27% "AI Regulation is a Risk Factor"
"Just Looking at the 'SB 1047' Bill is Dizzying"
According to the Wall Street Journal (WSJ) on the 27th (local time), 27% of the top 500 companies selected by Pocheonji cited artificial intelligence (AI) regulations as a risk factor.
According to the research platform AriseAI, 137 of the top 500 companies mentioned AI regulations as a risk factor in their annual reports submitted to the U.S. Securities and Exchange Commission (SEC). WSJ analyzed this as a signal showing how AI regulations could impact companies.
George Kurian, CEO of NetApp, a data storage and service company, said, "A combination of industry and consumer self-regulation and formal regulation is necessary," adding, "If regulations focus on enabling the reliable use of AI, they could be very helpful." However, NetApp stated in documents submitted to the SEC that if regulations substantially delay or hinder AI adoption, demand for their products may fall short of projections.
Telecommunications and security equipment manufacturer Motorola Solutions said in its annual report that complying with existing and new AI and data usage laws "can be burdensome and costly," and that regulatory inconsistencies across jurisdictions could increase costs and liabilities. It noted uncertainty about how new AI regulations will apply to its products and services, and that increased costs or liabilities could reduce the attractiveness of its products.
Credit card company Visa stated in its annual report that uncertainty arises because it is impossible to predict how regulations will take shape and because there is no single global regulatory framework for AI.
Concerns among companies are growing especially as California pushes the 'SB 1047' AI safety bill. The bill requires AI developers to conduct safety tests on large language models (LLMs) and to demonstrate that all algorithmic decisions are unbiased. The majority of the AI industry, including OpenAI, has expressed opposition to the bill. Previously, the comprehensive AI technology regulation law passed by the European Union (EU) in May, the world's first of its kind, has also been a concern for companies.
Niranjan Ramsunder, CTO and Head of Data Services at digital transformation service company UST, said, "Just watching the regulations pass through the California legislature is dizzying," adding, "Whenever bureaucracy intervenes, additional compliance work is required, and productivity decreases."
Moody's stated in its annual report that using generative AI could expose companies to stricter regulatory oversight and litigation, and that senior executives might have less time to address other business-related issues.
Some companies have set their own AI guidelines ahead of regulations. Babeshi Dayalji, Chief AI Officer at S&P Global, said that because they have implemented their own AI policies and practices, "we do not expect balanced industry regulations to have a significant impact on our approach." However, WSJ pointed out that S&P Global noted in its annual report that regulations could impair its ability to offer AI-powered products and services and compete with other companies.
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