Just like in life, political, legal, and regulatory scrutiny can hit you unexpectedly and swiftly. As the AI industry ponders its future, it only needs to reflect on the recent past, specifically the federal government’s approach to crypto assets, to get an idea of what lies ahead.
While those involved in crypto and AI may hesitate to be lumped together due to their fundamental differences, such as the broad applications of AI compared to the limited scope of crypto tokens, and the tangible use cases of AI versus the ongoing debate over the necessity of private currencies, there are still valuable lessons and strategies to be learned from how Washington approached crypto’s emerging technology.
The landscape of technology politics in the United States has shifted since the advent of the internet. Both sides of the political spectrum now harbor populist tendencies, resulting in a highly skeptical Congress that questions the core outputs and motives of the AI industry. While AI won’t face the same existential justifications that crypto assets have had to endure, there will be no presumption of innocence. Key lawmakers from both parties will assume AI has ulterior motives unless it proves otherwise.
Media gatekeepers are now weaker than ever, leaving the public, already skeptical of large corporations and institutions, susceptible to rumors and disinformation. In the late 1990s and early 2000s, many Americans heavily relied on traditional media sources. However, today, a larger number of Americans rely on their preferred social media platforms for news, which tend to prioritize engaging content rather than informative content. Consequently, when constituents are influenced by trending topics and viral posts, lawmakers have less flexibility in crafting moderate policies. Similarly, just as the crypto industry has been negatively impacted by the public’s focus on a few bad actors, the AI industry will face political consequences when machine learning produces imperfect outcomes, despite statistical evidence suggesting that machine learning is generally superior to human-managed processes.
While the AI industry can learn from the challenges faced by the crypto industry in Washington D.C., there is a crucial difference that makes achieving success in the city both more attainable and complex. Crypto market participants have aimed to penetrate the highly regulated financial services sector, which is less receptive to the “move fast and break things” approach that allowed companies like Uber and Lyft to bypass established transportation policies in the early 2010s. As of now, crypto market participants have not been able to leverage the popularity of their assets as a driving force to align Washington with their preferred regulatory framework.
The AI industry aims to enter various sectors, some of which have less established regulations compared to others. This provides an opportunity for AI market participants to outmaneuver policymakers in specific areas. However, AI will encounter significant challenges in financial policies that far surpass what the crypto industry has experienced. Just recently, SEC Chair Gary Gensler raised concerns about the potential systemic risk posed by using artificial intelligence in the financial system. It’s not difficult to imagine a scenario where prominent market participants utilize machine learning to trigger specific financial transactions during a crisis. While an individual company may benefit from reducing its exposure to a troubled sector, if multiple firms engage in the same practice, it could lead to a domino effect of margin calls, ultimately resulting in systemic risk in the financial system.
As the AI industry examines how Washington D.C. has approached crypto and anticipates future political risks and policy battles, how can it avoid falling into the same regulatory gridlock that the crypto industry currently faces?
The AI industry should quickly acknowledge and leverage its two crucial advantages over its opponents. While policymakers in Washington D.C. have expressed concerns about the implications of widespread AI adoption, neither party has reached a definitive conclusion on how the industry should be regulated. This situation resembles the time before Democrats classified crypto assets as securities while Republicans disagreed. Once AI policy becomes as fragmented as crypto regulation, it will be significantly more challenging to establish an effective regulatory framework.
The absence of firm policy positions within either party presents an opportunity for the AI industry to exploit another advantage: its substantial capital resources. The industry should utilize this capital to launch a comprehensive public affairs campaign that integrates AI technology into the broader American narrative. This campaign should emphasize the benefits of AI for everyday Americans and make a compelling case for retaining innovation within the country. The crypto industry delayed making a similar case to the American public, and now it faces a more intricate and resource-intensive task, although it can still rally public support to its cause.
If the AI industry decides to leverage the ongoing policy discussions among lawmakers and launch a campaign to gain support from the American people, it must approach it in a different manner than the crypto industry has done. While crypto initially attempted to influence lawmakers in Washington D.C., the AI industry should recognize that winning lawmakers’ favor starts at home, through campaigns in crucial congressional districts and states. These campaigns should present a positive case for the technology, highlighting its impact and potential. While activity in D.C. is important to finalize the efforts with lawmakers, the foundation is laid by engaging with constituents.
As influential executives from the AI industry return from D.C., they will have witnessed a city at a crossroads regarding artificial intelligence. They can either follow the path previously taken by the crypto market participants or embark on a new course that may make a significant difference.