Large tech companies should see a more assertive EU regulatory stance in ensuring competition in the AI market, France, Germany and the Netherlands have said in a draft paper seen by MLex. The three countries called for capturing AI and cloud services under the Digital Markets Act, introducing a supervisory fee for gatekeepers, and a stronger oversight on partnerships and mergers in the AI space.
Large tech companies should see a more assertive EU regulatory stance in ensuring competition in the AI market, France, Germany and the Netherlands have said in a draft paper seen by MLex. The paper is due to be published this week as senior government officials, C-level executives from leading AI companies and global experts gather in Paris for the AI Action Summit.
“The European AI ecosystem already faces serious bottleneck issues and risks of market capture by a few major tech companies that could threaten those strategic objectives,” the document reads.
— Digital Markets Act —
For the three countries, the key EU rulebook that should be used for this matter is the Digital Markets Act, a regulation introducing a list of dos and don’ts for large tech companies whose dominance in key online markets means they play the role of gatekeeper between businesses and consumers.
In particular, the draft paper regrets that, even though the DMA lists cloud computing as a strategic sector, no cloud service provider has been designated as a gatekeeper under the DMA. That's because they don't meet the law’s relevant quantitative threshold.
“Cloud services are a main input factor for AI and already listed as core platform services under the DMA,” the paper reads. “We encourage the European Commission to immediately initiate a market investigation into their qualitative designation as a first important step toward a more effective AI framework.”
France, Germany and the Netherlands also want to expand the scope of the DMA to include AI, since it currently applies only to AI-powered functionalities that are integrated or embedded into services that are already captured under the regulation, for example, search engines.
“However, obligations for gatekeepers under the DMA may not apply to their generative AI offerings if they are offered as standalone platform services,” the paper notes, calling on the commission to initiate a market investigation to add generative AI platform services to the list of those covered under the DMA.
France had already asked the commission to extend the scope of the DMA (see here). But its position seems to have garnered the support of Germany and the Netherlands.
By contrast, the EU's top competition official, Olivier Guersent, said at a conference* last month that he didn’t see any gatekeeper in this area, since the market for AI models is highly competitive with hundreds of competing companies.
— Amendments and enforcement —
The member states’ remarks on having the DMA cover cloud services and AI tend to echo similar requests from key EU lawmakers (see here). However, the three EU countries go further and ask for the introduction of new legal requirements.
“A further market investigation should explore updating the DMA’s list of obligations. It should assess whether there are practices in the AI sector that are not yet effectively addressed by the DMA,” the document adds.
For the three countries, these investigations should result in legislative proposals to amend the DMA or secondary legal acts where they suffice.
“In addition to swift legislative action, effective enforcement is required,” the paper continues, implicitly acknowledging the difficult times with the new Trump administration challenging the EU regulating prominent US companies.
Still, for the three European powerhouses, “the EU must stand its ground and ensure competitive European markets.” However, they recognize that, while asking for effective DMA enforcement, the commission has limited resources.
In this context, “an annual monitoring fee for gatekeepers should be considered. This fee could help finance and streamline the enforcement of the DMA, guaranteeing that it delivers tangible results for European businesses and end users,” the paper reads.
— Partnership and mergers —
The Franco-German-Dutch paper also takes aim at the partnerships and mergers that are taking place in the AI market, which they consider should benefit the entire AI ecosystem by providing smaller AI companies with key resources and knowledge.
Leading AI companies — such as Mistral AI, Anthropic and OpenAI — are largely dependent on the data infrastructure of large cloud service providers for the training and usage of large-language models, prompting scrutiny from competition authorities around the world.
“The challenge in merger control enforcement lies in striking a balance between fostering necessary partnerships and ensuring healthy competition. Dominant companies must be prevented from consolidating undue control over the AI sector and from pursuing a strategy of conducting harmful mergers,” the document states.
The three countries invite the EU authorities to monitor emerging market dynamics, such as partnerships, collaboration agreements, as well as less traditional takeover concepts — for example “acqui-hires,” when a well-established company hires the staff from an emerging competitor en masse.
A landmark case in this sense was Microsoft hiring key staff members from the start-up Inflection AI, which the commission ultimately declined to review, while making clear that it believes "acqui-hires" in general can be caught by EU merger law (see here).
“We call on the commission to carefully scrutinize such acquisitions and take the necessary steps to be able to review relevant takeovers in the field of AI,” the document reads.
* La régulation des réseaux sociaux à l’heure européenne, Conseil d’État, Paris, Jan. 21, 2025.
Nicholas Hirst contributed reporting.
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