This past week, executives from leading artificial intelligence (AI) companies met with a bipartisan group of senior U.S. Senators. It was only the latest indication that Washington has turned its full attention to AI technology. The technology has been the subject of a presidential address and even a voluntary agreement between government and companies to mitigate potential risks. The chair of the U.S. Securities and Exchange Commission, among the most active U.S. regulators, has also begun to examine the implications of AI.
John Rizzo is Senior Vice President for Public Affairs at Clyde Group. Rizzo most recently served as the Senior Spokesperson at the U.S. Department of the Treasury where he led public affairs strategy on digital assets, among other issues.
Like life, political, legal, and regulatory scrutiny can come at you fast. As the AI industry looks into the future, it needs only to look at the recent past to the federal government’s approach to crypto assets to see what’s ahead.
Crypto and AI folk might blanch at being tossed into the same bucket because there are fundamental, substantive differences between the two. AI’s applications are much broader than tokens that might serve as a store of value or means of exchange. And AI’s use cases are tangible, whereas crypto proponents and opponents debate the necessity behind private sources of money. Culturally, AI is buttoned up, whereas crypto might as well have no buttons at all.
Still, suppose the AI industry wants to know how Washington will approach its emerging technology. In that case, it needs only to look at how it approached crypto’s emerging technology to understand several core lessons and strategies for the way forward.
The U.S.’s technology politics have changed since the rise of the internet. Populist impulses on both sides of the aisle leave the AI industry facing a highly skeptical Congress that questions the industry’s core outputs and motives. While AI will not have to justify its existence to lawmakers as crypto assets supporters have been forced to do, there will be no presumption of innocence. Key lawmakers in both parties will assume AI is up to no good unless it shows them otherwise.
Media gatekeepers are weaker than ever, leaving the public, which is already distrustful of large corporations and institutions, vulnerable to rumor and disinformation. In the late 1990s and early 2000s, many Americans relied heavily on traditional media sources. Today, more Americans get their news from their favored social media app, which likely prioritizes content that engages (sensationalizes) rather than educates. And when constituents are whipped up by trending topics and viral posts, lawmakers have less political freedom to craft middle-of-the-road policies. Just as crypto market participants have suffered from the public’s focus on a small number of bad actors, the AI industry will be held politically liable when machine learning produces sub-optimal outcomes, even if machine learning outcomes are more often statistically superior than processes managed by humans.
While the AI industry may be able to see the ghosts of Christmas future in crypto’s challenges in D.C., a critical difference will make the AI industry’s effort to find success in the city both more achievable and complicated.
Crypto market participants have sought to penetrate America’s most highly regulated sector, financial services, which can be immune to the move fast and break things ethos that helped companies like Uber and Lyft outflank entrenched transportation policies in the early 2010s. Crypto market participants have yet to turn the popularity of their assets into a ramrod that can move Washington in line with their favored regulatory framework.
The AI industry seeks to penetrate multiple sectors, some with less established regulation than others. This will allow AI market participants to outflank policymakers in certain areas. However, AI will face substantial financial policy challenges that dwarf what the crypto industry has faced. Just this week, SEC Chair Gary Gensler raised the question of whether using artificial intelligence in the financial system could heighten systemic risk in the financial system. It’s not hard to conceive of. Suppose prominent market participants use machine learning to trigger certain financial transactions during a crisis. While an individual firm may benefit from reducing its exposure to a troubled sector of the economy, the collective effect of multiple firms engaging in the same practice could create the kind of cascading margin calls that lead to systemic risk in the financial system.
As the AI industry examines D.C.’s approach to crypto and glimpses into its future political risks and policy fights, how can it avoid ending up in the same regulatory logjam that crypto finds itself in?
The AI industry must recognize its two crucial, yet interrelated, advantages over its opponents and press them quickly. While D.C. policymakers have raised concerns about the implications of broader AI adoption, neither party has concluded how it would like the industry to be regulated. This harkens back to a time before Democrats concluded that crypto assets were securities, and Republicans concluded they were most certainly not. Once AI policy becomes balkanized, as crypto has become, achieving a workable regulatory framework will be much more challenging.
The lack of hardened policy positions in either party creates an opportunity for the AI industry to press another advantage, namely the massive amounts of capital it has. The industry needs to use that capital to run a considerable public affairs campaign that folds AI technology into the broader American story, highlighting the technology’s benefits to everyday Americans and making the case for keeping the next generation of innovation in America. Crypto waited too long to make the case to the American public. While the crypto industry can still galvanize the public to its side, the task is more complicated and more resource-intensive.
Suppose the AI industry chooses to take advantage of the unsettled policy conversation among lawmakers and launch a campaign to win the American people’s favor. In that case, it must do so differently than how the crypto industry has approached the task. Whereas crypto initially tried to influence lawmakers in D.C., the AI industry should understand that lawmakers’ favor is won at home through campaigns in vital congressional districts and states that make an affirmative case for the technology, its impact, and its potential. Activity in D.C. is how movements finish a job with lawmakers that began in their constituencies.
As key AI industry executives return from D.C., they will have confronted a city at a crossroads on artificial intelligence. They can follow the same path that crypto market participants have trodden or embark on a new road. One that will perhaps make all the difference.
