Will AI Regulations Hamper Innovation?
There is a philosophical battle that is raging right at the heart of the AI sector — should we prioritise innovation or regulation when developing AI?
This is not a new dilemma. For decades, writers and filmmakers have created works of science fiction that have warned against the unfettered development of AI , whether it’s The Terminator, The Matrix or Blade Runner.
Governments and organisations with more cautious inclinations have begun regulating AI, set guardrails determining its power and governance. The EU's AI Act is one such example.
On the other side of the argument, AI developers believe that overly intrusive regulations could disrupt the rapid growth the technology has enjoyed in the past few years.
Why do we need to regulate the AI sector?
Currently, copyright law is a major point of contention in the world of AI, particularly in the US.
In May, US President Donald Trump fired one of the most senior politicians in Congress, Shira Perlmutter, after she tabled a series of strong recommendations, including one which would prevent the unauthorised use of IP in the training of AI.
“Donald Trump’s termination of Register of Copyrights, Shira Perlmutter, is a brazen, unprecedented power grab with no legal basis,” said Joe Morelle, Member of the US House of Representatives.
“It is surely no coincidence he acted less than a day after she refused to rubber-stamp Elon Musk’s efforts to mine troves of copyrighted works to train AI models.”
Some industry experts, though, dispute the idea that regulation necessarily comes at innovation's expense.
"On the one hand you've got innovation, on the other you've got regulation. I think there's a false dichotomy here when these two things are set against each other," explains Ashley Braganza, Professor at the University of Brunel.
"It's not that you need one or the other, you need both. That message is starting to get through. It can’t be a free-for-all."
Can AI regulation build market confidence?
According to some observers, regulations might actually accelerate the adoption of AI, rather than stifling it.
Tim Clement-Jones, Member of the UK’s House of Lords, believes that regulations can provide certainty for businesses and consumers alike.
“Many potential AI adopters are hesitating not due to technological limitations but uncertainties about liability, ethical boundaries and public acceptance," he says.
You can see this dynamic at play in highly regulated industries, like aviation.
"We're a very heavily regulated business,” says Peter Burns, Director of Marketing, Digital & eCommerce at Heathrow Airport.
“In the physical space of an airport, people want to feel reassured — it's the same with a digital space.”
“It's what customers expect. They wouldn't use our airport and they wouldn't use our digital services if we didn't have that.”
Elsewhere, in the B2B economy, establishing trust is a core principle of some companies’ AI strategies.
Salesforce has built what it calls a “trust layer” into its new agentic AI assistant, Agentforce, which filters out biases and masks all personal information.
“We knew that that was an absolute table stake for our customers to be able to trust the technology,” says Zahra Bahrololoumi, CEO for the UK & Ireland at Salesforce.
The uncertainty around AI regulations
Whilst AI regulation could be invaluable in safeguarding the rights and livelihoods of people, uncertainty is unhelpful for businesses.
“Companies put in a big investment, two years down the line they find that some regulation comes in which means that their big investment doesn't add up to very much,” explains Ashley.
Down the line, this uncertainty can have a negative impact on innovation, as companies hesitate to invest in technologies that might later be restricted or banned.
The solution lies not in avoiding regulation but in creating clear, predictable frameworks that allow businesses to plan effectively.
“The goal isn’t whether to regulate AI, but how to regulate it promoting both innovation and responsibility,” says Tim.
“We need principles-based rather than overly prescriptive regulation, assessing risk and emphasising transparency and accountability without stifling creativity.”
The state of AI regulation today
Currently, only 60 countries have signed the Paris AI Action Summit declaration, which is the first global accord on AI. This represents progress, but it is clear that a global consensus is far from being reached when it comes to AI regulation.
Notably, the UK and US have elected not to sign.
The declaration aims to ensure AI is “open, inclusive, transparent, ethical, safe, secure and trustworthy”.
It is possible that some governments are worried that by adopting regulations they will forfeit the chance to reap the benefits of an AI-driven economy.
“If the government regulates against the use of drones or stem cells or AI , all that means is that the work and the research leave the borders of that country and go someplace else,” says Peter Diamandis, Founder & Chairman of the XPRIZE Foundation.
On the other side of the debate, Lord Clement-Jones believes that AI regulators should look to the world of sustainability for inspiration.
“Just as environmental regulations spurred cleaner technologies, AI regulations focusing on explainability and fairness could push developers toward more sophisticated, responsible systems,” he says.
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