Autonomous AI, private actors and hybrid modes of technology regulation: some firm level evidence

Mitja Kovac (University of Ljubljana School of Economics and Business)
Katarina Jevsjak (Metronik Corporation)
Svjetlana Maksimovic (Gebrüder Weiss company)


explosive growth of generative AI represent one of the most triggering questions of the modern world. The world is on the threshold of the fourth industrial revolution that draws its energy from big data combined with algorithms and powerful computers. The current digital revolution is marked by its global scale, rapid convergence and the enormous impact that breakthroughs in emerging technologies are having on countries, economies, societies, international relations and the environment. Europe, which for centuries has been at the technological frontier, playing a major role in technological advances and been a pioneer in the production and use of cutting-edge products, is currently lagging the US and China. It may be even argued that there is a risk that the EU might fall behind in global standard setting and technology development. EU in its recent legislative proposals suggests that the AI and robotics should be human-centered and developed to complement human activities. The legal requirements should be adapted accordingly in line with the risk-based approach and due regard should be given to the precautionary principle where warranted. However, the industry level data shows that the new EU compliance requirements might needlessly increase the cost of developing and maintaining AI systems, which could make it more difficult for EU based small and medium-sized enterprises to compete in the AI markets. In addition, they could slow down the development of AI systems, as companies would have to devote more resources to ensuring compliance with the proposed EU AI Act.
This paper provides a multidisciplinary assessment of the proposed EU Artificial Intelligence Act and seeks to assess its impact on the research & development processes in companies that develop solutions with AI elements. While exploring the unique firm and industry level evidence paper explores the role of public and private actors in AI regulation. It also investigates hybrid modes of regulation with the focus on the inclusive growth of the AI industry in the EU. Moreover, paper provides a set of normative suggestions for an improved hybrid regulatory respond which should achieve optimal risk internalization, precaution, and firm level innovation. Furthermore, this paper provides the comparative, industry based economic, geopolitical and behavioral analysis of current regulatory approaches to AI in the EU, US and China.

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