Multiple Entities Call for AI Regulations

Amid the increasing uncertainty about how artificial intelligence will unfold, several governments and entities have issues calls for regulations and actual regulations in the past week. First, the G7 has agreed to a code of conduct for companies focused on developing artificial intelligence, but the code will remain voluntary for now. Second, the United Nations issued an interim report on artificial intelligence intended to help governments and the private sector consider governance and risks issues. Third, the Biden administration has issued an executive order on safe, secure, and trustworthy artificial intelligence that “establishes new standards for AI safety and security, protects Americans’ privacy, advances equity and civil rights, stands up for consumers and workers, promotes innovation and competition, advances American leadership around the world, and more.” All of these together strongly indicate that Western governments and international organizations want to begin heavily regulating artificial intelligence. Some in the technology sector like Elon Musk welcome such regulations because of fears over what AI will be able to do, but there are highly likely to be negative economic impacts and limits on innovation due to them. The economic literature shows that during times of rapid technological change, such as with AI, regulations and government interference tend to create problems for innovation especially. Corporations looking to develop or use AI in their businesses will need to consider the changing regulatory environment and what kinds of local, federal, and international regulations will be implemented that could affect their business operations.

IF has written a report on the emerging ideological battle over AI.

Houthis Attack Israel in Support of Hamas 

Israel’s war against the terrorist organization Hamas continues to have the possibility of spreading beyond its borders, though the actual fighting has remained contained. The Iran-backed Houthis in Yemen have fired drones and missiles at Israel in support of Hamas, and they are part of the “Axis of Resistance.” Yahya Saree, the Houthi spokesperson, stated that many such attacks will come in the future to help the Palestinians, but it is unclear the resources the Houthis will be able to commit to this conflict. In response, the Israeli military deployed missile boats in the Red Sea near Eilat port to try and counter the Houthis’ attack. This is an indicator of Iran’s attempts to broaden the conflict indirectly, which they had already been trying to do by attacking US soldiers in Iraq and Syria.  

In the America, the FBI’s director has now issued a warning statement about Iranian hackers supporting Hamas. Director Wray stated that cyberattacks against US targets by Iran and non-state actors are highly likely to increase. Testifying before the Senate Homeland Security Committee, Wray stated that “cyber targeting of American interests and critical infrastructure that we already see conducted by Iran and non-state actors alike, we can expect to get worse if the conflict expands, as will the threat of kinetic attacks.” Diplomatically, Israel is also losing friends. Jordan is the latest country to withdraw its ambassador from Israel in protest against the “humanitarian catastrophe” in Gaza. In South America, Bolivia has severed diplomatic ties, and Chile and Colombia have both recalled their ambassadors. All of this demonstrates that even if the war between Israel and Hamas is contained, there will still be far reaching effects such as cyberattacks and diplomatic rifts that can affect economies negatively. 

Microsoft Releases Research on MGM Cyberattack 

Researchers at Microsoft have now called the attackers of MGM Resorts “one of the most dangerous financial criminal groups,” an attack so devastating the federal government had to step in to help with recovery efforts. Important to note in this attack is that the group (Octo Tempest) not only used malware, but they threatened employees with violence to gain access credentials. Octo Tempest are also native-English speakers, and they are capable of effectively using Adversary-in-the-Middle (AiTM) techniques and social engineering. Corporations should understand how the MGM attack took place because it was one of the most aggressive cyber operations against a company, and they will need to update several parts of their security procedures. 

EU Fails in First Use of DSA 

The European Union has failed to implement the controversial Digital Services Act correctly, according to Atlantic Council’s Digital Forensic Research Lab’s new report. This law is meant to contain disinformation and abuse on social media, but the commission is woefully unprepared to actually enforce the rules. The DSA will not take full effect until February 2024, but the European Commissioner for Internal Market decided to move forward anyways because of the disinformation spread by the Israel-Hamas war. Europe’s overt hostility towards American technology and social media companies will likely make the DSA ineffective because it essentially requires a significant amount of cooperation with those same companies. This highlights some major issues with the EU’s technology regulations and the commission lack of expertise when it comes to such issues. 

EU-Japan Agree on Cross-Border Data Flow 

The EU and Japan have agreed to a landmark agreement on cross-border data flows, which is highly likely to benefit both parties and corporations that operate in them. Both the EU and Japan are some of the largest digital economies in the world, and cross-border data flows are critical to effective business operations in the technology, transportation, and financial services. This agreement will be part of the broader EU-Japan Economic Partnership Agreement, and it will likely form the basis for broader digital agreements with the West. Importantly for corporations it will eliminate costly data localization requirements that inhibit business operations. 

Italian Auto Workers Go on Strike 

Italy’s Motor Valley is experiencing a strike by approximately 230 workers because Marelli wants to close plants that make internal combustion engines. The company says they have to close the plants because the EU’s ban on the sale of new petrol cars starting in 2035 has made the business unsustainable. Current estimates are that Italy will lose at least 70,000 jobs over green transport regulations. Though smaller in scale, this is only the latest iteration of protests over environmental regulations in Europe with the largest being the Dutch farmers’ protest that led to a new political party. The EU’s environmental regulations are highly likely to lead to more protests over the coming years as more workers will become displaced without any suitable alternatives for employment. In addition, there is likely to be broader economic disruption with higher prices for consumer goods. 

Russian APT Targets Universities 

France’s cybersecurity agency has accused Russian APTs of targeting universities and think tanks, which highlights an important threat to corporations as well. Fancy Bear (APT28) focused on routers to avoid detection, and they were able to exploit several zero-day vulnerabilities. While Fancy Bear has targeted government agencies and critical infrastructure, the threats to universities are important because of their corporate connections. Intellectual property is quite often developed in tandem with academic researchers, but universities have a dearth of cybersecurity measures, putting important data at risk of being compromised. 

Survey Indicates Increased Support for Political Violence 

A concerning new survey was released by the Public Religion Research Institute in partnership with the Brookings Institution that found three-fourths of Americans believe democracy is at risk and that almost a quarter (23%) of those surveyed held “American patriots may have to resort to violence to save the country.” This is an increase from 15% in 2021, and it is the first time that support for political violence has gone above 20% since the survey started. Partisan breakdown of support for political violence shows 33% of Republicans, 22% of independents, and 13% of Democrats believe it might be necessary. Considering the likely acrimony of the 2024 election, the risk of political violence in the U.S. has significantly increased, and corporations will need to consistently monitor how protests, riots, and even terrorism will unfold during the cycle. 

Dozens of Countries Agree Not to Pay Ransoms of Ransomware 

Almost fifty countries and entities have issued a statement as part of the International Counter Ransomware Initiative to no longer pay ransoms. This joint policy statement is the first of its kind, and it is meant to be a major step towards preventing ransomware gangs from targeting critical infrastructure. The involved countries and entities will also share a blacklist of cryptocurrency wallets connected to ransomware. Ransomware attacks have increased 150% year over year, and it remains an important threat to corporations and local governments. If ransomware gangs cannot make a profit from their attacks, then the idea is that they will have to divert to other forms of malicious activity.  

Pakistan Begins Expelling Undocumented Afghans 

Pakistan has begun expelling approximately 1.7 million undocumented Afghan migrants, citing security threats as the primary justification. The Pakistani government associates these migrants with a series of security breaches, including involvement in terrorist activities and criminal behavior, although these claims have been made without presenting public evidence. This decision comes amidst Pakistan's own economic struggles and internal political pressures to manage undocumented immigrants. The move has drawn criticism from human rights organizations and the Afghan government, both of which challenge the expulsion as a violation of human rights and an unacceptable action against vulnerable populations. The decision will make it even less likely that the Afghan government will assist Pakistan with counterterrorism efforts with the Tehreek-e-Taliban Pakistan, which has begun carrying out attacks against Pakistan again.