Reuters
THE BIG STORY
ALL EYES
ON AI
Regulators struggle to keep up with
artificial intelligence’s rapid development
YIFAN YU Nikkei staff writer
PALO ALTO, U.S. Imagine a world where artificial intelli-
gence surpasses human expertise in nearly every domain and
can code in one day what the biggest tech companies in the
world produce in years. Now, imagine that world becoming
our reality within the next decade.
In a series of speeches delivered in 20 countries over the past
month, this is what Sam Altman, CEO of the startup OpenAI,
has been asking audiences as part of his effort to proselytize
a global regulatory framework for artificial intelligence. His
company helped start the AI craze in November with the
launch of chatbot ChatGPT, which has demonstrated the huge
potential of artificial intelligence.
While most tech moguls resist efforts at government regu-
lation, Altman has taken pains to tell governments that they
need to start thinking about regulations now, before it is too
late. “The potential upside here is enormous. The AI revolu-
tion will create shared wealth and make it possible to dramat-
ically improve the standard of living for everyone,” he told an
AI conference in Beijing on June 10.
“But we must manage the risk together in order to get
there,” Altman added in his first public speech in China,
where ChatGPT is banned. “If we’re not careful, a misaligned
AI system designed to improve public health outcomes
could disrupt an entire health care system by providing
ungrounded advice.
“Similarly, an AI system designed to optimize agricultural
practices might inadvertently deplete natural resources or dis-
rupt ecosystems due to a lack of consideration for long-term
sustainability affecting food production and environmental
balance.”
As AI becomes more powerful and prevalent, tech industry
leaders like Altman, researchers and regulators alike are dis-
cussing the guardrails to put around the powerful technology,
as issues such as disinformation, bias and job displacement
rise in prominence along with the potential benefits of AI.
The stakes are high: Some U.S. policymakers fear too much
regulation will slow the development of U.S. AI technology
and give China an advantage; regulators such as the Federal
Trade Commission say too little regulation in the previous era
of social media has eroded transparency and given rise to black
box algorithms, abuses of privacy and toxic disinformation.
Largely spurred by the success of ChatGPT, governments
around the world this year made their first attempts at com-
ing to grips with AI. China in April announced a draft of a
generative AI law that is set to be the world’s first legislation
on the technology to take effect. The European Union’s AI Act,
a comprehensive bill on artificial intelligence passed a parlia-
mentary vote in May, taking a step closer to becoming law.
At the Group of Seven summit in May in the Japanese city of
Hiroshima, international regulations for AI were a key topic. People visit an AI robot booth at Security
In the U.S., the White House and Senate called in tech lead- China, an exhibition on public safety
ers to discuss the risks AI poses. In a series of hearings and and security, in Beijing on June 7.
Nikkei Asia - Special excerpt from June 19-25, 2023 Print edition. Nikkei Inc.
No reproduction without permission.
 THE BIG STORY
OpenAI CEO Sam Altman attends an open
dialogue with students at Keio University in
Tokyo on June 12.
element to the development and applications of AI.
Regulators could profoundly affect the develop-
Satoko Kawasaki
ment of AI with rules governing the type of data
generative AI can train its models on, for example,
or the uses that AI can be put to, such as policing.
“How these technologies develop is not an in-
evitability” as Lina Khan, head of the U.S. Federal
Trade Commission, which enforces rules on com-
behind-the-scenes negotiations in Washington, law- petition, put it in an interview with U.S. network
makers and regulators have been trying to deter- CNBC in May. “We as policymakers can face a
mine how best to impose limits on the technology, choice that will set all of these technologies on a
if at all. healthier and more beneficial trajectory, rather than
These regulatory decisions add an unpredictable a harmful one.”
Most immediately, regulatory decisions in China
and the U.S. -- the world’s two AI superpowers --
are now set to shape the new AI world order. Which
AI and government regulation: country’s regulatory formula will prove superior
The story so far
could be decisive in determining who wins the AI
October 2022 race. This will put China’s top-down regulatory
U.S. White House publishes Blueprint for an AI Bill approach, characterized by state control and cen-
How these of Rights, outlining a nonbinding road map for sorship, up against the U.S.’s bottom-up approach,
responsible use of artificial intelligence
technologies where Big Tech dominates the conversations of how
AI policy should be shaped while regulators take a
develop is not November 2022
back seat.
OpenAI releases AI chatbot ChatGPT to the
an inevitability public, powered by GPT-3 model Some argue that national regulations will be
meaningless, as large language AI models cannot
Lina Khan February 2023
Head of the U.S. Federal ChatGPT records 1 billion page visits stay bound by national borders. They propose an
Trade Commission international watchdog agency that could oversee
March 14 the global development of AI.
OpenAI releases new model, GPT-4 “As much as we want to talk about China and the
U.S., AI is truly a borderless technology and I don’t
March 21
Google unveils Bard, its ChatGPT rival chatbot think that we can regulate it at the state level,” said
Vilas Dhar, president of the Patrick J. McGovern
April 11 Foundation, a $1.5 billion U.S.-based philanthropy
Cyberspace Administration of China releases draft focused on artificial intelligence and other tech
of Administrative Measures for Generative Artificial
Intelligence Services, the country’s first legislation solutions for good.
targeting generative AI “At the end of the day, any existential risks are
going to be beyond borders,” Dhar said. He argues
May 4
China and the U.S. need to find common ground in
U.S. President Biden meets CEOs of Microsoft,
Google and OpenAI to discuss AI risks AI governance and that cross-border collaboration
is a must to regulate the powerful technology.
May 11
European Parliament committees vote to approve CHINA: TOP-DOWN APPROACH However,
the AI Act; lawmakers are now finalizing its details
with the European Commission and member states given the level of tension between Beijing and
Washington, it is hard to imagine how the super-
Source: Nikkei Asia research powers that are leading AI research could agree on
regulating the phenomenon.
China has a track record of emphasizing politi-
cal control over the tech sector even if that means
sacrificing the interests of its most innovative com-
panies. Its approach to AI has been no different:
Beijing has already warned companies to slow
down the development of ChatGPT-like services.
In April, five months after OpenAI’s chatbot was
released to the public, and when most governments
were still pondering the question of where to start
regulating AI, China unveiled a draft law requiring
all companies developing generative AI products to
register with the government and pass security tests
before rolling out to the public.
The draft calls for no discrimination or misin-
formation and respect for intellectual properties in
generative AI model training. It also emphasizes
that content generated through the use of gener-
ative AI must reflect “socialist core values” -- the
governing credo of the Chinese Communist Party.
They may not contain anything related to “subver-
sion of state power; the overturning of the socialist
system; incitement of separatism; harm to national
unity,” the draft states. Content also cannot upset
the economic or social orders.
The draft’s language is similar to that of several
new regulations Beijing has issued during a sweep-
ing crackdown on the tech sector over the past two
years. From antitrust to data protection, the crack-
down has addressed a range of issues, but all mea-
sures emphasize the requirements for tech compa-
nies to reflect these same “socialist core values.”
China’s State Council laid out its ambitions in
artificial intelligence back in 2017, with a road map
envisioning an industry worth 1 trillion yuan (over
China beats U.S. in AI-related research
output (Number of papers ranked in top 10%
of citations in global AI field)
8,000
China
6,000
4,000 U.S.
India
2,000 U.K.
Australia
0
2012 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21
Source: Elsevier
Nikkei Asia - Special excerpt from June 19-25, 2023 Print edition. Nikkei Inc.
No reproduction without permission.
$140 billion) by 2030; many state and local-level pol-
icies that funnel capital and other support into AI
development have been unveiled since then.
But the level of state support is commensurate
with the increase in political control.
“When it comes to AI, China is quite different from,
say, the United States, which has not really done a
whole lot of new stuff legally to regulate AI. China
has, in fact, been working on this for years,” said
Helen Toner, a director at Georgetown University’s
Center for Security and Emerging Technology.
The country introduced its first AI-related regu-
lation in March 2022, requiring companies that use
AI-powered recommendation algorithms to ensure
the algorithms do not “endanger national security
or the social public interest.” Providers of such
technology need to register with the Cyberspace
At the end
Administration of China (CAC), China’s internet of the day,
watchdog, to be compliant, the regulation says. any existential
Industry participants and analysts are expect-
ing more AI-related regulations to be introduced
risks are
in China. At a national security meeting in Beijing, going to
President Xi Jinping in late May called for more be beyond
and improved governance of artificial intelligence,
according to a readout from state media Xinhua
borders
News Agency. Vilas Dhar
President of the
THE US: FILLING A REGULATORY VACUUM Patrick J. McGovern
The U.S., on the other hand, seems to be in no Foundation
rush to roll out national legislation on AI, leaving
the question of how to govern the technology to
Chinese President Xi Jinping has called for
stronger governance of artificial intelligence
in the country.
Reuters
 THE BIG STORY
the tech industry. “By and large, federal agencies
have still not developed the required AI regulatory
plans,” Brookings Institution, a Washington-based
think tank, concluded in a report examining AI reg-
ulation in the U.S.
The report says that while U.S. regulations on
AI are clearly needed, the processes required “in-
By and large, creasingly stand in contrast to the current zeitgeist
-- where AI systems are becoming increasingly
[U.S.] federal powerful and having impact much faster than gov-
agencies ernment can react.”
have still not The CEOs of Microsoft, Google and OpenAI met
with U.S. President Joe Biden in May. According to
developed a White House readout, the administration called
the required on the leading AI companies to “model responsible
AI regulatory behavior,” and to “take action to ensure responsible
innovation and appropriate safeguards.”
plans “That’s just symbolism,” said John B. Quinn,
A Brookings founder and managing partner of Los Angeles-
Institution report headquartered law firm Quinn Emanuel Urquhart
& Sullivan, adding that while he does not expect
the Biden administration to sign any federal-level
legislation on AI very soon, there have been a lot of
regulatory actions at the state level.
California, for example, introduced a bill in April
that aims to regulate how artificial intelligence is
used in “automated decision tools,” such as algo-
rithms that filter out job applicants.
On a federal level, the U.S. Senate held a hear-
ing about artificial intelligence in May where
OpenAI’s Altman testified and urged more AI
regulation and the formation of a U.S. or global
agency to oversee companies’ compliance with
safety standards.
“We are not alone in developing this technology,”
AP
Alphabet CEO Sundar Pichai speaks about the
new PaLM 2 large language model at a Google
event in California on May 10.
Altman added. “It will be important for policymak-
ers to consider how to implement licensing regu-
lations on a global scale and ensure international
cooperation on AI safety, including examining po-
tential intergovernmental oversight mechanisms
and standard-setting.”
Sen. Richard Blumenthal, a Democrat from
Connecticut and chairman of the Senate panel, said
the goal of the hearing was to learn more about the
benefits and risks of AI and avoid repeating mistakes
the country’s lawmakers made with previous tech-
nologies. “Our goal is to demystify and hold account-
able those new technologies to avoid some of the
mistakes of the past,” Blumenthal said. “Congress
failed to meet the moment on social media.”
Reuters
Venture capital investment in AI by country
Number of deals
4,000
Japan
South Korea
3,000
2,000 Greater China
1,000
U.S.
0 0
2012 ‘14 ‘16 ‘18 ‘20
*Includes 27 member states
Meanwhile, the Biden administration introduced
an initiative called Blueprint for an AI Bill of Rights
in October, and Senate majority leader Chuck
Schumer is working on a framework to regulate AI
at the national level. Both express high-level prin-
ciples without getting into the details of how they
will be implemented in practice.
In the absence of federal regulations, Microsoft
and Google, the leaders in the field, have set up
internal AI governance teams and published their
own AI principles of how the company will develop
and deploy related technologies responsibly. Both
mention “safety, inclusivity and accountability”
as the key principles in developing and deploying
their AI products.
At Google, this has resulted in the creation of the
Responsible AI team, which takes part in designing
models. “We started working with the Responsible
AI team within Google from the very beginning,”
said Andrew Dai, principal software engineer at
Google DeepMind who led the development of the
company’s large language models, including the
latest, PaLM 2.
Responsible AI features include measuring how
much the model memorizes the training data, or
controlling how toxic the output from the model is,
in addition to quality filtering and data duplication,
Dai told Nikkei Asia at a briefing.
After training, the large language model, such as
U.S. Federal Trade Commission head Lina Khan
told media in May that policymakers need to
make a choice to send new technologies on a
“healthier and more beneficial trajectory.”
Nikkei Asia - Special excerpt from June 19-25, 2023 Print edition. Nikkei Inc.
(Selected countries/regions, in millions of dollars)
Average deal size
100
EU*
80
Greater China
60
South Korea
40
U.S.
EU*
20 Japan
‘22 2012 ‘14 ‘16 ‘18 ‘20 ‘22
Source: Preqin
PaLM 2, was thoroughly vetted by the Responsible
AI team before being rolled out, according to Dai.
However, some are questioning whether the
industry-led, bottom-up efforts in the U.S. will lead
to effective AI governance, as regulating AI could
mean slowing down progress amid intense compe-
tition among the leading players. It’s literally
Experts say it is hard to motivate companies to
self-regulate when competitors are moving for-
putting the
ward at full speed, nor is it straightforward to gas pedal and
convince competing companies to agree on how the brakes
self-regulation needs to be designed.
“It’s literally putting the gas pedal and the
down in the
brakes down in the car at the same time,” said Paul car at the
Kedrosky, managing partner at SK Ventures. same time
“If you’re the brake pedal person [in the com-
pany], people will likely tolerate you for a while,” Paul Kedrosky
Kedrosky said, “but then if the company’s market Managing partner at
SK Ventures
capitalization starts to fall, you’re gonna get fired.”
For example, OpenAI’s Altman, who called for
U.S. and international AI regulation at the May
16 Senate hearing, said at a May 24 conference in
London that ChatGPT and the companies will
exit the EU market if the region’s AI laws become
too overbearing, according to media reports. His
comment triggered the anger of Thierry Breton,
European commissioner for internal market, who
called it “blackmail.”
The CEO later walked back his comment on
Twitter and said the company has “no plans to
leave.”
Bart Selman, a professor at Cornell University,
and hundreds of other renowned AI researchers
in March signed an open letter that called for a
six-month pause on training AI. He said the AI
No reproduction without permission.
 THE BIG STORY
industry in the U.S. had little incentive to bear the
costs of regulating itself in any meaningful way.
“Compared to Europe, where they have reason-
able data and privacy laws in place now,” Selman
said, “Big Tech has sort of slowed [data and privacy
regulations] down in the U.S.”
“Big Techs might say, ‘OK, let’s work on regula-
tion for AI together. Just give us another five years.’
By that time, it will be too late,” said Selman.
“When you work for a company, you can’t really
go against the interests of the company. So you have
to have people that are a little removed from that
and don’t have such a conflict of interest [in shaping
AI policies],” he added.
Several open letters similar to the one Selman
Europe is signed and endorsed by many tech industry ex-
worried about perts and senior researchers in the field have been
released since March. All warn of the severe risks of
the risks and AI, but none has led to legislative or other actions
really wants to so far.
keep control “Part of [calling for a six-month pause in] the let-
ter was to get attention to the issue. We sort of knew
over the it would be almost impossible to really enforce a
evolution of pause,” Selman said. “The cat is out of the bag.”
models
‘THE STAKES HAVE NEVER BEEN HIGHER’ Just
Remi Bourgeot
like AI could improve work productivity but may
An economist at The
also cause job displacement that leads to world-
Conference Board
and associate fellow wide socioeconomic crises, both China’s top-down
and the U.S.’s bottom-up approach to governing the
at the French Institute
for International and technology have their pros and cons.
Strategic Affairs “The top-down approach China uses actually has
huge merits, in my opinion,” Kedrosky said. “When
the bottom-up approach is too slow, it seems irre-
sponsible and even immature and childish to wait
for things to happen. You see some rumblings in the
EU that are also top-down.”
The European Union is considering a bill called
the EU AI Act. The bill, which has been under dis-
cussion for two years but is yet to be signed into
law, proposes to assess AI tools by risk level. It
could also require generative AI companies to re-
veal which copyrighted material had been used in
model training, which some experts say is nearly
impossible given the sheer amount of data used in
large language models.
“The U.S. is at a much less advanced stage in the
development of regulations. And it will be less strict
[than Europe],” said Remi Bourgeot, an economist
at The Conference Board and an associate fellow at
the French Institute for International and Strategic
Affairs. “Europe is worried about the risks and really
wants to keep control over the evolution of models.”
Bourgeot said that while “everybody’s worried”
about AI, Europe is preoccupied by consumers,
whereas the U.S. is concerned about its tech giants
on its territory.
At a conference in Los Angeles in May, Kai-Fu
Lee, chairman and CEO of Sinovation Ventures
and one of the most renowned AI experts in China,
warned that overregulation could stifle innovations
and tech developments.
“For example, EU [regulations] have various parts
that require a human in the loop, which just makes AI
nonworkable. So you need to avoid overregulation
... that [would make] technology useless,” Lee said
at the panel.
While the top-down approach gave China a head
start in AI regulation, exactly how effective the law
will be remains a question.
ChatGPT’s advice on AI regulation
(Asked on June 12, 2023)
Question
How should governments regulate artificial
intelligence?
Response
Regulating artificial intelligence (AI) is
a complex and multifaceted issue that
requires careful consideration.
While there is no one-size-fits-all approach,
here are some key considerations and
approaches that governments can take
to regulate AI:
1. Ethical frameworks
2. Sector-specific regulations
3. Data privacy and security
4. Transparency and explainability
5. Algorithmic bias and fairness
6. Safety and reliability
7. International cooperation
8. Continuous adaptation
9. Public-private collaboration
It’s important to note that the specific
regulations will vary based on each country’s
legal and cultural context.
Striking the right balance between fostering
innovation and addressing potential risks is
crucial when regulating AI to ensure its
responsible and beneficial use.
Full text response has been abbreviated
“China, they can regulate and they will regu-
late,” said Yan Luo, a partner at law firm Covington
& Burling who specializes in Chinese cybersecurity
and data privacy rules. “So this is probably going
to be the first rule around the world that is actually
taking into force about generative AI.”
According to Luo, the draft proposes filing re-
quirements for generative AI products and punish-
ments such as fines for companies that violate the
rules but does not specify how the requirements will
be enforced or how the AI models will be reviewed.
“Nobody knows how effective the law will be,”
Luo said.
While the draft says the state supports “inter-
national cooperation in foundational technologies
such as AI algorithms and frameworks,” Luo does
not expect China to be signing onto a global AI legal
framework anytime soon.
“At least for China,” Luo said, “I can see they
want something very specific. But if you go interna-
tional, and go high level, that means a lot of princi-
ples everyone needs to agree on, which is different
from what Chinese regulators want.”
The West could be equally less interested to in-
clude China in an international AI regulation bloc.
“I think there are pieces of the Chinese model
that are not applicable in the U.S.,” Toner at
Georgetown University said. “You can’t mandate
what kinds of information the systems are going
to provide or what kinds of political views they’re
going to represent.”
Eric Schmidt, former CEO and chairman of
Google, discussed the matter at the Milken Institute
Global Conference in May. “China’s AI regulation
is about not putting out anything that damages the
Nikkei Asia - Special excerpt from June 19-25, 2023 Print edition. Nikkei Inc.
No reproduction without permission.
Screenshot from Beijing Academy of Artificial Intelligence’s website
OpenAI’s Altman, right, speaks to an
AI conference held by Beijing Academy of
Artificial Intelligence on June 10.
state,” he said. “I don’t think it will work in a de-
mocracy. Thank God.”
Despite the differences in values and an ongoing
AI race between the U.S. and China, some believe
the countries can and even must agree on AI gover-
nance to avoid catastrophe.
“This is a global technology with global impacts,”
China’s
Altman said at the June AI conference in Beijing. AI regulation
“The cost of accidents from reckless development is about not
and deployments -- that affects us all.”
“I appreciate that from time to time, great pow-
putting out
ers may have their share of differences. This is true anything that
today, as it has been before,” Altman said. “But even damages the
during the most difficult times, great powers have
found ways to cooperate on what matters most.
state. I don’t
“With the emergence of increasingly powerful think it will work
AI systems, the stakes for global cooperation have in a democracy.
never been higher.”
Comparing an international AI regulation to the
Thank God
Treaty on the Non-Proliferation of Nuclear Weapons Eric Schmidt
signed after World War II, Selman said people need Former CEO
to see what the technology can do and how destruc- and chairman
of Google
tive it can be without guardrails, and leaders of
nations need to realize the danger AI poses to their
own countries.
Even if the U.S. or China can win the AI race, he
wondered, “Is anybody actually going to benefit
from this?”
Additional reporting by Mailys Pene-Lassus in Paris.