RFI Response: AI Regulatory Reform
Thank you for the opportunity to offer comments on regulatory reform on artificial intelligence (AI). On behalf of the Connected Commerce Council (3C) — a nonprofit organization dedicated to ensuring small businesses have the digital tools they need to thrive in today’s economy — I urge you to prioritize policies that ensure small businesses’ ongoing access to and adoption of AI-powered tools.
AI is a game-changer for America’s 36.2 million small businesses. Its remarkable speed, “trainability,” and scalability significantly enhance small businesses’ efficiency and growth potential. AI-powered tools can, for example, improve marketing and advertising, streamline inventory management, boost customer service in e-commerce, and provide valuable data analysis that helps small-business owners make smarter decisions and reduce costs. By leveraging AI-powered tools, small businesses can level the playing field and compete against much bigger companies.
However, while guardrails are important, they have to be implemented in a way that is workable for small businesses. Absent a national framework, a patchwork of state laws regulating AI development and deployment, some of which introduce significant burdens for small businesses, threatens small businesses’ access to these transformational technologies.
To ensure AI-powered tools remain affordable for small businesses and encourage adoption of tools that help small businesses grow and thrive, we suggest the Office of Science and Technology Policy (OSTP) prioritize the following:
- Establishing a federal AI privacy framework that preempts state laws, simplifying compliance and encouraging adoption of AI tools by small businesses.
- Avoiding overly burdensome regulations that disproportionately impact small businesses and hinder innovation.
The future of small-business AI adoption lies in developing a comprehensive federal AI policy framework that supersedes state laws and avoids a complex “patchwork” of state-level regulations like those currently governing data privacy. Without a federal framework in place, AI compliance — and therefore AI-tool adoption — will be simply too complex, costly, and legally risky for small businesses. This year, lawmakers across the U.S. have introduced nearly 1,000 bills regulating AI, and several states have already passed new AI laws. In today’s digital economy, even the smallest businesses operate online and across state lines. Tracking 50 different state laws, with different thresholds for compliance, audit requirements, and other mandates, will erect new barriers to small businesses’ AI adoption, putting them at a competitive disadvantage.
Small businesses need a single, federal AI policy framework to preempt state laws, simplify compliance, and level the playing field of AI tool adoption.
Similarly, federal policies must seek the appropriate balance and avoid overregulating AI-powered tools. Some states, such as Colorado, have already adopted rules that create serious compliance costs for even the smallest businesses that use AI tools for activities like resume screening. A small business that uses these tools to screen more than 2,000 resumes in a year — not a particularly large number — would have to pay for expensive third-party audits to prove the tools weren’t used to further bias or discrimination in hiring. In addition, the developer of that AI tool would also have to submit a third-party audit, increasing that developer’s costs and making that tool more expensive for small businesses to use. In short, AI regulations shouldn’t require small businesses to adhere to additional regulations simply because they are using AI-powered tools to engage in standard, legal business activities.
Other proposals included requiring AI developers to list every copyrighted work used to train a model. These regulations will only make it more expensive for developers to continue to innovate and produce new AI-powered tools to help small businesses increase efficiency, maximize their profits, hire people, and contribute to their communities. That means AI-powered tools will be available only to bigger businesses with bigger budgets — putting small businesses at an enormous competitive disadvantage and squandering AI’s efficiency-generating potential.
Fundamentally, 3C seeks to ensure that small businesses have the digital tools they need to thrive, and that America’s technological, policy, and legal ecosystems continue to foster tools that allow our businesses and economy to flourish. We look forward to working with policymakers to ensure U.S. innovation, leadership, and small-business success in today’s digital economy.
