TECH MONITOR. Japan becomes latest country proposing hands-off AI regulation, but businesses ‘likely to follow EU rules’
Despite enthusiasm among governments for ‘light touch’ AI regulation, Europe’s rules-base approach is likely to win out.
04 JULY 2023
Japan is looking to regulate the development and use of artificial intelligence by taking a light touch approach to the technology in a bid to quickly capitalise on the potential of AI to solve some of the problems caused by its rapid population decline. It joins the likes of the US and the UK in favoruing a hands-off stance on the development of automated systems, but businesses are likely to follow the stricter rules proposed by the EU to ensure they can access what is a lucrative market.
Countries around the world are trying to determine the best approach to regulate artificial intelligence, particularly the more general purpose versions that power tools like ChatGPT and image generators like Midjourney. The UK and US favour a more light touch approach, focusing on safety research, international cooperation and guardrails rather than legislation.
In contrast, the EU has built a comprehensive and far reaching set of regulations through the EU AI Act, that includes requirements for foundation AI model developers to declare training data and minimise illegal or harmful content generation. This, according to some EU companies, poses a risk to their businesses as they wouldn’t be competing with non-EU companies on a fair or equal footing.
Japan’s AI regulation plans
Japan wants to more closely align its approach to regulation with that of the US according to Reuters, which cites sources familiar with the Japanese government’s plans. It is focused on boosting economic growth rather that regulation, and is also hoping to capitalise on its chip manufacturing prowess to train large language models. One approach being considered in Japan is to remove copyright restrictions from material used to train an AI model. This is in direct contrast to the EU which requires the declaration of any copyrighted material.
University of Tokyo’s Professor Yutaka Matsuo, the chair of the Japanese government AI strategy council, has described the EU rules as “a little too strict” suggesting the copyright of material used in deep learning as “almost impossible”. He told Reuters: “With the EU, the issue is less about how to promote innovation and more about making already large companies take responsibility.”
Global competition to become the home of AI regulation is speeding up. The UK will host an AI safety summit later this year where world leaders and industry will meet to debate the specifics of AI regulation and attempt to come to a global consensus. Meanwhile the EU is progressing at speed with the implementation of its AI Act and US President Joe Biden’s administration is exploring the extent to which AI should be regulated.
‘Wise and measured’ AI regulation needed
Paul Barrett, deputy director of the Center for Business and Human Rights at NYU Stern School of Business, told Tech Monitor the EU’s approach is “wise and measured” and will likely become the global standard. “Even if the US and UK fail to emulate the EU, I expect that major producers of AI apps and other products will conform to EU standards because they won’t want to lose out on the lucrative European market and it will prove inefficient to offer different versions of their products in different parts of the world,” Barrett says.
He believes innovation can still happen in a strictly regulated environment, and that the concept of “pro-innovation” proposed by the UK and under consideration in Japan “really means unregulated”. He cites the lack of regulation in the social media industry, which has led to “substantial negative side-effects”.
Barrett predicts the EU approach will work regardless of how much pushback it faces from companies or other countries. “Regulation is not necessarily an obstacle to innovation or profits,” he says. “Consider the car industry, which resisted environmental regulation for decades but eventually came up with innovative ways to reduce carbon emissions–and even eliminate them with the development of a vibrant and fast-growing electrical vehicle segment.
“In the end, the EU will seem like the forward-thinking jurisdiction when it comes to oversight of AI.”
Monish Darda, CTO of contract AI company Icertis agrees, suggesting that there is a need for regulation. “AI regulation must be pragmatic,” he says. “It must support large and small companies and encourage experimentation. But at the same time, regulation must allow AI to be controlled in a way that protects basic principles of ethics and law, including privacy.
“The draft [EU] AI law has potential, and the world is watching with excitement, hope, and expectations that the law will do well. The world not only expects a regulatory milestone that adequately addresses all interests – it needs it.”
Learn more: France wants to become Europe’s capital for AI
President Macron is calling for a French revolution in all things artificial intelligence. EU regulations might stand in his way.
July 3, 2023
In May, midway through his star-studded tour of world leaders, OpenAI CEO Sam Altman stopped by the Elysée Palace to chat with French President Emmanuel Macron. The pair met in inside Macron’s gold-panelled office, an ornate room originally designed in 1861 for the Empress Eugénie and now seared by the addition of monsieur le président’s dark leather furniture and a bleak, impenetrable painting by Pierre Soulages. It’s a room that arguably conjures the vision of France that Macron has often sought to promote: a nation that combines forward-thinking innovation with enduring legacies of imperial grandeur.
French President Emmanuel Macron has worked hard to cultivate a tech-savvy image. He’s a regular attendee of high-profile conferences and is frequently pictured alongside leading industry figures — everyone from Elon Musk and Satya Nadella to a small humanoid robot named Pepper. Now, as evidenced by his recent meeting with Altman, Macron is firmly channelling his long-standing love affair with tech towards AI. In June, at VivaTech Paris, Macron announced a host of new initiatives, including a €500m fund to fund French ‘AI Champions’. “I think we are number one [in AI] in continental Europe, and we have to accelerate,” the French President told CNBC at the event. “We will invest like crazy on training and research.”
Can France fulfil Macron’s dreams? The country certainly has plenty of technical talent, but it’s facing a challenging and costly market. Some, moreover, fear that the EU’s far-reaching regulatory framework might stunt the continent’s innovation, leaving European startups trailing in the dust of the US and China.
France’s ambitions for AI
Macron has always been bullish about emerging technologies. Indeed, his first presidential campaign promised an aggressive agenda to turn France into ‘a start-up nation’ — a slogan that, he said, implied “a nation that works with and for the start-ups, but also a nation that thinks and moves like a start-up.”
Ideally, France wants to foster homegrown companies to compete with the likes of Google and OpenAI. It might have found one in Mistral AI. Founded by ex-Meta and Google AI researchers, the start-up managed to raise €105m in its opening seed funding round in June – Europe’s largest, and all within four weeks of the company’s founding. Its success perhaps betrayed Europe’s growing desire to create a viable alternative to Silicon Valley, and attracted major attention from France’s political leadership, including Macron, who shared the stagewith Mistral CEO Arthur Mensch at VivaTech to announce new policies intended to further boost French start-ups.
Can France become a start-up innovation hub? Despite prominent success stories like Citroën and L’Oréal, and boasting a sizeable share of the world’s unicorns, France has long been stereotyped as an overly-bureaucratic and hostile environment for business. Has that changed? Maxime Lhoustau thinks so. “I think we might have an edge,” argues the deeptech analyst at French VC firm Elaia, not least because, under Macron’s ostensibly pro-business leadership, France has embraced an entrepreneurial mindset. Lhoustau is confident that industry-leading startups will emerge from France. “Maybe not on the foundational side, and maybe not a new Amazon or a new Google, but we’ll be able to apply AI to some specific verticals which we’re already good at in France,” he says, pointing to opportunities in fields like sustainability, diagnostics, and drug-discovery.
Nicolas Miailhe, co-founder of AI alignment nonprofit The Future Society, says France has also established a successful framework for getting startups off the ground, especially through government-backed initiatives like La French Tech. What’s more, France also boasts a large talent pool. “We have excellent schools of fundamental and applied research in mathematics, and we have an excellent set of schools of engineering,” says Miailhe. “There’s a reason why DeepMind, Facebook and others have invested so much to build [their] clusters in France.”
Indeed, in its ‘technical talent’ atlas, VC Sequoia Capital ranks Paris second in Europe for its share of AI talent, at 3.81% (though London hosts a more impressive 12.29%.) But don’t expect a French version of ChatGPT any time soon. “It will be very hard to catch up with the Americans” when it comes to building foundation models, says Mehdi Triki, a project manager at Hub France IA. The large public US models, like GPT-4, were extremely costly to produce and “already have a certain level of maturity – as well as an absolutely phenomenal level of adoption.”
Europe, however, could make a unique mark by targeting businesses, especially those concerned about data protection and legal compliance — issues that ChatGPT has been rather shaky on. “I think the Americans have accelerated well on B2C, but we can differentiate ourselves on B2B,” says Triki. Success, he believes, will be boosted by comprehensive governmental support. “We are at a pivotal moment in France, and I think that the French public authorities have well understood the importance of focusing on AI.”