The Big Story: Executive order, international summit mark steps toward AI regulation
President Biden issued a sweeping executive order on artificial intelligence on Monday, touching on many issues that will impact the startup and AI ecosystem. The 100+ page order includes several provisions to regulate AI, expand the AI talent pool, bolster AI resources, and much more. Also this week, 28 countries and the European Union came together for a summit in the United Kingdom, underscoring the broad international interest in AI policy. Taken together, this week's events represent an advance in the regulation of AI that could threaten to leave startups by the wayside.
Both the executive order and the summit communiqué focus heavily on the most powerful AI models, with the order controversially invoking the Defense Production Act—usually reserved for use in national emergencies—to regulate the models and the compute needed to build them. This seeks to address potential dangers, but it also risks cementing the position of the current incumbent companies while hindering innovation. Thankfully, the broad order has some provisions to like for startups as well, including AI resources, capital access measures, and immigration and training initiatives to bolster the U.S. AI talent pool. Overall, the order is a mixed bag for startups that leaves much to implementation, as we break down in a new blog post this week.
This week’s executive order and AI summit are just the latest of rapid developments as policymakers around the world move to regulate AI. Startups are innovating in AI across all sectors and in many ways—with their own unique AI products and building off of others’ general purpose models. Startups are key stakeholders in AI and their perspectives should be included in policymaking to arrive at AI policy that promotes innovation and competition.
Policy Roundup:
Engine calls for U.S. leadership on digital trade priorities for startups. This week, Engine sent a letter to the U.S. Trade Representative highlighting the importance of cross-border data flows for startups following the withdrawal of U.S. support for crucial digital trade provisions at the WTO last week. Barriers to cross-border data transfers pose significant hurdles for startups, creating unjustifiable costs, impacting their scalability, and diminishing their competitiveness. Engine’s call for USTR to reverse course echoes that of key lawmakers across parties and organizations across industry, underscoring the importance of smart digital trade policy to the U.S. economy.
Engine advocates for a copyright framework that works for startups. Engine submitted comments to the U.S. Copyright Office’s study on AI this week, highlighting how to keep the AI ecosystem innovative and competitive. In our comments, we address several questions surrounding copyrighted works in AI models’ training data, telling the Copyright Office it is most efficient to conclude that making inferences about large volumes of content—including copyrighted content—as part of an ingesting training data is a lawful, noninfringing use under copyright law. Conversely, requiring a license for the inclusion of copyrighted material in training data would be impractical, chill innovation, harm startup competitiveness, and be a misapplication of existing copyright law. Similar questions came up in a lawsuit by artists against several generative AI firms, this week, when a federal judge dismissed several claims against the companies.
LGBTQ+ coalition warns about kids’ safety bill. This week, LGBT Tech and 73 other LGBTQ+ organizations sent letters to congressional Democrats, highlighting the implications of the Kids Online Safety Act for the 5.7 million LGBTQ+ teenagers who seek valuable spaces and information online. Their letters underscore the unintended consequences of legislation aimed at protecting kids online. Engine has previously expressed similar concerns about the bill’s impact on third-party content, in addition to the challenges it raises around startup competitiveness and user experience, including cybersecurity risks, invasive data collection, and compliance costs.
Administration puts forth new student loan forgiveness proposals. This week, the administration released draft proposals for new student debt relief efforts, which could help free more individuals to pursue entrepreneurship. The proposals detail four proposed forgiveness pathways, including for those facing ballooned balances due to interest accrual, individuals in repayment for 25 years, and attendees of certain low-performing colleges. Engine has long stated that the student loan crisis serves as a barrier to entrepreneurship, particularly amongst underrepresented founders and would-be founders. The proposals come on the heels of failed efforts to broadly cancel up to $20,000 in student debt at the Supreme Court in June 2023. Policymakers must act to ease student debt burdens so that Americans from all backgrounds have equitable access to entrepreneurship as a career pathway, boosting innovation.
Startup Roundup:
#StartupsEverywhere: Vienna, Virginia. Fully mobile-enabled and web-based software solution Aravenda provides consignment stores, pawn shops, estate sales, online sellers, and more with cost effective white label resale & reallocation solutions. We spoke with Founder and CEO, Carolyn Thompson about her journey starting and operating multiple companies, tax issues related to reselling, and what it would mean for her business if she had to proactively screen product listings.
