This research paper explores the balance between fostering innovation in generative AI and addressing the competition challenges it poses. Generative AI technologies, such as OpenAI’s ChatGPT, have transformative potential across industries like healthcare and education but risk monopolistic behavior and unfair market practices. Regulators globally are adopting cautious yet proactive measures to prevent dominance by a few players controlling critical AI inputs like training data and semiconductors. Regional initiatives, such as the US executive orders, the UK’s evolving Competition and Markets Authority policies, and the EU’s Digital Markets Act, highlight growing efforts to ensure fair competition. Dialogue with industry stakeholders, as seen in the G7 International Code of Conduct, is emphasized as essential for fostering responsible innovation. The paper concludes that strategic collaboration and measured regulation are vital to unlocking AI's benefits while safeguarding market diversity.