AI compliance in the US: Israeli tech’s nightmare

The rapid development of Artificial Intelligence (AI) has brought undeniable benefits across various industries. However, the US Department of Justice (DOJ) recognizes the potential risks and benefits associated with its use.

The DOJ is committed to fostering responsible AI development and implementation. This includes ensuring safety and security by enforcing the President's Executive Order on Safe, Secure, and Trustworthy AI. This order establishes ethical standards with a focus on privacy, equity, and preventing AI misuse. Additionally, the DOJ is actively enforcing existing laws, such as discrimination laws, against AI misconduct. The DOJ is specifically instructing companies’ compliance programs to assess the risks from implementing AI in their systems and into their products. We expect to see significant enforcement efforts with respect to the use of AI. With that in mind, compliance professionals should be proactive in taking into account the new risks from AI in their companies’ systems and products to mitigate the cost of any misstep. On the other hand, the DOJ is actively encouraging companies to integrate AI into their compliance programs.

Regulatory scrutiny in AI use is on the rise. Other US regulators - the Federal Trade Commission and the Securities and Exchange Commission, for instance - are also applying increasing scrutiny to the use of AI and leveraging the existing tools at their disposal to take action against misconduct. The SEC recently brought actions against financial advisers under the Advisers Act and the Marketing Rule for misrepresenting AI capabilities in services. Similarly, the FTC has warned companies against making user data available to third parties to facilitate AI training and development, citing unfair business practice laws. The DOJ and the FTC are also cautioning companies that using AI to determine pricing strategies may result in collusive price fixing (which is illegal under existing antitrust laws) - regardless of the technology involved or whether the individual players still retain autonomy to set prices. And even a few states have proposed legislation to ban the use of AI to set pricing in some instances. Finally, there's growing concern over algorithmic bias leading to discriminatory practices, as illustrated by the Equal Employment Opportunity Commission's settlement against an online tutoring service.

Companies should prioritize developing and implementing robust AI governance frameworks. This includes comprehensive risk assessments alongside measures to detect and mitigate bias. Fostering a culture of transparency and accountability is also crucial. In addition, companies should be proactively adding assessment of AI risk to their compliance programs. This means cataloging all uses of AI in the company and qualitatively analyzing any legal and regulatory risks that stem from those uses. Finally, from a process standpoint, compliance programs should be involved in the process of implementing AI so that they are not catching up after the AI is already in the environment.

Staying updated on the legal landscape and ensuring compliance with relevant regulations is paramount. By proactively addressing these concerns, businesses can leverage the benefits of AI while mitigating risks and maintaining trust with their stakeholders.

The evolving legal landscape of AI regulation underscores the importance of caution and awareness for the Israeli tech industry. By proactively implementing robust AI governance frameworks, fostering transparency, and staying up to date on international trends, Israeli companies can ensure they are harnessing the power of AI responsibly. This will not only mitigate legal risks, but also build trust with stakeholders and position Israel as a leader in the development of ethical and beneficial AI technologies.

The authors are DLA Piper partners, who jointly lead the international law firm’s Global Compliance group. Advs. Benjet and Hausfeld recently visited Israel and participated in a workshop, hosted by DLA Piper Israel Country Group, on "Navigating the evolving landscape of compliance."

Published by Globes, Israel business news - en.globes.co.il - on April 24, 2024.