CRA experts, Andrea Asoni, Matteo Foschi, and Oliver Latham, teamed up with Chiara Farronato of Harvard Business School to reflect on developments in Generative AI and explore the current and future contestability in this space.
The paper, upcoming in a Management and Business Review Special Issue on “Competition and Regulation of AI” lays out key considerations for policymakers aiming to understand the potential risks of market concentration and offers management teams a path for navigating the GenAI landscape. The article addresses three main issues:
- Is GenAI bound to follow the same path as Web 2.0 markets, where early advantages led to long-term dominance by a handful of players?
- What do supply dynamics, particularly partnership trends and deals across the AI value chain, tell us about the likely future industry structure?
- What do early demand patterns suggest about adoption of GenAI inside organizations?
Drawing on recent market developments as well as data from a new survey of business leaders, the article findings are both encouraging and cautionary. The economics of GenAI differ meaningfully from Web 2.0 industries and there is evidence of competitors, including independent start-ups, investing to catch up with first movers. Moreover, while the upstream layers of the AI stack are more concentrated than downstream layers, survey evidence developed for the article shows that enterprise users are adopting a multihoming approach, engaging with multiple providers simultaneously.
To access the paper, follow this link.
