Artificial intelligence (AI) is a general-purpose technology driving technological change at a rapid pace, reshaping industries, markets, and broader economic structures. While AI offers the prospect of significant productivity gains and economic growth, these benefits are not guaranteed and come with inherent risks and costs. Among the risks are the potential for amplifying inequality in society, increasing the spread of misinformation, increasing cybercrime, copyright infringement risks, disruption of the labour market, and erosion of privacy. Consequently, policymakers around the world are actively debating how to balance the benefits that AI offers against the potential risks, considering various interventions.

In the Oxera Economic Council meeting of 11 June 2025 we discussed a specific part of AI’s impact on society: the dynamics of competition within ‘AI markets’, i.e. the markets directly involved in producing and deploying AI (e.g. AI chips, datacentres and model training) and the adjacent markets within which AI is being used (i.e. services and products that use AI models). Our briefing paper for this meeting paid particular attention to generative AI, and its interaction with the established market positions of major digital technology firms. The increasing scrutiny of AI markets by competition authorities— evidenced by published reviews and ongoing legal cases—raises the question of whether this regulatory activity represents an adequate response to concrete risks likely to impact competition, or, on the contrary, is a potential overreaction prompted by past criticisms of delayed intervention in other digital markets. Against this backdrop, the briefing paper provides the background to discuss the following three questions:

1. Is there a demonstrable need for intervention in AI markets to safeguard competition and, if so, at what level(s) of the value chain?
2. Do competition authorities have the power to regulate competition in AI markets effectively, or are new tools and approaches required?
3. If intervention is deemed necessary, should this be done ‘early on’?