Global Regulatory Changes impacting the Defence & Security Sector
Written By
Senior Associate
UK
As an associate in the Tech Transactions team in our Commercial Group, I advise on a variety of technology contracts with a focus on complex and cutting edge procurement. Artificial Intelligence is a particular interest of mine.
Partner
UK
I am a specialist in outsourcing and large scale technology projects and co-head the firm's Technology Transactions and International Outsourcing practice groups.
In the AI space, governments are moving at different speeds to meet the growing calls for firm regulation on generative AI ahead of 2024’s elections. In the United States, President Biden unveiled proposals this October to protect workers and citizens from the threats posed by technology. This included a requirement for firms working on potentially dangerous models to share safety data with the government prior to release, while also addressing concerns that AI may lead to models that are trained in a way that exacerbates existing social biases and untruths.
The EU has reached a deal on how it plans to regulate AI, having signed a political agreement for the Artificial Intelligence Act. However, this will not find its way into law until 2025 at the earliest, thereby missing the bumper year of elections and failing to play a role in pacifying growing concerns over the damaging potential impact of AI on these elections. Similarly, while the United Kingdom in 2023 enacted the Online Safety Act and introduced the Artificial Intelligence (Regulation) Bill, the government has been cautious of the risk of over-regulating, claiming that this would stifle innovation.
The Online Safety Act has expanded the UK government’s powers by creating requirements on social platforms to swiftly remove illegal misinformation as soon as they become aware of it, including that generated by AI. The Act does not, however, tackle the risk of digitally manipulated content from being created at its source and leaves the defence sector on high alert for potential unrest and risk of conflict at a time when geopolitical tensions are at their highest.
The Foreign Subsidies Regulation (FSR) is a new EU regulation on control of foreign subsidies distorting the EU internal market, which could well impact many defence (and dual-use) businesses operating across the EU and other countries. While there are some exemptions for defence, the FSR states that foreign subsidies in public procurement procedures in the defence sector can be examined ex officio by the European Commission. Businesses are also seeking to understand the tightening national security landscape (e.g., the National Security Act and National Security Investment Act in the United Kingdom) and broader risks around potential weaponisation of their products.
Our international defence and security team have worked with Lexology on the publication of Lexology Panoramic: Defence & Security Procurement. The team has written the global overview, the France, Germany, Italy, Poland, UK, Denmark, Sweden, Hungary and Australia chapters and Mark Leach and Will Bryson are contributing editors for the publication. All content on the hub is reproduced with permission from Law Business Research Ltd and was first published in Lexology Panoramic. For further information please visit: https://www.lexology.com/panoramic
