Business leaders are unlikely to slow efforts to govern and manage artificial intelligence use despite an uncertain future for AI regulation in the U.S., as risks posed by the technology and resulting lawsuits threaten companies' brands and revenue.
President-elect Donald Trump has promised deregulation and plans to rescind President Joe Biden's executive order on AI after he takes office in January. However, despite promises to roll back regulation, it's unclear how Trump might approach AI regulation specifically.
Trump on Dec. 5 announced plans to nominate David Sacks as the White House AI and cryptocurrency "czar." In a post on social media platform Truth Social, Trump said Sacks will guide the administration's AI and cryptocurrency policy. Sacks is a former PayPal executive and a venture capitalist.
Daniel Castro, vice president of the Information Technology and Innovation Foundation, said in a statement that Sacks brings significant tech experience to the role heading U.S. AI policy and that he will "offer policymakers strategic insights on what the U.S. government should do to better compete globally."
Trump also keeps close ties with tech entrepreneur Elon Musk, who supported an AI regulation bill proposed in California earlier this year. Companies face a growing number of state AI laws, creating compliance complexity that might force the Trump administration to consider an overarching federal law that preempts state law, Gartner analyst Avivah Litan said. However, Musk has also been nominated to lead Trump's planned Department of Government Efficiency, which aims to reduce regulations and cut federal agencies.
There's a lot of uncertainty on what's going to happen in the U.S.
Avivah LitanAnalyst, Gartner
"There's a lot of uncertainty on what's going to happen in the U.S.," Litan said. "I think people are expecting Trump to be light-handed. He said he's going to rescind the Biden order, and that's pretty much all they know."
The number of AI lawsuits being filed against companies is also increasing, particularly with the rise of generative AI and unanswered questions around copyright protection. In Forrester Research's second-quarter 2024 survey of 106 GenAI decision-makers, 21% of business leaders in charge of generative AI reported an increase in legal investigations and litigation related to their generative AI efforts.
Without AI regulation setting rules and guardrails for companies using the technology, AI issues are being tackled by the courts, Forrester analyst Alla Valente said.
"We have so much uncertainty in the U.S.," she said. "If these questions aren't going to be settled in Congress through legislation, and we're not getting them from the agencies as part of regulation, then they're just going to be settled in the courtroom."
Risks push AI governance to forefront
Whether a company wins or loses a case, litigation is costly in time, effort and money, according to Valente. That's why companies are focusing on AI governance and will have to "find their own sweet spot" when it comes to generative AI, she said.
As part of companies' AI governance efforts, Valente said, business leaders are cataloging and inventorying AI models the company uses and doubling down on vetting third parties that are incorporating generative AI into their own products.
Additionally, though business leaders expect a shift in approach to AI regulation under the incoming Trump administration, Valente said businesses still have to contend with local and state AI laws, as well as global laws like the EU AI Act.
"Having fewer regulations might mean less regulatory reporting requirements, but that doesn't mean that how they manage the risk of that AI is necessarily going to take a back seat," Valente said. "They can't take their foot off the pedal when it comes to being diligent."
AI governance vendors including Holistic AI offer free tools such as the Holistic AI Tracker 2.0 to help businesses keep track of AI legislation and regulation, as well as class action lawsuits involving AI and investigations that enforcement agencies have launched.
Holistic AI co-founder and co-CEO Emre Kazim said the company released the Holistic AI Tracker 2.0 as a "resource for everybody in the community to use." While it's a database keeping track of state, local, federal and global AI laws, it also provides analysis on AI legislation and regulation, he said.
Charles Kerrigan, an adviser to Holistic AI and a partner specializing in AI at international law firm CMS, helps businesses comply with AI laws, particularly the EU AI Act. He said he uses the Holistic AI Tracker 2.0 to stay on top of new and emerging AI laws.
"The tracker is addressing the problem, for me, of the volume of regulation that's now appearing," Kerrigan said. "This is the only tool I've got to manage that -- previously it was me with word searches and things like that."
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
