The AI Legal & Update #13 - 😃 An AI coup, AI veto, and a big AI booth smile

Cecilia Ziniti

Oct 3, 2024

Hi, everyone. OpenAI raised the biggest VC funding round in history ($6.6 billion dollars), and founder/CEO Sam Altman ousted all his cofounders in the process. California Governor Newsom vetoed the big AI safety bill, yet signed a dozen others. Plus, an all-smiles picture that moved your editor. 🥹

Read time: 7 minutes 32 seconds

OpenAI special feature because ... big

The news and AI intrigue volume makes even your editor want to drink caffeine again!

📈 ChatGPT today has 10M paying users and expects $2.7B in revenue in 2024, up from $700M in 2023 and $11.6B in 2025. Source.

💰 OAI completed the biggest funding round in venture capital history, oversubscribed with $6.6B at a $157B valuation, although Apple pulled out. Save the money to buy Disney? The company says 250 million people use OpenAI products every week. You're in good company, GC AI users. 😎

🗣️ New voice product - OpenAI launched ChatGPT Advanced Voice Mode (AVM) on mobile, and it is wild, particularly with being able to switch to talking in different languages (50+), and how it exclaims and seems happy for you. Note - the feature is not available in the EU as its emotion-sensing triggers the EU AI Act.

🤺 Big departures, with every founder except Altman out now. Ex-CTO Mira Murati posted this nice departure message. We admire her and what she’s achieved!

🕴️ Corporate governance issues around evolving out of being a non-profit status. See WSJ coverage.

Editor’s take - OpenAI's full conversion to for-profit is long overdue. You make the most useful tech in over a decade, expect to sell $3B this year, and you’re a … non-profit? Didn’t make sense. Elon says the original structure "was all hot-air philanthropy—the hook for Altman’s long con” and is still looking to get paid. Sour grapes? 🍇

Also, given how public all of this is and will continue to be, kudos to the lawyers running this and drafting the docs, as there’s a 100% chance they will be scrutinized in litigation. You got this! 🙌

Other Big Tech

🧳 LinkedIn will train AI on US user data unless you opt out. Your editor's feed was scandalized, even though it seems ... normal? To opt out, clicking your profile pic, and open the settings. Select “Data privacy,” then turn off “Data for generative AI improvement.”

📓 Google's NotebookLM will make an eerily good podcast on a topic of your choosing. Check out this podcast crafted from legislative texts on California bill SB-1047.

🧑‍🔬 AI provider Anthropic hired one of the departed OpenAI co-founders, Durk Kingm who started at OAI as a researcher.

Regulatory & Litigation

🌴 California loves AI regulation. Just signed by Governor Newsom:

🪞 SB 942 (California AI Transparency Act): Requires AI providers to offer free AI detection tools and include clear disclosures in AI-generated content.
🔐 AB 1008 (Personal Information in AI Systems): Expands the definition of personal information in the CCPA to include data processed by AI systems.
🚂 AB 2013 (Generative AI Training Data Transparency): Mandates developers to document the data used to train generative AI systems or services.
⍺ AB 2885 (Definition of AI): Defines artificial intelligence in the context of various California laws related to technology and governance.
☠ AB 1836 (Deceased Performers) & AB 2602: prohibits AI replicating a deceased performer without their estate’s consent, and forbids an AI avatar of an actor instead of an in-person performance unless a "reasonably specific" description of that use appears in their contract and either a lawyer or a union represented the actor.

❌ Newsom vetoed SB-1047, the bigger AI safety bill, thought. He feared it’d have a “chilling effect” on the state’s lead in AI. Click the image to read his letter. Tech is taking a victory lap while SB-1047's bill’s sponsor, Senator Weiner, optimistically called the veto “a setback”, and a “missed opportunity” under which “we are less safe.” Newsom also vetoed a bill that would have required additional privacy settings for mobile devices.

🤠 Texas Attorney General Paxton announced his office had settled with a company that marketed its healthcare AI for frontline healthcare workers as being 99.999% accurate. The settlement involved no financial penalty, and the company pointed out there’s no universal standard for assessing AI accuracy (true). See the AG press release, the assurance of compliance, plus analysis from GC AI and from law firm Husch Blackwell.

☎️ FCC finalized a $6M fine against the folks behind the Biden deepfake robocalls last year. “Let me be clear: if you flood our phones with this junk, we will find you, and you will pay,” said FCC Chair Jessica Rosenworcel. Related, almost half of US states have passed bills regulating election deepfakes. Source: Axios.

AI & Legal

💾 HR software giant Workday bought legal-tech company Evisort, an early legal AI player focused on searching large corpuses for discovery and litigation. Word on the street is people are sad about it. But hey, you have choices - GC AI is independent!

🫡 Orrick released four recommendations for reviewing your privacy policy if your company uses AI. Our fifth? Use the GC AI Privacy Policy analyzer prompt.

👮 The FTC fined startup DoNotPay, which claimed that its AI-powered “robot lawyer” could prepare “ironclad” legal filings without involving any attorneys. Not so much. FTC Chair Khan was clear: “using AI tools to trick, mislead, or defraud people is illegal," emphasizing that existing laws do not exempt AI. Below is the FTC's required email notice, which kinda seems like marketing to your editor. Weird.

AI Globally

🇪🇺 Thierry Breton, the EU regulator who was very proud of himself for the EU AI Act and who helped architect the Digital Services Act, has “resigned”. Editors note: do not post selfies of yourself regulating billionaires, even if you’re proud. Demure & mindful, remember?

🌐 The United Nations’ report, “Governing AI for Humanity,” recommends a global approach to AI regulation, including standards and information exchange.

🥧 The EU Commission announced over a hundred companies signed the voluntary EU artificial intelligence Pact. Signatories pledge to (a) having an AI governance strategy, (b) mapping high-risk AI systems, and (c) promoting AI literacy and awareness among staff. Motherhood and apple pie basically.

🍀 The Irish Data Protection Commission inquired into Google's AI model, PaLM 2, for potential GDPR violations from its training on EU subjects’ data without consent.

🇬🇧 Google’s UK managing director, Debbie Weinstein, says the UK risks being left behind in the global AI race unless the UK government builds more data centers and lets tech companies use copyrighted works to train AI models. Source.

🇧🇪The Belgian Data Protection Authority issued this report on GDPR & AI and the interplay between the AI Act and GDPR. Very readable! Check it out, or read this GC AI checklist based on it.

AI Adoption

📺 YouTuber Mr. Beast is hiring an “AI Concept Artist” (link) and put out this epic culture guide the whole team at GC AI loved.

📈 The FT reports that AI startups are generating revenue faster than prior kinds of tech. We agree! Speaking of, want to buy some legal AI or expansion seats? Let us know.

🤩 💰 PWC reports in its 2024 Jobs Barometer Report that lawyers with AI skills make 49% more in the US and 27% more in the UK compared to their less tech diverse counterparts. H/t GC AI power user Celia Reinsvold. So ... what's stopping you? Take an AI class at least.

AI & IP

🇩🇪 In a possible first EU court to opine on AI training & copyright, the LG Hamburg ruled that non-profit's LAION’s use of the plaintiff's photograph to create a dataset for AI training was covered by the exception for scientific research under § 60d UrhG (German Copyright Law). See summary.

👂Overheard: "I’m quite optimistic we will resolve the copyright issues [with AI]. I’m less comfortable about what it means for humankind.” US Register of Copyrights Shira Perlmutter.

New, Notable, Random & Fun

Great news for GC pay! Per Equilar:

📈 Median general counsel compensation and biggest 500 public companies increased 27% from 2019 to 2023
🚺 Median pay for women GCs rose 34.5%—16 percentage points more than for male GCs.
✅ The gap between what GCs earn and what CEOs earn shrank

Your editor got her first class action notice in an Instagram Story(!), versus a post. Also, a GC AI user told us in Slack that she worked on the first case ever to accept a Facebook message as personal service under Fed. R. Civ. P. Rule 24. Amazing!

Events

🖥️ In-House counsel community Counselwell’s Summit in Toronto last week was a success! Thank you to everyone who came to see us!

So, a quick confession ... your editor literally shed a tear setting up the booth. It was so real and tactile that after almost a year, we are big enough to have a booth, have delightful customers come to it, and still have folks with jaws on the floor for legal demos. Amazing.

Big shout out to our fantastic Canadian customers we met in person! One whipsmart GC AI user, counsel at a SaaS company, explained: “With GC AI, I now have to schedule send my emails a few days later because if certain stakeholders knew how fast I have become, they would have much higher expectations.”

🎤 GC AI is presenting at HeyCounsel's Demo Day on Thursday, October 10, 2024. Catch your editor at 11:00- 11:15 AM PT, and hey give us a vote? Register here.

Third-Party Events

💡 ChIPs (women in IP) Global Summit in DC is coming up on October 17-18 Your editor is speaking on a panel. Hope to see you there!

🧑🏻‍💻 Sidley running an AI webinar series - next one is, The AI Revolution at the FDA: Fireside Chat With Former FDA Commissioner Dr. Scott Gottlieb. on Thursday October 3, 1:00 pm EDT. Register here.

🎙️UCLA Anderson Forecast (live & virtual) - “AI and the future of Corporate Governance” on October 15, 2024. Your editor will keynote at 1:20-2:00 PM PT. Open to UC Law SF and UCLA alumni, or anyone online. Register here!

Podcasts & Classes

🚨New! Hear your Editor on The Abstract by SpotDraft. Click the image to watch on Youtube or you find it on Spotify and Apple podcasts.

👩🏻‍🏫AI Prompting 101 Class - Wednesday, October 9 at 7:00 am PT and Friday, October 25, 2024 at 8:30 am PT

👩🏻‍🏫AI Prompting 201 Class - Friday, October 4 at 9:00 am PT and Tuesday, October 15 at 10:00 am PT

Product Updates

…Three Dots and Other Beautiful Things

Lots of new design updates for you. Your editor's favorite? Three dots when a chat is about to complete, so you get that iMessage-like feeling of anticipation!

🏢 AI does your Company Profile

Use AI to help you use AI. GC AI will now use your company's domain to pull in relevant info like a blurb about the company, your HQ location, and other details so you get the most relevant legal AI. So meta! In a good way.