The General Authority for Competition has warned of the impact of artificial intelligence, algorithms and data on pricing and fair competition in the Saudi market, confirming to local Arabic language newspaper Al-Eqtisadiyah its efforts in cooperation with the Saudi Data and Artificial Intelligence Authority (SDAIA) to include fair competition principles in all AI legislation in Saudi Arabia.

The authority said that the current regulations issued by SDAIA are advanced and cover most concerns related to negative impacts.

The Competition Authority explained that AI's negative impact on fair competition includes facilitating anti-competitive practices, most notably collusion, data control, bundling and tying practices, network effects and restricting choices, the paper reported on August 11.

AI benefits include reduced transaction costs, easier consumer access, increased market transparency, and innovation, according to the authority and have been heavily invested in by the Kingdom while also hosting several US and Asian AI companies on local server farms in Dammam and elsewhere. 

Collusion is defined as a coordinated agreement between competing companies aimed at increasing prices, including explicit collusion based on direct communication between competitors and implicit collusion based on mutual recognition of interdependence and knowledge of market pricing strategies.

The authority's confirmations come after publication of its 2024 annual report, which included a study addressing potential risks from negative use of AI and algorithms on competition, including using consumer personal data and violating privacy rights to achieve company-specific goals.

Study results showed AI can help develop complex collusive pricing strategies and facilitate collusion between establishments through abundant big data in the current era through advanced systems or platforms that rely entirely on algorithms to analyse big data on consumer behaviour.

The study revealed the possibility of practising personalised pricing, which involves using information observed, volunteered, inferred or collected about consumer behaviour or characteristics to set different prices based on what consumers are willing to pay.

This may contribute to reduced price transparency in the market and unfair pricing, according to the study.

Regarding regulatory gaps that hinder data exploitation in fair competition, the authority said gaps include major global companies' potential for broad data control and centre on other companies' ability to access this data in related markets.