The Big Story: Policymakers set their sights on artificial intelligence
This week saw a frenzy of activity from policymakers around the globe looking to regulate artificial intelligence technologies, which startups are increasingly leveraging in their products. In the U.S., federal agencies recently kicked off processes to examine AI and intellectual property as well as AI accountability, while Congress is exploring legislation. Abroad, policymakers have used existing regulations to ban certain AI tools and are looking to adapt their proposed AI rules.
Policymakers across the U.S. government are continuing to respond to increased public awareness around the technology thanks to popular AI tools like ChatGPT. The National Telecommunications and Information Administration this week issued a request for comment exploring ways to increase trust in AI systems through audits or assessments. Next week, the Copyright Office will begin a series of listening sessions examining issues raised by rightsholders in response to generative AI systems, and earlier this year, the U.S. Patent and Trademark Office put out a request for comment on how AI impacts inventorship. Also earlier this year, the National Institute of Standards and Technology released an AI risk management framework to guide innovators as they build and deploy AI tools. On the Hill, Senate Majority Leader Chuck Schumer (D-N.Y.) has indicated he’s working to bring a broad AI bill to the floor in the coming months.
Policymakers in Europe are acting quickly to regulate AI also. European countries like Italy have used existing data protection rules to ban ChatGPT altogether, and several others have initiated investigations to follow suit. European lawmakers are also looking to revise the proposed AI Act that is moving through their legislative institutions. That law takes a risk-based approach to regulating AI, but some are calling this week for general purpose AI technologies themselves—which form the basis of several AI systems, including many deployed by startups—to be considered high-risk and face higher scrutiny. Doing so would undermine the risk-based approach and saddle innocuous and beneficial uses of AI with unnecessarily burdensome requirements.
Many startups are utilizing AI to create benefits for communities across the country and solve large problems. Policymakers must ensure regulation of AI is sufficiently balanced and forward-looking to avoid unintended consequences that threaten to stymie startup innovation and societal progress.
Policy Roundup:
Senate expected to weigh kids’ proposals. Senate Majority Leader Chuck Schumer (D-N.Y.) is planning to bring bills to the Senate floor in the coming months that would dramatically change how Internet companies, including startups, handle data and user content. The bills, like the Children and Teen’s Online Privacy Protection Act (COPPA) 2.0, and the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act are intended to improve kids’ safety online but threaten privacy-protecting tools like encryption and incentivize more aggressive data collection and content scanning online in order to infer users ages and ensure potentially violative content is removed. In addition to privacy-invasive unintended consequences, the proposals will negatively impact the competitiveness of startups that cannot afford to build scanning tools or collect and analyze additional user data to ascertain their users’ ages.
Overbroad Internet regulation reduces investment and innovation. A new report out this week from the Computer and Communications Industry Association (CCIA) and the Copia Institute demonstrates the unintended consequences of Internet regulation, especially for smaller entities like startups. The report explores the global landscape of Internet regulations and shows how overbroad policies have scoped-in startups, increased compliance costs, reduced innovation, and created barriers to new entrants, often without proportionate measurable benefits.
More states poised to enact their own data privacy laws. This week, the Indiana House unanimously passed a comprehensive data privacy law, making it likely to become the seventh state with its own unique privacy law. The bill previously unanimously passed the Senate and must go back through that chamber before it is sent to the Governor’s desk. On Monday, the Tennessee Senate is expected to take up a privacy bill, a version of which unanimously passed the Tennessee House earlier this year. The states’ laws will add to the growing patchwork that is costing startups hundreds of thousands to navigate as they serve customers across the country.
EU-U.S. Data flows continue to face headwinds. The European Data Protection Board this week voted to resolve a dispute over Meta’s use of Standard Contractual Clauses (SCC) to transfer data to the U.S. The decision against SCCs—which are also used by many startups in the absence of a data transfer agreement between the EU and the U.S.—will carry impacts beyond Meta. Relatedly, a European Parliament Committee voted to adopt a nonbinding resolution against the proposed EU-U.S. Data Privacy Framework, which would restore the transatlantic free flow of data. The effective date of that framework appears to be delayed until the fall of this year.
Student loan debt plan at a standstill, Biden administration facing calls for next steps. While President Biden’s student loan forgiveness plan still remains in legal limbo, the administration is facing calls to propose alternatives in the event the Supreme Court invalidates the loan forgiveness, including further modifying income-based repayment plans. With payments set to resume this year and no extension in sight, the public is calling for more permanent solutions. Millions of individuals—including many would-be founders—face overwhelming amounts of student loan debt, especially underrepresented groups.
Startup Roundup:
#StartupsEverywhere: Chicago, Illinois. Innovare is an education technology company that aims to enable improvement throughout educational communities through the use of education management software and good data. The company’s platform helps educators centralize and analyze student data in order to guide better, data-driven decisions in the classroom. We spoke with AJ DeLeón, Co-Founder and CEO of Innovare, to learn more about his platform, his experience navigating various data privacy regimes—including why he favors a uniform, federal privacy standard, and his experience raising the capital necessary to build Innovare.
