A finger-wagging from state attorneys general over artificial intelligence (AI) chatbots was the catalyst behind a mild sell-off of Microsoft (MSFT 1.02%) stock on Wednesday. While this isn't the firstor the most seriousregulatory issue the company has facedit wasn't helping sentiment on the tech giant. It contributed to Microsoft's nearly 3% decline in share price that day.
Concerns expressed
That morninga bipartisan group of state attorneys general sent a letter to several major tech companies -- including MicrosoftMeta PlatformsAlphabet's Googleand Apple -- warning them that their AI-enhanced chatbots were causing problems.
Image source: Getty Images.
The legal officials aimed to "communicate our serious concerns about the rise in sycophantic and delusional outputs to users emanating from the generative artificial intelligence software promoted and distributed by your companiesas well as the increasingly disturbing reports of AI interactions with children."
The attorneys general added that these factors "indicate a need for much stronger child-safety
and operational safeguards. Togetherthese threats demand immediate action."
The recipients were requested to allow independent auditing of these products by state and federal authorities.
The effort is part of a tug-of-war between the states and the federal government regarding AI oversight. The Trump administration aims to restrict states from enacting their own laws on itwhile certain officialssuch as the authors of the letterwould like to place some limits on the technology.
NASDAQ: MSFT
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As mentionedMicrosoft has found itself on the business end of regulatory pushes before. It has always found a way to either gain compliance or settle for a compromise that doesn't significantly harm its business. While we can expect some level of legal and regulatory oversight to cover AI products in the near futureI believe thatregardlessMicrosoft will find a way to operate effectively.
