The Matrix

Since the arrival of AI programs like OpenAI’s ChatGPT, Google’s Bard, and other similar technologies (“Generative AI”) in late 2022, more programs have been introduced and several existing programs have been upgraded or enhanced, including ChatGPT’s upgrade to ChatGPT-4. Our previous posts have identified the features and functionality of Generative AI programs and outlined the emerging regulatory compliance requirements related to such programs. This post discusses how regulatory agencies worldwide have begun to address these issues.

Since late 2022, terms like “large language models,” “chat-bots,” and “natural language processing models” increasingly have been used to describe artificial intelligence (AI) programs that collect data and respond to questions in a human-like fashion, including Bard and ChatGPT. Large language models collect data from a wide range of online sources, including books, articles, social media accounts, blog posts, databases, websites, and other general online content. They then provide logical and organized feedback in response to questions or instructions posed by users. The technology is capable of improving its performance and otherwise building its knowledge base through its internal analysis of user interactions, including the questions that users ask and the responses provided. These AI programs have a variety of applications and benefits, but businesses should be aware of potential privacy and other risks when adopting the technology.

On March 25, 2022, the United States and the European Union announced they agreed in principle to a new data privacy framework for cross-border data transfers. Although specific details of this new data privacy framework have not yet been provided, the new framework is meant to replace the former EU-U.S. Privacy Shield (the “Privacy Shield”), an arrangement that allowed companies to transfer the personal data of European data subjects to the United States. The Privacy Shield was invalidated in July of 2020 by the Court of Justice of the European Union on the basis that the Privacy Shield did not protect European data from U.S. surveillance.

Last week, the Federal Bureau of Investigation issued a private industry notification warning that “ransomware actors are very likely using significant financial events, such as mergers and acquisitions, to target and leverage victim companies for ransomware infections.” The FBI cautioned that ransomware attackers research publicly available information and target companies involved in significant, time-sensitive financial dealings such as M&A and other transactions. This initial reconnaissance, according to the FBI, is later followed by a ransomware attack and a subsequent threat that unless the victim pays the ransom, the attackers will disclose the information publicly, causing potential investor backlash and affecting the victim’s stock value.