Tech
Major tech firms acknowledge AI risks in regulatory filings
In a series of recent SEC filings, major technology companies, including Microsoft, Google, Meta, and NVIDIA, have highlighted the significant risks associated with the development and implementation of artificial intelligence (AI).
The revelations reflect growing concerns about the potential for AI to cause reputational damage, legal liability and regulatory scrutiny.
Concerns about artificial intelligence
Microsoft expressed optimism about AI, but warned that poor implementation and development could cause “reputational or competitive damage or liability” to the company itself. It highlighted the widespread integration of AI into its offerings and the potential risks associated with these advances. The company outlined several concerns, including flawed algorithms, biased datasets, and malicious AI-generated content.
Microsoft acknowledged that poor AI practices could lead to legal, regulatory and reputational issues. The company also noted the impact of current and proposed legislation, such as the EU AI Act and the US AI Executive Order, which could further complicate the implementation and acceptance of AI.
Google The presentation reflected many of Microsoft’s concerns, highlighting the evolving risks associated with its AI efforts. The company identified potential issues related to harmful content, inaccuracies, discrimination, and data privacy.
Google has highlighted the ethical challenges posed by AI and the need for significant investment to manage these risks responsibly. The company has also acknowledged that it may not be able to identify or resolve all AI-related issues before they arise, which could lead to regulatory action and reputational damage.
Half said it “may not succeed” in its AI initiatives, posing the same business, operational and financial risks. The company warned of the material risks involved, including the potential for malicious or illegal content, misinformation, bias and cybersecurity threats.
Meta expressed concerns about the evolving regulatory landscape, noting that new or increased oversight could negatively impact its business. The company also highlighted competitive pressures and challenges posed by other companies developing similar AI technologies.
Nvidia did not dedicate a section to AI risk factors, but did mention the issue extensively in its regulatory concerns. The company discussed the potential impact of various laws and regulations, including those related to intellectual property, data privacy, and cybersecurity.
NVIDIA highlighted the specific challenges posed by AI technologies, including export controls and geopolitical tensions. The company noted that increased regulatory focus on AI could lead to significant compliance costs and operational disruptions.
Along with other companies, Nvidia has highlighted the EU Artificial Intelligence Act as an example of regulation that could lead to regulatory action.
Risks are not necessarily probable
Bloomberg first reported the news on July 3rdnoting that the disclosed risk factors are not likely outcomes. Instead, the disclosures are an effort to avoid being singled out for liability.
Adam Pritchard, a professor of corporate and securities law at the University of Michigan Law School, told Bloomberg:
“If a company has not disclosed a risk that its peers have, it can become a target for legal action.”
Bloomberg also identified Adobe, Dell, Oracle, Palo Alto Networks and Uber as other companies that have disclosed AI-related risks in SEC filings.