This article is brought to you by HLB Global.

AI legal challenges — to which the modern legislature does not have a definitive response yet — arise from both sides of the AI models. On the input side, using protected IP for training generative AI models is still controversial. On the output side, the ownership and copyright status of the works they produce, such as images, text, and other inventions, remains part of the legal debate that cuts deep into the core economic premise of IP law. 

When it comes to privacy, existing data privacy laws and policies already directly regulate many key data-related aspects of AI. Still, the rapid rise of generative AI platforms has prompted legislators to consider updates that could accommodate the drastic changes brought by this transformative technology. Even key industry players, including Google and OpenAI call for more regulation. 

In the EU, pan-European efforts are underway to develop the Artificial Intelligence Act (AIA) to supplement the existing GDPR. However, it is expected that AIA will not be adopted before 2024. Once in effect, it will introduce a risk-based approach to data protection and transparency in AI systems. 

In the US, while the Senate has established rules on AI and the White House recently published its Blueprint for an AI Bill of Rights, much of the data protection is still at the state level. Some states have taken the initiative to enact comprehensive state privacy laws, including California, Virginia, Connecticut, Colorado, and Utah, while others have introduced privacy bills to address issues such as protecting biometric identifiers and health data. 

SMEs' compliance hurdles

As regulatory clarity lags behind technological advancements, companies will need to look to courts to understand the emerging legal practices around generative AI. 

Small businesses using generative AI should consider how the technology fits within the existing data privacy and security framework, such as GDPR. But, given the pan-European efforts to introduce AI-related laws, business leaders also need to think more than one step ahead and look beyond the current regulatory requirements.

Until these legal uncertainties resolve, SMEs need to be highly appreciative of the risks around sensitive data and other information they share with generative AI platforms such as ChatGPT, as they may be used through the training process and resurface elsewhere. Recognizing these challenges, OpenAI introduced the ability to disable chat history, which means that these conversations will not be used to train their models. The company also announced the launch of ChatGPT Business for professionals and enterprises that need more control over their data. 

When it comes to IP, the world still appears to be in the Wild West days of generative AI, as the legal system has yet to catch up. Although generative AI could be a powerful tool that can help SMEs boost efficiency and productivity beyond what was possible only a few months ago, SMEs must tread cautiously. Given the direction of the thinking around the copyright of AI-generated content, SMEs need to be aware that they may have limited avenues for recourse if someone copies the work they created by using generative AI. 

How to navigate the legal complexities of AI

Technology is no longer seen as a tool for transformation but as a necessity for survival. The latest 2023 HLB Technology Sector Outlook demonstrates that more than 70% of business leaders focus on accelerating the adoption of new technologies. They view technologies such as Cloud (73%), AI (57%), and machine learning (40%) as the most important for the sector over the next five years. 

HLB International has dedicated teams across different verticals to help companies stay abreast of the fast-evolving technological megatrends — of which generative AI is undoubtedly one. In this complex AI landscape, success belongs to businesses that grasp the legal implications that emerge with this transformative technology. Our Technology advisory services help companies stay on top of the latest tech trends, while HLB Emerging Technology experts help business leaders — from entrepreneurs to established organisations — keep up with the latest technology and industry insights and guide their businesses through the emerging growth company lifecycle. HLB Advisory is designed to harness the collective power of business consultants across the globe who combine both technical expertise in innovative thinking and strong relationship skills to help organisations grow locally, regionally, and internationally through a collaborative approach.

Embrace AI with confidence

Given the current uncertainty around generative AI systems due to the lack of established legal and jurisprudential guidance, it is too early to predict the direction of these developments and how they will affect business decisions. Still, sitting on the sidelines of technological megatrends is not viable in the current business landscape.

Against this backdrop of unresolved legal tensions, it is best to take a cautious approach without assuming that generative AI outputs are safe to use. Joining forces with an expert partner can help businesses confidently navigate the regulatory maze to seize unparalleled opportunities and thrive in this fast-paced environment.

This article is brought to you by HLB - a global network of advisory and accounting firms. As an independent member of this global network, we access the power of 38,732 professionals across 157 countries to bring you the latest insights and expertise.

This content is provided by The Gibro Group and its independent associated businesses for informational purposes only. The content of this Post is not intended to be and should not be construed as financial advice. We are not financial advisors, and the information presented in this Post is not a substitute for professional financial advice.

The information in this Post is based on publicly available data and our understanding of the subject matter. While we make every effort to ensure that the information provided is accurate and up-to-date, we do not guarantee its accuracy or completeness. The financial landscape is subject to constant change, and it is essential to consult with a qualified financial advisor or professional before making any financial decisions.