The disclosures reflect growing concerns about AI’s potential to cause reputational harm, legal liability, and regulatory scrutiny.
AI concerns
Microsoft expressed optimism toward AI but warned that poor implementation and development could cause “reputational or competitive harm or liability” to the company itself. It emphasized the broad integration of AI into its offerings and the potential risks associated with these advancements. The company outlined several concerns, including flawed algorithms, biased datasets, and harmful content generated by AI.
Microsoft acknowledged that inadequate AI practices could lead to legal, regulatory, and reputational issues. The company also noted the impact of current and proposed legislation, such as the EU’s AI Act and the US’s AI Executive Order, which could further complicate AI deployment and acceptance.
Google filing mirrored many of Microsoft’s concerns, highlighting the evolving risks tied to its AI efforts. The company identified potential issues related to harmful content, inaccuracies, discrimination, and data privacy.
Google stressed the ethical challenges posed by AI and the need for significant investment to manage these risks responsibly. The company also acknowledged that it might not be able to identify or resolve all AI-related issues before they arise, potentially leading to regulatory action and reputational harm.
Meta said it “may not be successful” in its AI initiatives, posing the same business, operational, and financial risks. The company warned of the substantial risks involved, including the potential for harmful or illegal content, misinformation, bias, and cybersecurity threats.
Meta expressed concerns about the evolving regulatory landscape, noting that new or enhanced scrutiny could adversely affect its business. The company also highlighted the competitive pressures and the challenges posed by other firms developing similar AI technologies.
Nvidia did not dedicate a section to AI risk factors but mentioned the issue extensively in its regulatory concerns. The company discussed the potential impact of various laws and regulations, including those related to intellectual property, data privacy, and cybersecurity.
NVIDIA highlighted the specific challenges posed by AI technologies, including export controls and geopolitical tensions. The company noted that increasing regulatory focus on AI could lead to significant compliance costs and operational disruptions.
Along with other companies, Nvidia highlighted the EU’s AI Act as one example of regulation that could lead to regulatory action.
Risks are not necessarily likely
Bloomberg first reported the news on July 3, noting that the disclosed risk factors are not likely outcomes. Instead, the disclosures are an effort to avoid being singled out for responsibility.
Adam Pritchard, a corporate and securities law professor at the University of Michigan Law School, told Bloomberg:
“If one company hasn’t disclosed a risk that peers have, they can become a target for lawsuits”
Bloomberg also identified Adobe, Dell, Oracle, Palo Alto Networks, and Uber as other companies that published AI risk disclosures in the SEC filings.
