Big tech companies quietly warn of AI risks in SEC filings

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Companies like Nvidia have warned investors about the risks of AI in recent reports. I-HWA Cheng/AFP via Getty Images

Growing security concerns. Biased data sets. A surge in copyright infringement claims. These are just some of the scenarios that big technology companies laid out as potential risks of AI in recent filings with the U.S. Securities and Exchange Commission (SEC). As the tech industry races to profit from the AI ​​revolution, as first reported by Bloomberg, the “risk factors” sections often used to ward off shareholder lawsuits also warn of AI's harms in SEC filings.

AI has undoubtedly been a boom time for technology companies. Nvidia (NVDA), which dominates the market for graphics processing units (GPUs) that power AI applications, has become the world's most valuable public company with a market capitalization of over $3 trillion this year. In the software space, leaders such as Microsoft (MSFT), the largest corporate investor in OpenAI, are paving the way to integrate AI across their product lineups. But that doesn't mean these companies aren't aware of AI's many risks, from increased regulation to generating objectionable content.

From chipmakers like AMD (AMD) to tech giants like Meta (META) and Google (GOOGL), the biggest names in the AI ​​industry have taken the time in their quarterly and annual reports to warn investors about the potential for AI to negatively impact their businesses. Here's what the big tech companies have to say about the risks posed by the emerging technology.

Meta: Third-party misinformation and inappropriate use

Meta's AI ambitions include both large-scale language models and its own AI chips. But the company has also warned about the technology's potential for disruption. Its AI-related efforts leave it vulnerable to misinformation and deepfakes, including those related to elections, the company said in a recent SEC filing. It also cited harmful or illegal content, bias, discrimination and toxicity as worrying byproducts that could result from its AI pursuits.

Additionally, Mehta noted that the development of AI open to third parties means that there may be no control over how such tools are used. “We cannot guarantee that third parties will not use such AI technologies for inappropriate purposes,” Mehta said, noting that this could lead to the spread of illegal, inaccurate, defamatory, or harmful content, furthering discrimination, cybersecurity attacks, and data privacy violations.

Microsoft: Copyright Infringement Claims and Security Risks

Microsoft, which recently launched its AI PC series, also pointed out several potential risks associated with the technology in a recent SEC filing: Flaws in AI algorithms or training methods, biased or inadequate data sets, offensive or illegal AI-generated content, and inefficient deployment of AI by Microsoft itself could all lead to harm, according to the company.

The company further discussed potential copyright infringement claims related to AI training and deliverables, as well as possible implications arising from regulations such as the European Union's AI Act and the Biden Administration's AI Executive Order in the United States, which aim to develop AI responsibly while mitigating harms.

Not to mention the security risks associated with generative AI capabilities, which the company said “may expose us to unforeseen security threats from sophisticated adversaries.” Microsoft noted that users could use the AI ​​to impersonate other people or organizations, or spread misleading information to manipulate the opinions of Microsoft customers.

Google: Social harm and exploitation by bad actors

Meanwhile, Google's parent company, Alphabet (GOOGL), said in an SEC filing that the use of AI “can raise ethical questions and have far-reaching effects on society.” The company has made advances in AI in recent years, including acquiring AI startup DeepMind in 2014, but it also acknowledges that it may not be able to resolve AI-related issues before they arise that could negatively impact “human rights, privacy, employment or other societal concerns,” which could lead to litigation or increased regulation.

The company also warned that new AI features may expose “unforeseen security risks” as Google better understands how to protect AI, adding that the increasing prevalence of AI in its products could lead bad actors to pursue new ways to exploit it.

Amazon: Negative public perception

Amazon (AMZN) is also betting big on the new technology with a series of AI announcements. However, in a recent SEC filing, Amazon acknowledged that public perception of social and ethical issues surrounding the development and use of AI could impact the e-commerce and cloud giant's financials. The company also said that its use of AI could lead to increased infringement claims, pointing to unauthorized use of “third-party technology or content” as a risk factor.

Adobe: Workforce Disruption and Increasing Competition

Adobe (ADBE) may be embracing the power of AI when it comes to its image generation tools, but the company is warning that its AI offerings could hurt its business if it fails to adapt. The company said that AI has the potential to deliver new ways of marketing, content creation and document manipulation, potentially transforming the industries in which Adobe operates, and that the technology could disrupt workforce needs.

The company also expects increased competition in the rapidly evolving AI market. “For example, we are experiencing increasing competition from companies offering AI technology that generates images from text, which may compete directly with our creative products,” Adobe said in the filing, adding that its revenue could decline if it is unable to compete effectively.

NVIDIA: Long-term outlook uncertain, regulatory scrutiny intensifying

Despite the chipmaker's dominance in the AI ​​hardware market, NVIDIA doesn't believe it can maintain its momentum. “While recent technologies such as generative AI models have emerged and are driving demand for data centers, [products]”The long-term trajectory is unknown,” Nvidia said in a recent SEC filing.

Growing concerns about AI risks have also led to increased regulatory scrutiny, which could affect the company's AI products, Nvidia said, adding that it has received requests for information about its GPU sales from regulators in the EU, UK and China, and expects more requests in the future.

AMD: Lack of Competitiveness and Talent Poaching

AMD, another major player in the AI ​​chip manufacturing industry, is also benefiting from the AI ​​revolution as demand for GPUs grows to power data centers that run AI models. But like Nvidia, the company is not confident about the technology's staying power, stating in an SEC filing that “our long-term strategy for such generative AI solutions is unclear.”

The company also cited “intense” competition from AI accelerator rivals such as Nvidia, saying it may not be able to simply keep up with their ability to adapt, especially given that the AI ​​market is prone to rapid change, product obsolescence, evolving trends and new product introductions.

AMD is also concerned about its ability to attract and retain AI talent. “Competition for highly skilled executives and employees is intense in the technology industry, particularly in the areas of AI and machine learning,” the company said, adding that “competitors are targeting talent from our organization with desirable skills and experience.”

Big tech companies quietly warn of AI risks in SEC filings

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