October 4, 2024

Overview of Major AI Investments: Top 3

In 2023, the globalartificial intelligence (AI) market was valuedat over €130 billion and is expected to grow significantly by 2030 to nearly€1.9 trillion. Private investments currently account for the majority of AIinvestments. Accordingto recent searches, the US leads with €44 billion invested in 2022,followed by China (€12 billion). The EU and the UK hold third place with €10.2billion. But which companies from these countries have made the largestinvestments in AI, and what are the main legal risks they faced?

‍

USA: Microsoft's Investment inOpenAI

ChatGPT needs no introduction. If someone hasn't used it, they havecertainly heard of it. The creator of this revolutionary tool is OpenAI, withone of its largest investors being Microsoft, which has invested around $13billion since 2019 (including a $10billion tranche in 2023). These funds aim to developadvanced AI technologies and integrate GPT-4 into Microsoft products, includingAzure and Office 365. But what are the main legal issues Microsoft faces withsuch significant investments?

1. Antitrust Compliance

The US has stringentrequirements to prevent market monopolization. Microsoft's significantinvestments, given the company's history with the Federal Trade Commission,undoubtedly attract regulatory attention regarding AI market competition.

2. Intellectual Property Issues

Lawsuits from writers regardingAI violating their copyright are becoming a good tradition. Lawsuits againstOpenAI have been filed not only by lesser-knownauthors but also by prominent figures like GeorgeR.R. Martin. The NewYork Times, which is suing not only OpenAI, but also Microsoftitself, was not left out. All of them accuse the developers of using otherpeople's works without permission, be it books, scripts, or journalisticmaterials. Therefore, this issue is a "headache" for Microsoft,taking into account the potential amounts of compensation (after all, the saidlawsuits are still ongoing).

3. Responsibility for AI Technology Use

This concerns both the outputsproduced by AI and the control over its development. AI has demonstrated"academic honesty" issues, such as fabricating court cases, causing problemsfor lawyers. Additionally, the rapid advancement of AI technologyled to an openletter signed by 50,000 professionals, including Elon Muskand Steve Wozniak, calling to halt AI training more powerful than ChatGPT-4 toavoid a "Terminator" scenario.

Therefore, behind large profits and primacy in the field of AI, thereare many not only economic but above all legal risks for Microsoft. Thus, itremains an open question when we will hear about a new record investment fromMicrosoft in AI.

China: Investments by Alibaba,Tencent in Baichuan

China is striving to keep up in the AI field, making substantialinvestments in these technologies. Giants like Alibaba and Tencent haveinvested $300 million in Baichuan, a startup founded in 2023,developing a Chinese counterpart to ChatGPT, called Baichuan-13B. Currently,this model is available only to scientists and developers authorized forcommercial use. The legal risks of such investments are similar to those facedby Microsoft:

1. Enhanced Antitrust Control

In 2021, Alibaba wasfined $2.8 billion, and Tencent paid around $77,000 but wasrequired to take significant measures to address violations.

‍

2. Scrutiny of High-Tech Startup Investments

In addition to licensing and inspections, AI products are often onlyallowed to be used by a certain category of consumers. Chinese regulators areno less strict than American ones, so any violations will not go unnoticed.Confirmation of this is the high-profile processes with revocation of licenses,forced reorganization, or cancellation of the IPO (initial public offering ofshares), as was the case with Ant Group, Didi Chuxing or even the same Tencent'sWeChat.

3. Compliance with Legislation in Target Markets

This risk becomes relevant ifBaichuan-13B enters the international market, involving privacy and humanrights compliance. Otherwise, the startup could face the fate of SenseTimeand MegviiTechnology, which were sanctioned by the US for human rightsviolations, accused of developing facial recognition software used to oppressUyghur Muslims.

EU: Investments by Bosch andSchwarz Group in Aleph Alpha

The German startup Aleph Alpha is also working on a ChatGPT counterpart,distinguished by ensuring transparency of information sources. Currently, thisproduct is intended for enterprise and government use, aiming to create aproduct independent of American companies and compliant with European dataprotection rules and the AI Act. Several well-known European companies,including Innovation Park Artificial Intelligence, Bosch Ventures, and SchwarzGroup (Lidl and Kaufland), have investedin this project. The main risks with AI investments include antitrustcompliance, intellectual property rights adherence, and confidentiality.Notable investigations and legal cases related to AI investments in the EU arefew but include cases like Clearview AI. This American company, which developsfacial recognition technology, used billions of images from the internet totrain its algorithms without proper user consent, violating GDPR. Severalcountries, including Italyand France,fined the company and banned its activities.

Conclusions

In recent years, AI technology development has accelerated, naturallyattracting significant investments. The top three regions leading in private AIinvestments are the US, China, and the EU. The main legal risks investors facein substantial AI startup investments involve antitrust compliance,confidentiality, intellectual property rights, and sometimes even human rights.High-profile cases involving OpenAI, Alibaba, Tencent, SenseTime, Clearview AI,and others show that ignoring legal compliance leads not only to record finesbut also to activity bans.

‍

Рекомендовані статті

Підписуйтесь на наші новини