, the central administrative organization plans to examine whether there are any structural problems in the AI industry, such as hindering the entry of new players or restricting competition. Key areas of the probe include looking at the major businesses and services in the market, typical transaction methods and conditions among market participants, and data utilization practices.
Additionally, the regulatory authority will assess concerns such as algorithmic collusion, disadvantages faced by content providers, and restrictions on use after the services are opened. For this, the KFTC is preparing to form a research team or establish an advisory system with experts in competition law and AI markets.
Moreover, the KFTC plans to issue a policy report on both the AI and e-commerce markets later in the year. This report will outline the structure of the emerging technology market and the regulator’s policy direction to address competition and consumer-related issues.
Some speculate that the administrative organization would consider the need for new legislation to regulate the development of emerging technologies, as the current Monopoly Regulation and Fair Trade Act may not suffice to prevent market distortions and ensure fair competition.
“We are committed to exploring measures to prevent monopolistic practices from stifling competition in the AI market,” a KFTC official stated, adding, “The policy paper may also include sanctions to prevent algorithmic collusion using AI technology.”
