Everyone wants regulation, the question is how

Husic is co-ordinating a whole-of-government response to the issue.

Elon Musk thinks artificial intelligence could threaten humanity and Bill Gates figures it could solve world hunger – therein lies the dilemma, everyone wants some form of regulation but the question is just how.

A meeting of technology heavyweights left the door open in Washington this week even though they were unanimous something needs to be happen.

Australian Industry and Science Minister Ed Husic will address a Mindfields conference in Sydney next Wednesday to update the government’s progress but it seems a decision is, in the words of an advisor, a long way off.

In Australia, copyright looms as a major battleground, even if Quay Law’s Angela Flannery is right to lament, while Australia led the world with the 2021 Media Bargaining Code, Husic has made clear he is happy to take a back seat role on AI to see where the cards fall.

Husic is co-ordinating a whole-of-government response to the issue, which has another layer of danger, in Australia being late to the party and missing the upside, on top of the international dilemma on just where to draw the line.

Trouble is when you try to match regulation to technology, inevitably technology wins the race and the wrong regulation can either hurt the national economy and in the process entrench market dominating positions, in this case held by the platforms.

The textbook says make the regulation technology informed but technology neutral.

Microsoft is using its breakthrough generative AI tool ChatGPT to help boost its Bing search engine, which just might one day be competitive with Google, which is a good thing but then ChatGPT “learns” by hoovering through 570 gigabytes of text which depending on your definition is 167 million words or 4473 200-plus page books.

Generative AI is defined as “an engineered system that generates predictive outputs such as content, forecasts, recommendations or decisions for a given set of human-defined objectives or parameters without explicit programming”.

If you drink a bottle of wine its finished but open data on the internet is there for the next user, be it Microsoft, Google or Apple, as distinct from the walled garden data the platforms revel in.

Attorney-General Mark Dreyfus is handling one of the most fraught debates, being just whether the copyright laws meet the challenges AI presents.

Australian copyright law is more focused allowing fair dealing exceptions where you can seek permission to use someone’s work, an effective licence.

US law allows “fair use” which provides a broad exception and the technology platforms want this free run extended in Australia, while the content owners like the media and artistic companies want to keep the law as it is and for it to be enforced.

This is where it gets difficult because if a black box computer has read 167 million words and uses the same phrase as you did in a newspaper article how can you say the computer stole your words?

The assumption is the box has breached copyright, but whose, when and how?

Macquarie University academic Rita Matulionyte argues the lack of transparency means copyright owners will have difficulty enforcing their rights.

Same goes for the tech companies who can’t claim rights over their words because its been copied from someone else.

Former Copyright Agency boss Kim Williams figures copyright law is out of its depth and given the depth of “learning” by the computer it’s like trying to stop the tide.

Content creators have told Dreyfus there is strong regulatory momentum globally supporting the position that for generative AI to become a legitimate, trusted and valued part of the creative industries’ global ecosystem, it will have to become demonstrably transparent, ethical, fair and lawful.

This means seeking permission to use content.

Other countries including the EU, Japan, Singapore and South Korea have attempted to divide use into commercial and non-commercial purposes.

The US writers’ guild strike wants writers to be able to use AI to help them but not replace them.

Ultimately it should be up to the prompters to come up with the solution, after all it is their technology which is overtaking markets, breaching copyrights, ethics and threatening jobs.

Matulionyte proposes a two-stage step, the first being a licensing system covering output which competes in the market with creative content. The second is an exception to data mining used for specific business and scientific purposes including medicinal and existing use like AI to help retailers know which products are used when.

It is a complex response system.

Everyone except the platforms (which includes Microsoft) wants increased transparency, ethical principles and measures to mitigate bias, but words are not much use without the means to enforce lability for breaches.

Media bargaining code author Rod Sims argues it would be possible to amend its rules to incorporate AI compensation but many think that is a stretch.

AI will generate trillions in productivity savings for Australia but just how it does it is where the debate lies.

Decision due

The ACCC is finally due to decide next week whether to let Transurban extend its market dominance in Victoria to buy Horizon’s East Link stake and cement a virtual monopoly on private toll roads in Australia.

Logic says it should say no but that confuses competition law and policy.

Ultimately the only way to control the company is by state government policy.

Separately Steve Donohue at Endeavour Drinks will learn whether he can buy the Rye Hotel to extend his domination of the Victorian liquor industry.

Fighters

Two Dutch-based traders, Optiver and IMC, and local trader Vivcourt are leading the fight to resurrect tax concessions to keep them using Australia as a base for Asia Pacific financial trading.

Optiver pays 17 per cent tax on income earned from trading say Singapore stocks from Australia rather than Singapore and against the 30 per cent tax it would pay on trading Australian stocks.

The former government two years ago scrapped the Offshore Banking Unit which was established by the Keating government as part of efforts to boost Australia as an Asia Pacific banking hub some 30 years ago.

The argument being if you base the trade in Australia you generate more income and keep traders in the country rather than lose them to low-tax regimes in Singapore et al.

Having a base of Asian traders in Sydney would then spawn other regional activities, the argument went, but admittedly it has so far not worked as well as planned.

A tax perk added to the rule of law, education and other benefits to an Australian base was seen by Keating as a small price to pay.

Optiver by way of example employs 450 people in Australia out of the 600 employed in the region.

There are around 40 companies based in Australia who were getting the tax perk which expired in June this year and the loss of tax collected is estimated to increase from $30m in the 2023 year to $60m in the 2025 year.

Treasurer Jim Chalmers is reportedly looking at the issue.