If you're feeling anxious about the recent rapid development of artificial intelligence, you should know that you're not alone: In fact, American companies are getting worried, too.
By law, public companies must tell investors about material risks that could impair their profitability, usually things like a weakening economy or potential supply chain problems. And more than 56% of Fortune 500 companies list AI as one of the risk factors in their annual SEC filings, according to a new analysis from Arize AI.
Now, what those risks are specifically, and which companies are concerned about them, may not be what you would expect.
Netflix, for example, is the undisputed king of streaming. But the company faces risks: the impact of inflation on consumers, lingering labor issues, and a lack of unsolved crimes to make documentaries about. And if you turn to page 5, item 1A, of Netflix's annual SEC report, you'll find a new concern: generative AI.
“This could lower the cost of content production, making it easier for other companies to enter the market and making user-generated content on platforms like TikTok and YouTube more competitive,” said Jamie Lumley, an analyst at investment research firm Third Bridge.
According to the Arize report, 92% of Fortune 500 media and entertainment companies cited AI as a significant risk, the highest percentage of any industry.
But it's not just the media that's worried: Constellation Brands, maker of Corona beer and Kim Crawford wine, also cited AI as a risk factor in an SEC filing.
For many companies, AI is more of a security issue, with employees providing sensitive information to ChatGPT, than a direct competitive threat, said Joe Lazzarotti, an attorney at law firm Jackson Lewis.
“Customer lists could be leaked. Sensitive information about business opportunities could be leaked,” he said.
The AI risks that businesses worry about aren't necessarily external. For technology companies in particular, the risks come from within: deploying your own AI comes with legal, regulatory and reputational threats.
But Arize AI CEO Jason Lopatecki said there is a bigger risk behind the SEC disclosure.
“AI is going to engulf a lot of industries,” he says, “and I think the tension is that, 'If we don't invest here, we're at risk.'”
For many companies, not investing in AI could be the riskiest path.
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