By Sharon Nguyen, Tech Policy Fellow, Connected Commerce Council (3C)

My role as Tech Policy Fellow for the Connected Commerce Council (3C) has given me valuable insight into artificial intelligence’s (AI’s) transformative potential for businesses. In particular, it’s opened my eyes to how AI-powered tools can help small businesses run and grow with unprecedented efficiency — helping even tiny mom-and-pop shops better perform key operations such as managing their inventory, supplies, finances, marketing, and advertising their products and services. 

Those insights have helped me understand something else, too: the importance of thoughtful, balanced policymaking that allows small business leaders to continue making the most of AI-powered tools. According to 3C’s recent research, a vast majority (95%) of small business leaders already use AI tools to enhance their day-to-day work. 

The Regulatory Landscape

As AI increasingly transforms small businesses’ operations, policymakers face a critical challenge: balancing small business benefits with regulation. Laws and policies that overregulate AI would impact millions of small businesses leveraging AI-powered tools daily to grow and compete.

As policymakers move forward with AI regulations, key considerations should include: 

• Promoting AI Literacy: Policymakers should strive to educate small business leaders and the public about the actual benefits and risks of AI. By increasing knowledge, policymakers can help foster a culture of responsible AI use without curbing innovation. For more information, check out 3C’s roundtable discussion about AI research.
• Establishing Ethical Guidelines: Developing clear ethical guidelines for AI development and deployment would help reassure the public and offer critical boundaries for business leaders. These guidelines should address issues such as bias, privacy, and transparency.
• Bridging the Resource Gap: Many AI-powered tools offer cost-effective alternatives to professional services (e.g., accounting or marketing experts), helping boost small businesses’ bottom lines. For under-resourced small businesses, the tools would prove particularly empowering, allowing affordable access to high-value services. Promoting equitable AI access could produce broad benefits for the small business community, allowing more businesses to grow, compete, and succeed.

Recommendations for AI Policy Design:

Federal AI regulation presents a number of complex and interrelated opportunities and challenges. The recommendations below provide a broad framework for creating balanced AI regulations 

• Prioritize Small Business Benefits: Considering how policies can bolster (or harm) small businesses is essential. When crafting AI regulations, it’s crucial to weigh the potential benefits of AI against its risks. Regulations that are overly cautious and prioritize perfect safety would significantly hinder entrepreneurship.
• Focus on Human Performance, Not Perfection: Instead of striving for an unattainable standard of perfection, evaluate AI systems based on their performance compared to humans. While biases and errors may occur, the substantial benefits and efficiencies that AI offers should be the focal point.
• Create Holistic Regulatory Practices: Policymakers should prioritize a balanced approach to AI regulation that fosters innovation and empowers small businesses by focusing on limiting undesirable uses rather than limiting innovative technological developments. 
• Promote Economic Dynamism: Policymakers can bolster local communities by promoting AI-adoption among small businesses. When small businesses thrive, they directly support their communities by creating job opportunities for local residents, which in turn stimulates the local economy and fosters community development.

The Path Forward 

In today’s digital age, AI-powered tools must be accessible to small businesses because they are the backbone of our nation’s economy and drive entrepreneurship. Furthermore, these tools play a crucial role in leveling the playing field for small businesses, allowing them to grow and compete with much bigger players. 

Although there are understandable concerns about AI advancements, it is critical that legislators seek to maximize AI’s benefits — not just minimize its harms. Restricting access to these platforms and tools would disadvantage small businesses, reducing their competitiveness and hindering broader economic growth.

AI tools have astonishing potential to boost productivity and efficiency. Without a thoughtful, holistic approach to AI legislation, small businesses may not be able to realize the benefits of that potential.