Google Attaches Its First Real AI Warning To Annual SEC Report

Google is one of the largest entities in the artificial intelligence arms race right now, so it's kind of a big deal that it recently, for the very first time, included a warning about how AI may affect its business in its annual report to the United States Securities And Exchange Commission. This report is usually a critical indicator of how a company thinks its fiscal year will unfold, so it's quite telling that Google has predicted that AI flaws may have a negative impact on its operations.

The warning in question isn't the doom-and-gloom variety usually touted by extreme realists and naysayers. Instead, it simply states that the company's heavy dealings with AI mean that the sensitive technology's inherent flaws and difficulties could cause headaches for the company, and by extension, for shareholders and analysts. To quote Google's nebulous warning, AI tech could "raise new or exacerbate existing ethical, technological, legal, and other challenges".

Background: Google has been on the AI train for a very long time now, and has of course been involved in a number of gaffes relating to the technology. Even so, it's seemingly never felt the need to warn authorities and shareholders about AI's potentially volatile nature and how that may affect its business in any formal capacity before.

That's not to say that AI screw-ups haven't had a negative impact on Google's dealings in the past, nor is it the case that Google has painted a rainbows-and-butterflies picture of AI thus far. Bias scandals, product failures, and ethical issues are just a few of the many issues the company has had, very publicly, in the past. The fact that an AI warning made it into the risk section of its annual report could mean that Google is simply covering itself in case something bad happens, or it could mean that the company is looking to increase its emphasis on AI this year.

Google is actually not the first company to include such a warning in its report. Microsoft did so last year, and many companies, or their leaders, have issued warnings of a similar sort in less formal ways. Apple co-founder Steve Wozniak, Tesla mogul Elon Musk, and Skype co-founder Jaan Tallinn are among just a few in Silicon Valley to talk about the risks of AI from many different perspectives.

Impact: The implication here should be pretty obvious. The fact that Google has seen fit to put an AI warning right there in its annual report means that the company now considers the risk of AI malfunction or mishandling to be a very real potential detriment to its operations.

Those who have a vested interest in seeing Google and other AI companies succeed have a few key things to watch for. Google warned that AI data sets may be biased or inadequate, AI may be badly trained, or could do totally unexpected things in self-training, just to name a few risks. Investors should watch for high-stakes AI experiments to come to fruition, such as public availability of self-driving cars, for one.

Other things to watch closely, and possibly bail if things look bad, include AI experiments that involve a high degree of critical operation, such as implementing more AI use cases in data center workings, or AI use cases that may bring up an ethics quandary. Naturally, those same things could go far better than expected and cause stocks to surge. Risk and reward, of course, is just part of doing business.