RAND

State legislatures are scrambling hard to enact regulations of the cybersecurity and AI industries to protect them from themselves. And the leaders of those industries object to the efforts, like drug abusers forced into rehab.

For the past 10 years, the investor world shoveled money into any company that said they are focused on AI, but that support is starting to shake. Many AI startups that have received billions of investment are struggling financially, not the least of which is the elephant in the room, OpenAI. The most successful AI company in the world is on pace to lose $5 billion this year and, according to CEO Sam Altman, the company needs more than $8 billion more investment this year or will face bankruptcy inside 12 months.

Part of the loss of confidence in AI are the number of failures that seem to be increasing. The AI Incident Database, which chronicles incidents dating back to 1983, now contains 629 incidents. An even bigger reason is the self-governing rules the industry says it has adopted either don’t work or are ignored altogether.

The industry has generally acknowledged its weaknesses. More than a year ago, Altman sat before the US Senate essentially begging for the government to regulate the industry. Support for that legislation has waned, however, as 15 U.S. state legislatures are considering dozens of bills to regulate the development and use of artificial intelligence.

In a letter from OpenAI Chief Strategy Officer Jason Kwon to California Senator Scott Wiener (author of SB 1047), the company highlighted several reasons it opposed the bill, including the recommendation that regulation should be, "shaped and implemented at the federal level. A federally-driven set of AI policies, rather than a patchwork of state laws, will foster innovation and position the US to lead the development of global standards."

The “patchwork” argument has been used to oppose proposed laws in nine states. The problem with that is most federal laws come after a critical mass of laws at the state level. Historically, when two thirds of the sites pass similar laws, the US Congress considers standardizing them nationally. The US is less than halfway through that process.

The legislators authoring these bills seem to understand that they are not “experts” in technology and have been working with tech companies to make the bills more palatable. In California’s SB 1047, Weiner, removed provisions for criminal prosecution and an entirely new state bureaucracy to enforce the bill before it went to the governor’s desk last week. Instead, the bill merely directs the state attorney general to file civil charges when companies violate the mandates.