The Competition and Markets Authority (CMA) is launching a review of the artificial intelligence (AI) market.
It will include the models behind popular chatbots like ChatGPT.
The AI industry has faced scrutiny from regulators lately, over the pace at which it is developing technology to mimic human behaviour.
The watchdog will assess whether or not AI provides an unfair advantage to companies that are able to afford the technology.
CMA chief executive Sarah Cardell told the Financial Times that it would examine so-called foundation models, such as the software underlying ChatGPT.
It follows concerns over the development of generative AI – technology that can create images or text that are barely distinguishable from the work of humans.
Ms Cardell said it would be a “fact-finding mission” that would engage a range of experts including academics and businesses in an attempt to find out how best to protect consumers.
Last week, the watchdog found itself in the firing line of the technology giant Microsoft after it blocked the company’s proposed takeover of the gaming company Activision Blizzard, which makes Call of Duty.
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