This article analyses the competitive problems potentially arising in the foundation models and generative AI value chain, by exploring its structural complexities and distinguishing between upstream and downstream dynamics. While upstream markets, such as cloud services, proprietary data, and AI chips, have drawn much of the competition policy attention, tipping dynamics, consumer lock-in and foreclosures are most likely to arise in the downstream part of the value chain. This is particularly relevant for mobile ecosystems, where the integration of foundation models with operating systems, on one side, and the development of agentic systems, on the other side, significantly enhance those competitive risks. Consequently, as a complement to competition law scrutiny, ex-ante regulatory intervention seems necessary to ensure market fairness and contestability, according to principles already embedded in the Digital Markets Act.
Keywords: generative AI, foundation models, competition policy, mobile ecosystems, operating Systems, AI agents, gatekeepers