International Research Shows Strict Rules Hinder AI Innovation
The following insights come from Bay Area Council Senior Vice President Peter Leroe-Munoz, who leads our AI, innovation and technology policy work.
When the General Data Protection Regulation (GDPR) took effect in 2018, it was hailed as the world’s most comprehensive and wide-reaching set of data privacy regulations. European Union organizations, and those operating within their borders, would be limited in how they collected, processed and monetized information from online customers. Citizens were granted unprecedented ability to access, review, correct and deny the use of their online data. Seven years later, international scholars have crunched the numbers and their finding is simple: artificial intelligence innovation diminished under the GDPR rules. The lessons learned may help offer a path to balancing rules and technology growth in the age of AI.
Scholars from Morocco, France, the UK and Northeastern University in the U.S. studied the impact the GDPR has had on the development of AI in countries under the GDPR rules. Innovation was measured in terms of AI patents, publications and companies. To allow for an even comparison, certain variables were held constant among the countries: past AI patents, historical economic growth rates, population size and others.
Overall, the results were sobering. Countries under the GDPR saw 10.8 percent fewer AI patents compared to GDPR-unaffected nations relative to their prior difference in patents. Interestingly, the report found that countries were able to mitigate the innovation decline through certain cultural factors, including individualism, tolerance for uncertainty and others.
While the study focused on a discreet global region and the impact of a singular set of regulations on innovation, the results including 27 countries shouldn’t be ignored over a seven-year period. The universal findings that AI innovation decreased by more than 10 percent should be a warning to policymakers around the globe as they try to balance thoughtful regulation with technology advancement.
Countries around the world are racing to compete in the AI space, whether to create an AI ecosystem for global investment and development, or simply to develop sovereign artificial intelligence that reflects their unique linguistic and cultural traits. Increasingly stricter regulations may undermine these national goals when they increase costs that preclude new market entrants, divert too many resources from innovation to compliance, and create suffocating rules that unduly slow data acquisition in a field that moves exponentially faster each day.
Thoughtful regulation and innovation are not necessarily incompatible. But regulating with little consideration for negative externalities on innovation is an effective way to limit a country’s number of “Eureka!” moments.
