The Organisation for Economic Co-operation and Development has published a policy brief on recent developments in artificial intelligence markets, finding a mixed competitive picture across the AI value chain. It notes that foundation models, especially large language models, have shown signs of contestability, with performance improving, prices falling and technological leadership changing hands frequently. At the same time, the OECD warns that broader structural risks to competition remain significant and are likely to intensify, particularly where compute, data, skills, chips and cloud infrastructure are concentrated among a small number of firms and countries. Updated OECD evidence points to rapid expansion and falling model costs in some segments. The number of developers focused on language models for cognitive tasks rose from nine in January 2024 to 47 in April 2026, while active text-to-text models increased from 22 to 453 over the same period. The aggregate OECD quality-adjusted price index for text-to-text models fell by nearly 80% between January 2024 and April 2026. But the brief stresses that these gains do not remove deeper competition concerns across hardware, cloud, data, model development and downstream applications. It highlights first-mover advantages, data feedback loops, switching costs, network effects and growing vertical integration. Among the examples cited, the three largest cloud providers held 74% of the global cloud market in 2023, while NVIDIA accounted for 90% of the graphics processing unit market. The OECD also points to concentrated AI investment, noting that the five largest US technology firms spent USD 400 billion on capital expenditure in 2025 and are forecast to spend USD 660 billion in 2026. The brief says policymakers should focus on preserving contestability and innovation by improving access to key AI inputs such as data, compute and skills, lowering investment barriers for small and medium-sized enterprises, increasing transparency and interoperability, and scrutinising acquisitions, partnerships and bundling strategies that could lock in users or foreclose rivals. It also calls for coordination across competition, digital and energy authorities, alongside cross-border co-operation, given the global and infrastructure-dependent nature of AI markets.
OECD2026-07-10
Organisation for Economic Co operation and Development flags intensifying AI competition risks despite rapid price declines and new entry in foundation models
The Organisation for Economic Co-operation and Development said AI markets show a mixed competitive picture. Foundation models have become cheaper and more crowded, but the OECD warns that concentration in chips, cloud, data and skills, combined with first-mover advantages and vertical integration, could entrench a small number of firms. It calls for closer monitoring and policy action to preserve contestability across the AI value chain.