AI – an issue of ‘national security’?

How the National Security and Investment Act 2021 could impede transactions involving companies 'active' in Artificial Intelligence

The emergence of Artificial Intelligence as the topic at the forefront of the technology sector in the past couple of years has prompted a trend amongst governments and associated bodies to warn of the dangers AI poses from a national security perspective.

UK Prime Minister Rishi Sunak has been extremely keen in recent months to publicly champion Britain as a global leader in the field of Artificial Intelligence. During a visit to Washington D.C. in June, Sunak announced that the UK would host the first global summit on AI regulation later this year. In response to a reporter’s question about whether a “midsize country” could naturally lead the debate around AI he responded: ‘That midsize country happens to be a global leader in AI.’ ‘You would be hard-pressed to find many other countries other than the U.S. in the western world with more expertise and talent in AI.’

Yet amongst this undeniable encouragement to those businesses with a UK nexus who are active in AI and will be seeking investment, there is also an emerging concern over the dangers of AI as an issue of national security.

Also in June of this year, Jonathan Hall KC, head of the UK’s terror watchdog, who look at the adequacy of terror legalisation, said that the national security threat from AI was becoming ever more apparent and too much AI development focused on the potential positives of the technology while neglecting to consider how terrorists might use it to carry out attacks.

This climate therefore suggests not only an incoming barrage of new regulation covering AI, but also that application of existing legislation aimed at protecting national security, such as the UK’s National Security and Investment Act 2021 (NS&I Act) will see a sharpened focus on transactions involving Artificial Intelligence in particular, which could have practical implications on the costs, timing and possibly completion of deals concerning entities which are ‘active’ in AI.

In the latest in our series of articles concerning the NS&I Act, we examine how the legislation defines Artificial Intelligence as well as trends which have developed from the first 18 months of the NS&I Act which allow us to suggest some practical tips for businesses contemplating transactions in this space, and specifically, in deciding whether or not to notify.