Decoding the White House's Executive Order on AI

Christopher S. Brinkman, Kennedy E. Brooks, David J. Stewart

President Biden signed an Executive Order regarding artificial intelligence (“AI”) on October 30, 2023 (the “Order”). The Order touts the importance of responsible development and use of AI and calls for collaboration between the United States’ public and private sectors. The Order also protects and encourages small businesses and entrepreneurs to participate in the AI marketplace. This article briefly summarizes the Order, recent developments, and provides key takeaways for business leaders and entrepreneurs.

I. Overview

While the Order spotlights the overarching goal of responsibility in AI, it also sets forth specific measures. The Order emphasizes ethical considerations at the core of AI development and prioritizes principles like fairness, accountability, and transparency when developing and utilizing AI systems and technologies.

A. Protection of Individuals

Recognizing the importance of security in AI and to better protect Americans, the Order charges the National Institute of Standards and Technology (“NIST”) with establishing standards for extensive AI safety testing. The Order also calls upon the Department of Commerce to develop guidance on detecting AI-generated content. In tandem, while recognizing the importance of data privacy in the realm of AI, the Order urges Congress to enact federal data privacy legislation, underscoring the value of safeguarding personally identifiable information. As part of the broader effort to enhance protection for Americans, the Order also requires the Chairman of the Council of Economic Advisers to develop a detailed report on the labor-market implications of AI and requires the Secretary of Labor to identify options to strengthen support for workers facing labor disruptions.

B. Small Businesses and Entrepreneurs

The Order extends its reach to support small businesses and entrepreneurs. For example, certain federal funds, such as the Growth Accelerator Fund Competition bonus prize and Regional Innovation Cluster funds, are now to be allocated with priority given to eligible AI-forward businesses. The Administrator of the Small Business Administration is also directed to raise awareness of capital-access program opportunities for small businesses and perform outreach to encourage eligible investment funds with AI-related expertise to apply for Small Business Investment Company licenses.

Additionally, the Order encourages the Federal Trade Commission to exercise its rulemaking and enforcement authorities over the AI marketplace to ensure fair competition and, thus, protect small businesses and entrepreneurs from industry dominators.

C. Government AI Use

In addition to providing protections for individuals, small businesses, and entrepreneurs, the Order highlights the need for responsible government use of modern AI infrastructure. This includes a call for quick and efficient contracting for AI products and services, a directive aimed at ensuring agility and responsiveness in the government’s adoption of AI Systems. To build internal expertise and lead by example, the Order also commands the issuance of guidance to federal agencies on the use of AI and the rapid hiring of AI professionals within the government.

II. Recent Developments

In January, NIST released a report on adversarial machine learning which includes methods for mitigating and managing damages resulting from attacks on AI systems. In early February, the United States Artificial Intelligence Safety Institute (“AISI”) and the Artificial Intelligence Safety Consortium (“AISC”) (comprised of companies such as OpenAI and Microsoft) were established to be housed under NIST. AISI and AISC will contribute to the development of the guidelines, rules, and regulations called for in the Order, along with generally supporting the safe and responsible development and use of AI.

Meanwhile, state and federal governments have continued introducing AI-related bills in droves; in fact, a handful of states have already enacted AI-related legislation. The array of state laws in the United States, paired with the absence of a comprehensive federal law, is reminiscent of the ongoing regulation of data privacy in the United States. Without a comprehensive federal law, the regulation of AI in the United States is likely to end up in a patchwork system of state laws, unfriendly to businesses small and large.

III. Key Takeaways

The Order’s broad applicability is sure to affect businesses, entrepreneurs, and investors across a wide array of sectors. The emphasis on the government’s interest in contracting for AI products and services, as well as assisting small businesses and entrepreneurs, signifies an opportunity for those involved, or looking to get involved, in the AI marketplace. However, the government is also calling upon multiple government agencies to set standards, issue guidance, pass new laws and regulations, and enforce existing laws and regulations. Businesses will be required to adapt and navigate the influx of government input surrounding AI, whether offering AI products and services for sale or using AI only internally.

The KMK Law Venture Group is available to provide additional guidance in this area—please contact us should your business need assistance navigating the Order, its opportunities, or existing or future standards, guidance, laws, or regulations relating to AI.

KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.


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