AI Regulation Is Coming. Fortune 500 Companies Are Bracing for Impact.

🌈 Abstract

The article discusses the state of artificial intelligence (AI) regulation in the United States, highlighting the concerns and challenges faced by Fortune 500 companies as they launch AI projects.

🙋 Q&A

[01] The state of AI regulation in the U.S.

1. What are the key concerns regarding AI regulation expressed by Fortune 500 companies?

• 27% of Fortune 500 companies cited AI regulation as a risk in recent SEC filings, indicating their concerns about how AI rules could affect their businesses
• Companies are worried about higher compliance costs, penalties, and a potential drag on revenue if AI regulations materially delay or impede the adoption of AI
• There is uncertainty around how new AI laws will apply to companies' products and services, and the lack of a single global regulatory framework for AI creates uncertainty

2. What is the current regulatory landscape for AI in the U.S.?

• The U.S. government has not yet regulated AI, while the European Union has introduced the AI Act
• There is a hodgepodge of AI-related initiatives being developed at the state level in the U.S.
• California's SB 1047 bill is seen as a bellwether for how AI will be regulated across the country, with concerns that it will slow innovation and discourage sharing of AI technology

3. What are some companies' perspectives on the need for AI regulation?

• Some companies believe a combination of industry/consumer self-regulation and formal regulation is needed, as regulation focused on enabling the confident use of AI can be beneficial
• Others are concerned that regulation could materially delay or impede the adoption of AI, reducing demand for their products
• Some see potential benefits in regulation, such as reining in AI model makers and addressing risks like biased, stale, or insufficient data used to train AI models

4. How are companies responding to the uncertain regulatory environment?

• Many corporations are not pausing their AI initiatives, especially if competitors are pushing forward with the technology
• Some companies are trying to get ahead of regulation by setting their own internal AI policies and practices
• Financial services and insurance companies accustomed to working with regulators may have an easier time navigating AI laws

[02] Challenges in regulating generative AI

1. What are the unique challenges in regulating generative AI compared to other forms of AI?

• Generative AI, which can create new content, requires different processes and approaches to regulation compared to more predictable forms of AI
• Regulating generative AI is seen as more complex, as it requires designing processes "that allow us to keep up with the trajectory of intelligence"
• Companies like Nasdaq are working with regulators to manage the technology if it goes awry, ensuring that "anything gets out the door unless it's ready for prime time"