TAIWAN Trends and Developments Contributed by: Tsung-Yuan Shen, Rachel Chen and Josh Tsai, Lee and Li Attorneys-at-Law
unit (GPU) market, which is significant to AI consid - erations since AI relies heavily on processing tech - nologies originally developed for GPU applications. Similarly, CSPs are concentrated among a handful of major technology companies. Should these dominant operators restrict access to computing resources, whether by tying hardware sales to other products or by prioritising supply to preferred partners, such actions risk posing significant barriers to entry, there - by undermining competitive dynamics. Restriction of data access Data constitutes the foundational input for AI model training. Digital platform operators controlling vast troves of user data enjoy a substantial competitive advantage in data analytics and AI development. If new entrants are unable to access data of comparable quality and scale, their ability to compete effectively with the incumbent market players will be severely constrained. Cloud service platforms The cloud computing services market is currently concentrated among a few large CSPs, resulting in ecosystem lock-in effects that impede user mobility between different platforms. Moreover, if CSPs favour their own or affiliated generative AI models in platform interfaces, or condition model usage on their cloud services, such practices may distort competition and entrench market power. Foundation models Market-dominant operators may impose requirements that terminal devices (eg, smartphones and laptops) exclusively incorporate their AI models or prioritise their model outputs, thereby restricting competitors’ market access. Additionally, by mandating access to proprietary internal data through terms of use agree - ments, such operators may further consolidate their data advantages, raising the risk of unfair monopoly. Concerted actions Prior to the advent of generative AI, algorithms already served as instruments to facilitate collusive agree - ments among competitors, enabling the implementa - tion and ongoing monitoring of co-ordinated conduct. With the advancement of AI models, the incentives and capabilities for co-ordinated pricing and business
decisions are likely to increase. If multiple enterprises employ the same generative AI model or derivative products, they may inadvertently or deliberately align their commercial strategies, thereby impairing market competition. Mergers Leading AI companies may pursue horizontal, verti - cal or conglomerate mergers to consolidate resources and strengthen market influence. Given the high capi - tal and technological barriers to entry in generative AI infrastructure and model development, start-ups may be incentivised to collaborate with or be acquired by dominant technology firms. The competitive implica - tions of such consolidation warrant close scrutiny. False advertising and other unfair competition practices Generative AI-generated content may be exploited to engage in false or misleading marketing practices, potentially deceiving consumers. Furthermore, AI’s advanced data analytics capabilities could facilitate the dissemination of false, misleading or deceptive information tailored to individual users, raising con - cerns under unfair competition laws. Draft Artificial Intelligence Fundamental Act On 28 August 2025, the Executive Yuan approved the Draft Artificial Intelligence Fundamental Act. The Act will take effect upon review and ratification by the Leg - islative Yuan. Its primary objective is to create a legal framework that fosters the development of AI while safeguarding human rights and managing associated risks. Article 3 of the draft enumerates seven fundamental principles that underpin the government’s AI policy: • sustainable development and social welfare; • protection of human autonomy and fundamental rights; • privacy protection and data governance; • cybersecurity and safety; • transparency and explainability; • fairness and non-discrimination; and • accountability mechanisms.
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