SEC Upholds AI Disclosure

Apple (NASDAQ:AAPL) and The Walt Disney Company (NYSE:DIS) have faced a setback as the U.S. Securities and Exchange Commission rejected their requests to exclude shareholder votes on their use of artificial intelligence (AI), according to Reuters.

The decision by the U.S. SEC means that both Apple and Disney cannot avoid the upcoming annual meetings where calls for reports on their use of AI will need to be addressed, a significant blow for the companies.

AI in Business Operations

Organizations are increasingly adopting AI for its potential efficiencies, but concerns have arisen regarding the impact on employment of creative and professional workers. Hollywood labor disputes and a recent lawsuit by The New York Times (NYT) against Microsoft (MSFT) and OpenAI for copyright infringement underscore the contentious nature of AI.

The shareholder proposals, submitted by a pension trust of the American Federation of Labor and Congress of Industrial Organizations, or AFL-CIO, also have AI measures pending at four other major technology companies apart from Apple and Disney.

AI Ethical Guidelines

At Apple, the group has requested a report on the company’s use of AI in business operations, including disclosure of any ethical guidelines adopted. The AFL-CIO has emphasized the importance of protecting copyrighted works and the rights of professional performers when it comes to AI systems. In contrast, Disney has been asked to report on its board’s oversight of AI usage.

Regulatory Implications

The SEC’s rulings could pave the way for agreements with Apple and Disney, potentially aligning them with the AI disclosure practices of other leading companies such as Microsoft. The regulator’s stance reinforces the view that the AI proposals transcend ordinary business matters and are not an attempt to micromanage the companies, rejecting the companies’ claims that these matters pertain to “ordinary business operations,” like the choice of technologies.

AI Impact and Intellectual Property

Despite the surge in generative AI services following the launch of Microsoft-backed OpenAI’s ChatGPT, questions remain around the use of intellectual property and its potential impact on the workforce. A landmark case in the U.K. in December 2023 saw an American computer scientist named Stephen Thaler losing his appeal to register patents on inventions created by his AI system, signaling the complex legal and ethical challenges posed by AI innovations.