AI Faces Regulatory Challenges

Some tech startups say the regulatory uncertainty over AI is starting to slow them down

OpenAI is at war for its existence, the Washington Post reported in early April.

A year ago, the company was the darling of Congress, with lawmakers clearly impressed by the potential of ChatGPT. Now it faces numerous legal and regulatory challenges, including lawsuits from billionaire Elon Musk, the New York Times, and comedian Sarah Silverman.

The regulatory landscape for artificial intelligence has indeed gotten much more complicated in the last several months. Proliferating AI and generative AI applications might run afoul of the EU’s General Data Protection Regulation, which contains provisions for algorithmic transparency in certain defined decision-making processes, according to this TechTarget article by George Lawton. Citing data privacy concerns, regulators in Italy initially blocked the rollout of OpenAI’s ChatGPT, Lawton reports.

The speed of innovation today is so fast, GenAI applications can violate digital regulations as soon as they come into effect, according to this piece in Harvard Business Review. Large language models (LLMs) are pushing the frontiers of regulations, including the EU Digital Services Act.

In the U.S., the White House issued an executive order in October affirming that AI must be “safe and secure,” and that AI systems must “function as intended.” The order included several directives intended to eliminate or mitigate AI’s biggest threats to safety and security, although rules in the U.S. are still evolving. Unlike the EU, the U.S. is not likely to pass a broad national AI law over the next few years, according to Bill Whyman with the Center for Strategic and International Studies. He predicts that the ultimate outcome is likely to be a “bottom-up patchwork quilt” of executive branch actions.

Some innovators are beginning to feel stymied. For the startups and investors in the nation’s $4 trillion health care market, regulatory uncertainty is a hurdle that forces them to build more slowly and meticulously, making it harder to keep up with the fast pace of tech, many recently told STAT, which covers health and medicine innovation in the U.S.

Boomtown, an innovation services company, will continue to monitor this evolving landscape as we help startups and corporations change the future of tech.

Tripp Baltz
Head of Research