Artificial intelligence (AI) has already begun transforming a
wide range of industries, including entertainment, advertising,
e-commerce, education, finance, and healthcare, to name a few. In
an effort to ensure that AI is developed and used safely and
responsibly in the United States, President Biden issued an
Executive Order on October 30th
directing the “most sweeping actions ever taken to protect
Americans from the potential risks of AI systems,” according to the White House.

What does the President mean when referring to “AI”?
The Order explains that “AI” includes any
“machine-based system that can, for a given set of
human-defined objectives, make predictions, recommendations, or
decisions influencing real or virtual environments.” The Order
also covers: “AI models” (components of a system that
implements AI technology and uses computational, statistical, or
machine-learning techniques to produce outputs from a given set of
inputs); “AI systems” (any data system, software,
hardware, application, tool, or utility that uses AI); and
“generative AI” (AI models that emulate characteristics
of input data to generate synthetic content including images,
videos, audio, text, and other digital content). In short, the term
is meant to encompass the full spectrum of artificial intelligence
offerings, from decision-making algorithms to content-generating
applications like large language models and beyond.

The Order also addresses a number of issues raised by the rapid
development of AI technology, including the “most pressing
security risks”—those related to biotechnology,
cybersecurity, critical infrastructure, and national security. It
also sets forth the Administration’s eight major policy goals
and priorities as follows: make AI safe and secure, promote
innovation and competition, support American workers, advance
equity and civil rights, protect consumers from fraud and
discrimination, protect Americans’ privacy, hire and train
public service-oriented AI professionals, and continue
America’s global leadership in technological progress. The
topics can largely be seen as falling into two distinct policy
priorities: consumer protection (including privacy and
discrimination protections) and championing American innovation and
competition.

CONSUMER PROTECTION

• Safety and Security:

The Order contains broad directions regarding the safety and
security of U.S. consumers, such as requiring that “developers
of the most powerful AI systems” share their safety test
results with the U.S. government. It is unclear what qualifies as
“the most powerful AI systems” but, at minimum, the Order
requires that anyone developing “a foundational model that
poses a serious risk to national security, national economic
security, or national health and safety” notify the federal
government when training the AI model and share results to ensure
that the system is “safe, secure, and trustworthy” before
making models public.

The Order also seeks to establish guidelines and best practices
for the development and deployment of safe, secure, and trustworthy
AI, including the development of a companion resource to the AI
Risk Management Framework, NIST AI 100-1 for generative AI. The
Administration is seeking to launch an initiative to create
benchmarks and auditing capabilities for AI generally with a focus
on high-risk areas such as cybersecurity and biosecurity.

Additionally, the Order seeks to address issues of consumer
fraud and disinformation by establishing best practices for
detecting AI-generated content and authenticating official
government content. The Department of Commerce will develop
guidance for content authentication and watermarking to label
AI-generated content for use by federal agencies. This labeling is
expected to “set an example for the private sector.”

The Order’s focus on safety goes beyond the U.S., including
by directing the accelerated development and implementation of AI
standards with international partners to ensure that
“technology is safe, secure, trustworthy, and
interoperable” on a global scale.

• Supporting Workers:

The Order also addresses the possible displacement of workers
due to AI by requesting a report from the Secretary of Labor
assessing how federal programs could be used to respond to AI
related work disruptions and identifying options to develop support
for affected workers. Here, again, the Administration expresses
concern with a range of potential consequences from the development
of AI, and calls for best practices that address equity, health,
and safety in the workplace. Specifically, those practices are
meant to address the “implication for workers of AI related
collection and use of data.”

• Equity and Civil Rights:

Much of the recent discourse regarding AI has focused on bias
and discrimination, including in the employment, consumer financial
market, and housing contexts. To address related concerns, the
Order requires training for the Department of Justice and federal
civil rights offices on best practices for the investigation and
prosecution of civil rights violations related to AI. Specific
federal agencies are also required to analyze AI in their sectors
and, as appropriate, require that regulated entities use AI and
other tools to ensure compliance with federal law. For example, in
the housing and consumer financial markets, the Federal Housing
Finance Agency and the Director of the Consumer Financial
Protection Bureau should evaluate underwriting models for bias or
disparities affecting protected groups and evaluate automated
processes to minimize bias. Additionally, the Order calls for
guidance to be issued regarding the use of tenant screening
systems, which may violate federal law by leading to discriminatory
outcomes.

It is worth noting that various federal agencies have already
published guidance regarding the
enforcement of individual civil rights in the AI space.
Organizations that operate in these sensitive areas, or that
collect sensitive data, should be particularly careful in their
practices and refer to the existing guidelines when processing such
data.

• Privacy and Other Protections:

Privacy protections are clearly a primary emphasis for the
Administration. Of particular concern is the potential for
increased privacy violations arising from the unregulated training
of AI systems. To address this, the Order calls for the evaluation
of agency standards associated with the collection, processing,
maintenance, and use of commercially available information. In
addition, the White House’s press release explicitly calls for the
passage of bipartisan data privacy legislation. Although such a law
has been a common topic in Washington in recent years, there has
been little progress toward a comprehensive federal privacy law
since last year’s proposed American Data Privacy and Protection
Act.

The Order also directs the strengthening of privacy-preserving
research and technologies through the funding of a Research
Coordination Network and the development of guidelines from federal
agencies to evaluate the effectiveness of privacy-preserving
techniques.

Additionally, the Order discusses a variety of other actions
meant to “protect American consumers from fraud,
discrimination, and threats to privacy.” The Administration
seeks to deploy AI in myriad ways, such as using predictive and
generative AI in healthcare delivery and financing while
simultaneously conducting safety monitoring of AI enabled
technologies in these spaces. Other key industries include
transportation and education; the Secretaries of Education and
Transportation are tasked with creating guidance and policies to
ensure the safe and nondiscriminatory use of AI while minimizing
any adverse impact on underserved communities.

ADVANCING INNOVATION AND COMPETITION

• Innovation and Competition:

The Biden Administration seeks to strengthen public-private
partnerships for advancing innovation, commercialization, and
risk-mitigation methods for AI, particularly through increased
funding for AI research and exploiting potential updates for patent
eligibility to address AI and other emerging technologies. The
Administration is particularly interested in using AI to further
its agenda in areas such as healthcare, veteran’s affairs, and
climate change.

The AI marketplace is also of interest to the Administration.
The Order tasks the Federal Trade Commission with ensuring
“fair competition in the AI marketplace” and that
“consumers and workers are protected from harms that may be
enabled by the use of AI.” At the same time, the administrator
of the Small Business Administration will help establish one or
more Small Business AI Innovation and Commercialization Institutes
that provide support, technical assistance, and other resources to
small businesses seeking to innovate, commercialize, scale, and
otherwise advance the development of AI. It is likely the
Administration is responding to the growing concentration of AI
power in a few big technology companies.

• Advancing Government Use of AI

The Director of the Office of Management and Budget will convene
an interagency council to coordinate AI development and usage
across government agencies with the goal of issuing guidance to
agencies to “strengthen the effective and appropriate use of
AI, advance innovation, and manage risks from AI in the
government.”

With the rise of generative AI, many companies have been
struggling to develop internal policies for the use of such tools.
In the Order, the Administration discourages federal agencies from
“imposing broad general bans or blocks on agency use of
generative AI.” Instead, agencies are directed to limit access
based on risk assessment and establish guidelines and limitations
on the appropriate use of generative AI. This should be of
particular interest to companies as they look to federal examples
for the development of their own internal use policies.

• Strengthening American Leadership

The order also looks toward international relationships,
partnering with international allies in efforts to establish
frameworks for managing AI risks, encouraging the adoption of
commitments similar to those of the U.S., and advancing responsible
global technical standards for AI development. The Secretary of
State, Administrator of the U.S. Agency for International
Development, and the Secretary of Commerce shall also publish an AI
Global Development Playbook that incorporates the AI Risk
Management Framework principles into “contexts beyond those of
the United States borders.”

The Takeaways:

President Biden’s Executive Order seeks to establish uniform
guidance and best practices for the development and use of AI,
particularly in areas of high risk. However, given the limitations
of an Executive Order compared to formal legislation, it remains to
be seen how the order will affect the private industry.

Importantly, the Order does not address any of
the hotly contested intellectual property issues raised by AI,
including whether use of copyrighted materials to train AI models
constitutes infringement or whether AI-generated outputs are
eligible for copyright or patent protections. We continue to blog
about these issues as they are battled out in court (see, e.g.,
here and here).

For now, it is clear that the Administration is heavily focused
on issues of bias, discrimination, privacy, and security.
Developers and organizations using AI should refer to the existing
regulatory guidelines referenced in the Order, such as the NIST AI
Risk Management Framework, as AI products are developed and brought
to market. Additionally, organizations and AI developers involved
in high risk areas, such as employment, housing, healthcare, or the
consumer finance market, should begin conducting bias audits and
stay up to date with any specific agency regulations. Those not
involved in high risk areas should nevertheless begin developing
internal AI policies, paying particular attention to potential
adverse effects on consumers from the use of AI.

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