Congrats on the milestone Nick. One thing I'd add on the pros / cons of regulation in AI: Tech regulation in particular can be misused over time to entrench competitive positions in favour of large, incumbent organisations. A regulation in a new domain sets out to prevent harm, and so creates a variety of standards conformance, inspection, reporting, and other compliance requirements. At first, industry decries the burden this will have on all businesses, how it will hinder innovation and increase costs. But as the largest companies over time allocate resources and implement regulatory mechanisms to comply, they internalise the cost and spread it over existing programs. It becomes simply a marginal cost. And so, their position changes - it's no longer an impediment, it's an important differentiator - highlighting that those companies who can't demonstrate compliance with an array of certifications/compliances are less trustworthy. At that point the well-meaning regulation has entrenched a competitive moat, a cost of entry that other smaller, probably more nimble and perhaps even more trustworthy companies can't afford to cross. This restricts market access and competition in the medium term. Then with fewer competitor alternatives, little differentiation against their fellow incumbents, and tight relationships with regulators, those large companies may be able to wind back their efforts on compliance while maintaining the ticked checkboxes of compliance. Unfortunately, it seems this may be where the EU AI Act is headed, and quite likely where the extraordinary number of other legislative initiatives in AI around the world seem to be heading too. Despite what may well be very good intentions, I doubt a vast patchwork of regulatory instruments will increase AI safety, but it certainly will have an impact on competitiveness of smaller market participants.
It all comes back to the economics. I genuinely hope that there will be sufficient space to overcome these hurdles for SMEs and start-ups (be it a more effective distribution of regulatory burdens that is relatively fair, or cheaper methods to achieve certifications/compliance, or simply just more capital flowing toward smaller innovators). However, I also fear that the smaller players will be too late in realizing that AI governance can be a key differentiator to competitors, and a revenue-driver instead of a pure expense.
Congrats on the milestone Nick. One thing I'd add on the pros / cons of regulation in AI: Tech regulation in particular can be misused over time to entrench competitive positions in favour of large, incumbent organisations. A regulation in a new domain sets out to prevent harm, and so creates a variety of standards conformance, inspection, reporting, and other compliance requirements. At first, industry decries the burden this will have on all businesses, how it will hinder innovation and increase costs. But as the largest companies over time allocate resources and implement regulatory mechanisms to comply, they internalise the cost and spread it over existing programs. It becomes simply a marginal cost. And so, their position changes - it's no longer an impediment, it's an important differentiator - highlighting that those companies who can't demonstrate compliance with an array of certifications/compliances are less trustworthy. At that point the well-meaning regulation has entrenched a competitive moat, a cost of entry that other smaller, probably more nimble and perhaps even more trustworthy companies can't afford to cross. This restricts market access and competition in the medium term. Then with fewer competitor alternatives, little differentiation against their fellow incumbents, and tight relationships with regulators, those large companies may be able to wind back their efforts on compliance while maintaining the ticked checkboxes of compliance. Unfortunately, it seems this may be where the EU AI Act is headed, and quite likely where the extraordinary number of other legislative initiatives in AI around the world seem to be heading too. Despite what may well be very good intentions, I doubt a vast patchwork of regulatory instruments will increase AI safety, but it certainly will have an impact on competitiveness of smaller market participants.
It all comes back to the economics. I genuinely hope that there will be sufficient space to overcome these hurdles for SMEs and start-ups (be it a more effective distribution of regulatory burdens that is relatively fair, or cheaper methods to achieve certifications/compliance, or simply just more capital flowing toward smaller innovators). However, I also fear that the smaller players will be too late in realizing that AI governance can be a key differentiator to competitors, and a revenue-driver instead of a pure expense.
Let's see what comes, exciting times ahead.
Thanks for your interesting comment, James!
Great article Nick - very comprehensive. And really appreciate the shout out :)