Key takeaways
- President Joe Biden signed an executive order in 2023 outlining artificial intelligence (AI) safeguards.
- Experts say the Biden order is just the start of AI regulation in the United States that could affect companies developing the technology, with more expected in 2024.
- Regulators face the challenge of creating guidelines as AI technology and its capabilities continue to rapidly evolve.
- Big tech companies may be best positioned to benefit from regulation, according to a Goldman Sachs study, with a Wedbush Securities analyst saying Microsoft Corp. is leading the pack.
After President Joe Biden issued a artificial intelligence (AI)– Executive order targeted in 2023, experts suggest this is just the beginning of AI regulation in the United States
With more AI regulation expected in 2024, tech giants like Microsoft Corp.MSFT), may be best positioned to win as regulators struggle to keep pace with emerging technologies.
As advances in AI technology become more integrated into people’s lives, regulation has become a growing priority aimed at limiting technology-related risks.
“Privacy, safety, security, transparency, avoidance of bias and discrimination, and accountability” are common themes considered in AI regulation, Duane Pozza told Investopedia. attorney at Wiley in Washington, DC, who focuses on legislation involving emerging technologies.
Summary 2023
President Biden has taken the first steps toward widespread regulation of AI in 2023.
Before issuing a decree outlining general safeguards for the use of AI, Biden enlisted voluntary agreements large companies leading the development of technology, including Alphabet Inc., parent company of Google. (GOOGLE), Meta Platforms Inc., parent company of Facebook. (META), Amazon.com Inc. (AMZN), Microsoft (MSFT), OpenAI Inc. And Nvidia Corp. (NVDA).
“One thing is clear: To realize the promise of AI and avoid the risks, we must govern this technology,” President Biden said, noting that he considers the executive order “the most important action any government in the world has ever undertaken. AI safety, security and trust.
“AI policy is like running a decathlon,” Ben Buchanan, White House special adviser on AI, told Investopedia. Buchanan, who helped create the executive order, said that “from the thicket of AI and civil rights to the intersection of AI national security, AI and workers’ rights and consumers,” the president is ready to address the issue. “all the different ways AI can affect our society. »
US regulations could pave the way
Companies around the world are working on AI, but U.S. regulations in particular could serve as an international standard.
“Right now, it’s an American technology,” said Haim Israel, head of global thematic research at Bank of America, telling Investopedia that AI regulation is something his firm will watch in 2024 .
Biden’s executive order is a step toward widespread regulation, but it is not the only way the government is working to implement the AI guidelines.
“The Biden executive order is going to have many impacts on what agencies within government do, but has very limited ability to require private companies to do certain things,” Wiley’s Pozza said, noting that the executive branch The federal government is not alone in exploring regulation.
Sectoral agencies, such as Federal Trade Commission (FTC) and the Food and Drug Administration (FDA)work in already heavily regulated industries where there are “no AI exemptions from (existing) policies,” Pozza noted, unlike in some areas where the law is less clear.
Some state governments are considering AI-focused laws, with California “the state to watch in 2024,” Pozzo said, as state lawmakers consider proposals that would require companies to take mandatory measures. risk assessments.
Regulators may struggle to keep up
One of the major challenges facing those developing AI policies is keeping up with the rapid evolution of the technology.
Biden’s 2023 executive order provides some flexibility for adjustments, according to White House special adviser Buchanan, “over time because we know technology could evolve in ways we didn’t expect “.
“Self-regulation of the tech industry around AI will be key,” Dan Ives, a technology analyst at Wedbush Securities, told Investopedia, saying that “regulators are going 25 mph in the right lane while AI technology and big tech are in a running Ferrari.” 100 mph in the left lane.
Ives said the company doesn’t expect strict regulation of AI until 2024, or even 2025, because AI is emerging as “the biggest technological transformation since the beginning of the Internet.”
Big tech companies are well-positioned to come out on top
Tech giants could be poised to benefit disproportionately from sweeping regulation, experts suggest.
“The push for early regulation of AI technology could also favor large, well-capitalized companies,” according to a Goldman Sachs study.
“Regulation typically comes with higher costs and higher barriers to entry,” Eric Sheridan, senior equity research analyst at Goldman, said in a report, noting that “larger technology companies can absorb the costs of building these systems. major language modelsbear part of these IT costs and comply with regulations.
In 2023, stocks of big tech companies saw a surge rally that has outperformed the market as a whole, which may reflect “investors recognizing the potential of these players to develop transformative AI applications,” according to Goldman’s research.
Trading View
Ives, the Wedbush analyst, echoed a similar sentiment, saying the “lack of consensus” in Washington “makes Big Tech the winner for now, led by Microsoft.”
