Britain can capitalise on the EU's caution over this booming industry
Source - Daily Telegraph 18/04/23
There will be controls on privacy and facial recognition. Copyrights will be upheld. And there will be safeguards to make sure that employees and consumers are adequately protected.
As the new generation of chatbots take artificial intelligence into the mainstream for the first time, the European Union is planning the first regulatory system for the booming industry, and officials and parliamentarians are weighing in with their long lists of demands.
Doubtless there need to be some rules in place, and AI systems cannot become some new Wild West.
But the EU’s planned rules, typical of the bloc, look as though they may turn into a bureaucratic monster that will punish start-ups and crush innovation.
And this means that, if Britain is bold enough to resist the gravitational pull of the EU system, a huge space could grow up.
We could become a hub for entrepreneurship and investment in what could become one of the fastest growing sectors of the economy.
With the launch of GPT-4, alongside rivals from Google, Amazon and soon from Elon Musk, AI is moving out of the sci-fi movies and into everyday life.
Yes, it remains to be seen whether any of the new systems now available can make any money when the field is so crowded, and many of the main products are being given away for nothing for many uses.
But it is still a breakthrough technology with the potential to transform white-collar productivity and kick-start growth. Money is pouring into the sector at rapid speed, with tech giants and the venture capital firms rushing to invest.
But the European Union risks tying itself in knots over how to regulate AI's newest sensation.
Lawmakers are still locked in negotiations on the planned Artificial Intelligence Act, which would create a common regulatory and legal framework for the technology, intended to shape the way developers, providers, users and governments build, deploy, and use AI.
According to its supporters, it will protect consumers and privacy. The expectation is that, like GDPR, it could become a global standard.
Yet, much like critics of GDPR note of that legislation, it could well prove excessively bureaucratic and chill innovation. The experience of data protection regulations showed how unclear, complex and expensive rules can discourage start-ups.
Too often, policymakers fail to fully appreciate the potential downsides from the regulations they impose. They don't consider the deterrent to new entrants in a particular market, or to potential investors.
The EU's proposed AI rules contain four separate risk levels.
Christmas will come early for lawyers who can spend years arguing about which category a piece of software falls into, and the law may make it too risky to launch certain applications.
There is a concern it could lead to facial recognition technology being banned in public spaces, even though it could do away with cumbersome ticketing or password systems.
Even simple tasks like recruitment or insurance, where there is lots of potential for AI to speed up processing and cut costs, could require companies to log activity and submit detailed reports on the system to a new breed of regulator.
Indeed, some believe software using so-called “large language models” could be subjected to the strictest possible controls, regardless of whether it is used in sensitive areas such as hiring staff.
We have all seen enough sci-fi films to worry that the robots may one day turn on us, and the smarter they get the higher the risk.
Google's chief executive Sundar Pichai recently admitted the risks posed by AI keep him up at night. But the EU’s proposed regulatory system may be an overreaction.
Its heavy-handed response, designed to ensure AI is used ethically and in the public interest, also runs the risk of deterring start-ups – and big investors – from the continent.
“The EU’s AI Act is prescriptive, risks stifling innovation and could blunt Europe’s edge in AI,” warned Robin Rohm, founder of the Berlin based AI start-up Apheris told Sifted this week.
“Britain, on the other hand, has gone rogue with a government white paper that favours a hands-off approach with no plans to introduce new legislation. That could be bad news for the rest of Europe.”
In other words, the UK is taking a pro-innovation, pro-experimentation approach.
We do not appear to subscribe to the EU view, while the government's AI white paper, published last month, proposed a potentially lighter touch system of controls.
The concern, however, is that if EU legislation is passed and proves more onerous, we will come under huge pressure to introduce similar standards of our own.
Lobbying groups, perhaps funded by large incumbents anxious to prevent nimbler start-ups attacking their markets, could insist that consumers are being put at risk.
We may be told that diverging from EU standards will make it harder for our companies to sell products across the continent so we might as well sign up to whatever it proposes.
And there could well be some hints from Brussels that if the UK doesn’t fall into line with its rules data transfer will be blocked, and trade reduced.
The Remainer arguments with which we are all now so familiar will be tweaked and resubmitted with an AI twist.
But there can be no justification for pulling down UK-based firms simply to create a level playing field.
Back in 2021, start-ups told the Coadec campaign group that they were “overwhelmingly concerned” that the EU's proposals were too restrictive and will hurt innovation.
We have the third largest AI ecosystem in the world, behind the US and China. There has already been £13.7 billion worth of investment into UK AI companies via nearly 5,000 deals, according to Henry Whorwood of Beauhurst.
After a long wait, this could be our first big, post-Brexit economic win.
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