AI in the era of regulation: striking the balance
When ChatGPT was unveiled in November 2022, the first users had fun asking the AI model to do their homework or write a Shakespearean sonnet. But it soon became clear that this was no mere plaything. Generative AI quickly took its pace at the heart of any serious business plan. As Big Tech firms invest vast sums to build the data centres needed to train AI models, this newsletter looks principally at how regulators can foster this fast-evolving sector.
For a start, supportive regulation on things such as electricity tariffs for large users can critically influence the decision where to locate a data centre; countries need to be proactive on such issues to attract investment, we argue. Also on regulators’ to-do list is how to adapt to the major shift now underway from cloud-based computing to AI operating seamlessly on personal devices. One key question, we believe, is whether this move will create opportunities for new entrants or simply consolidate market power in different areas.
Yet another challenge for regulators is to encourage investment in data sharing among co-located infrastructure providers to produce better customer outcomes. Setting the right incentives will be tough, but the prize, in the form of increased resilience, is huge. Quantifying the benefits of AI is difficult, a related article explains, not least because the spillovers from an AI intervention are inherently uncertain.
Two further pieces examine the impact of AI on financial services and screen production. We believe it is urgent for the UK to publish clear regulatory guidance if it wants to be a leader in the application of generative AI to financial services. Regulators also have an important role to play in the screen production industry, for example in relation to the misuse of AI and support for copyright and likeness rights. But, in what is a global business, they must tread carefully and not drive producers away by making projects costlier and riskier.
Switching focus from regulation, we look at harnessing AI to uncover the AI skills that the UK economy needs to boost lacklustre growth and fulfil its ambition to be a global leader in the new technology.
72%
of financial services firms are already deploying or developing machine learning applications
£3.25bn
was announced in the recent Spring Statement to support the fundamental reform of public services and seize the opportunities presented by digital technology and AI.
By 2026
data centres in Germany must reuse at least 10% of the heat they generate
