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In this AI-driven world, it is hard to track AI activities if no restrictions are imposed. That’s why AI Regulations are required to ensure Artificial Intelligence is used in a proper way. While these regulations open new paths for innovation and ethical integrity for tech companies, they often make the competition more challenging for tech startups.
Artificial Intelligence (AI) has become an integral part of the modern world, particularly in the business sector. Recognizing its significance, current governments have shown a reluctance to tightly regulate AI, as it is crucial for various fields such as education, communication, transportation, military surveillance, scientific research, customer service, and finance management.
However, boundaries are necessary to protect individuals from the potential downsides of AI. The capabilities of Artificial Intelligence can complicate the lives of citizens in many ways. Therefore, prioritizing AI risk management is essential. Each government has developed its own regulations regarding AI, which must be adhered to by all enterprises within that country.
Almost all countries have some AI regulations to maintain. Among them, the USA probably has the strongest laws against AI. In Colorado and Utah, there are consumer protection laws against AI, while New Hampshire has passed a law that protects its citizens from AI surveillance.
In Europe, the law is simple. The government wants residents who work with AI applications to take the required measures for their systems and files. This law against AI was set to work on Aug. 1, 2024.
In China, the Cyberspace Administration’s AI regulation laws say generative AI services provided to users in mainland China are completely prohibited. This law was imposed on August 15, 2023.
Aside from these, many more countries have strong regulations against AI activities to safeguard the country’s affairs and citizens’ private lives.
Presently, Microsoft, Google, Anthropic, OpenAI, and Meta are the behemoths in the AI industry. They provide AI services, either language-based or image-based. But these are just a few names. Apart from them, an entire section of tech startups are struggling to succeed with their AI models.
This regulatory landscape is specifically troublesome for those startups, as they have been going through major scrutiny from regulatory bodies, especially in some fields like data privacy, consumer protection, and cybersecurity. Therefore, tech startups must understand and follow the rules set by the authorities to survive and become legal.
To cope with this situation, startup companies that involve technology-based work primarily focus on integrating compliance into their business models and frequent employee training programs. These sessions make the employees aware of the protocols to follow and ensure everyone is following the same ones.
The first thing that tech startups find troublesome because of these rapidly shifting AI regulations is funding and investment. The rapid shifts impact how venture capitalists and angel investors approach investment for a tech startup. Of course, investors mainly emphasize the sustainability of a startup.
Taking it a step further, the U.S. Securities and Exchange Commission’s new rules ask startups to disclose their environmental impact. The more a tech startup aligns with this rule, the more it will get investments.
Another thing that tech startups must follow is that their AI models must maintain an ethical approach toward the new norms, including transparency in algorithmic decision-making and protocols to protect user data.
To ensure that, tech startups must undergo strict and regular assessments. Assessing their algorithm models regularly confirms that the business model is fair and non-discriminating. Following this regular checkup model is necessary to prove fairness. Upon failing, these startups face hefty penalties.
In 2024, the world of tech startups has seen multiple changes. Expectedly, the trend will be the same this year as well. Therefore, startup companies must be agile and adaptive toward these AI regulatory changes. While, apparently, it looks like these AI regulatory changes have only created roadblocks for these startup companies, the actual scenario is pretty different from how it appears.
These AI regulation changes have given these companies ample opportunities to initiate ethical innovation. For example, suppose startups can research and develop more reliable cybersecurity measures or automated reporting tools. In that case, they will not only survive in the highly competitive tech world but will be at an advantage.
Interestingly, more than startups, these AI regulations affect already-established gigantic companies. While startups can quickly adapt and enforce new AI laws (if they want to), it takes time for established companies to do it.
AI has become an alarming concern in the modern world; therefore, some controls need to be implemented to ensure security. As new uses of AI come to light, new regulations are imposed to control the evil effect. It indeed affects startup companies sometimes, but mostly, if they can accept and cope with these regulations, it will mitigate risks and place them on the way to sustainable growth in this highly competitive world of tech companies.
