News and Analysis of Artificial Intelligence Technology Legal Issues
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Artificial Intelligence, Risk Disclosures, and a New SEC Materiality Test

When Microsoft shared in 2018 that certain “deficiencies” surrounding its artificial intelligence practices could “subject[] us to competitive harm, legal liability, and brand or reputational harm,” it set the stage for other companies to self-report perceived risks associated with developing, using and producing AI technologies. Disclosing risks–a Securities and Exchange Commission (SEC) requirement imposed on public companies since 2005–raises a number of important considerations for both public as well as private companies, including transparency, accuracy, and the degree of speculation that may be acceptable when discussing AI impacts.  Although companies in industry segments other than AI face similar concerns, AI…