Some Fortune 500 companies highlight AI as a business risk

Tech law experts previously told Business Insider that unchecked generative AI could usher in a “dark age” as copyrighted work is copied by models, discouraging original work, and misinformation is easily created and distributed by actors heaven.

As technology leaders and policymakers figure out what those safeguards might actually look like, several Fortune 500 companies are highlighting the potential business risks of the regulations.

An analysis by Arize AI, a startup that helps companies troubleshoot generative AI systems, found that 137 of the Fortune 500 companies — or about 27 percent of Fortune 500 companies — identified AI regulation as a risk to their business in their annual reports filed with Securities. and Exchange Commission, starting May 1.

And the number of Fortune 500 companies that listed AI as a risk factor increased by nearly 500% between 2022 and 2024, according to Arize data.

In these annual reports, companies cited the costs that could arise from complying with the new laws, the penalties that could come from breaking them, or rules that could slow the development of AI.

To be clear, they are not necessarily saying they oppose AI laws. Instead, the concern is that it is unclear what those laws will look like, how they will be enforced, and whether those rules will be consistent around the world. California’s legislature, for example, just passed the first statewide AI bill — but it’s unclear whether Gov. Gavin Newsom will sign it into law or whether other states will follow.

“The uncertainty created by an evolving regulatory landscape clearly presents real risks and compliance costs for companies that rely on AI systems for everything from reducing credit card fraud to improving patient care or customer service calls Jason Lopatecki, CEO of Arize AI, told Business Insider. in an email. “I don’t envy the legislator or councilor trying to make sense of what’s going on right now.”

Regulation could slow business

The companies’ annual reports warn investors about a long list of possible business hits, from the specific — another wave of COVID-19 — to general risks like the possibility of cybersecurity attacks or bad weather. Now, AI regulations figure in that list of unknowns, including the cost of keeping up with the new rules.

Meta, for example, mentioned AI 11 times in its 2022 annual report and 39 times in 2023. The company devoted an entire page in its 2023 annual report to the risks of its own AI initiatives, including regulation. The tech giant said it is “not possible to predict all the risks related to the use of AI”, including how regulations will affect the company.

Motorola Solutions said in its annual report that complying with AI regulations “can be onerous and expensive and may be inconsistent from one jurisdiction to another, further increasing the cost of compliance and the risk of liability.”

“It is also unclear how existing and future laws and regulations governing issues such as AI, AI-enabled products, biometrics and other video analytics apply or will apply to the products and services we sell,” he said. wrote the company.

NetApp, a data infrastructure company, said in its annual report that it aims to “use AI responsibly” but that it may “fail to identify or resolve problems before they occur.” The company added that regulation that slows the adoption of AI could be harmful to its business.

“To the extent that regulation significantly delays or impedes the adoption of AI, demand for our products may fall short of our forecasts,” the company wrote.

NetApp CEO George Kurian told The Wall Street Journal that he supports AI regulation.

“We need a combination of industry and consumer self-regulation as well as formal regulation,” Kurian told the publication. “If regulation focuses on enabling the confident use of AI, it can be a boon.”