The newly proposed law in Michigan would impose burdensome requirements on artificial intelligence systems. The predictable impact from these proposed laws is to drive out the states of the most likely AI developments of China or other Asian economies.
House Bill 4667 creates new felony crimes and mandatory sentences for criminal use, development or distribution of AI systems. House Bill 4668 requires AI developers in Michigan to conduct regular risk assessments and third-party audits, implementing and publishing safety protocols. Both bills were introduced by Rep. Sarah Lightner of R-Springport. HB 4668 has been featured in the House Communications Technical Committee. HB 4667 was sent to the House Judiciary Committee.
A notable feature of HB 4667 is to establish an absurd and broad definition of AI as “a machine-based system that can simulate data processing, content generation, or human-like interactions, such as chatbots, voice assistants, generator AI models, and automated decision-making tools.” By this definition, basic spreadsheet sorting functions qualify as AI systems. The same goes for everyday business marketing analytics and almost all customer profiling using computers. Many small business owners don’t think they’re using “AI” when maintaining and sorting everyday customer data in Excel spreadsheets. However, if they are charged with another crime, even minor offences, they could face a forced eight years in prison when prosecutors add a violation of HB 4667 to the charges.
According to a recent article in the Centre for International Law and Economics, “If the negative impact on consumer welfare or privacy interests is minimal, they could incorrectly impose strict regulatory obligations,” SMEs in particular would face significant uncertainty and disproportionately high compliance burdens. “In fact, SMEs are already heavily relying on low-risk AI applications, increasing productivity and staying competitive in an increasingly technology-driven market.”
The Michigan Chamber of Commerce is also concerned. “While Michigan HB 4668 is intended to try to address real concerns about AI misuse, it places excessive burden and impractical requirements on developers. The MI chamber emphasized that individual states should not pass their own AI regulations and risk competing patchwork, but rather through this issue, through federal scripts.”
These bills create penalties for things. Fraud, fraud, honour and harmful discrimination, illegal discrimination, and anti-competitive business behavior violate the law, whether AI has been used in the process or not. Therefore, it is not clear how victims of illegal activities will benefit from these proposed AI laws. However, one of the highly profitable groups is trial lawyers. Some attorneys reap new business opportunities by defending their clients from prosecution under HB 4667. Other lawyers are acquired by filing a class action lawsuit for failing to comply with all new regulatory requirements under HB 4668.
HB 4667 and 4668 follow the regulatory approach of the 2023 AI Executive Order, which in the words of analyst Christine Stout, “seeing danger around every virtual corner,” “seeing regulations born out of fear,” (threatening useful innovation from that threat.” Biden AI’s executive order states that the administration will “place the highest urgency in safe and responsible control over the development and use of AI.” President Donald Trump has rejected this kind of government approach to AI development.
On July 23rd, Trump issued his own AI executive order. “Winning the Race: America’s AI Action Plan.” The new executive order emphasizes that cybersecurity, innovation, and infrastructure construction is not opposed or completely separate efforts, but rather a complementary objective achieved in tandem. In contrast, the proposed Michigan law does not take into account the importance of promoting technological innovation. Instead, they focus solely on imposing regulatory restrictions and punitive punishments.
American companies are already suffering from excessive state and local mandate known as the “Sacramento effect” for California’s misfortune in AI regulation. This puts our most innovative companies at a competitive disadvantage with their foreign competitors, weakening their efforts to stay ahead of China due to AI hegemony. HB 4667 and 4668 add an unwelcome “Lansing Effect” to Michigan’s most innovative companies, giving them an incentive to move to a more welcoming country or another country.
