Artificial Intelligence (“AI”), which, very few years ago, simply did not register in the mind of most people beyond the realms of science fiction, is now rapidly shaping the practical realities of everyday life and the legislative and regulatory choices a jurisdiction makes now will have direct consequences for our businesses, workplaces and society.
In fact, AI has already begun to massively impact the global economy; influencing everything from financial services to healthcare and the legal profession. Nevertheless, as this new technology evolves and grows, so too does the associated risks and by default, the need for governments to consider the need for legislative and regulatory boundaries.
Should “scraping” the internet for inclusion in the new Large Language Models such as ChatGPT be subject to copyright laws? To what extent should the work of artists and musicians be allowed to be imitated? Should facial recognition extend to mood detection to help prevent angry individuals from entering a football stadium? Should deepfake photos be allowed to produce seemingly accurate representations of real people in a state of undress? What about children? These are real questions that Governments have to answer, rarely has the arcane world of regulation had so many ethical issues to consider.
All around the world jurisdictions are racing to set global standards in the regulation of AI, none more so than the EU, with their EU AI Act which entered into force on 1 August 2024. In the USA, President Trump has signed an executive order blocking state AI regulation; the order directs the Attorney General to create a new task force with the powers to directly challenge any state laws, which conflict directly with laws like the Colorado AI Act. His comments underscore the Trump Administration’s vision of a deregulated, innovation-driven AI system with the intention to optimise and accelerate technological progress. Undoubtedly, therefore, in the global developing response, Gibraltar has an opportunity to position itself as a progressive jurisdiction, by implementing a bespoke, dynamic approach to AI regulation. Alternatively, we can be a protective jurisdiction, restricting and even banning some AI. Legislating to protect the rights of artists and others. Or we can meet in the middle, providing a stable, yet appealing, approach.
The EU AI Act provides a clear example of how regulation can move from theory to practice. Under this Act, AI systems are classified by risk, with outright bans on certain uses such as social scoring and emotion recognition in the workplace. These are not just abstract rules: in one practical scenario, in the absence of such regulation a workplace could make use of such monitoring by using AI to score employees based on their ‘moods’ and thus, those who score poorly could be assigned lower-paid jobs. The implications of this type of automatic AI scoring are significant, spiralling into potential racial and gender biases. Such a system would be deemed illegal under the EU’s prohibited practices, as it violates privacy and is disproportionate to the legitimate aims of the employer.
In the United States, recent policy under the Trump administration has focused on minimizing regulatory burdens and pre-empting state-level AI laws. This has led to a situation where companies may face fewer restrictions but also less accountability for AI harms. For example, if an autonomous vehicle was to cause a serious accident, the question of liability would be far less clear under a US-style regime, which prioritises innovation over consumer protection. Would the vehicle manufacturer be to blame? The AI developer? The passenger?
One thing is clear, in Gibraltar, as elsewhere, AI Regulation is essential for numerous reasons, including but not limited to; the maintenance of fundamental rights, the risk of reputational damage for Gibraltar-based firms that operate globally and timely market opportunities to attract ethical AI developers who seek clear legal certainty. Historically, Gibraltar has successfully leveraged its regulatory agility, becoming a leader in innovative legal frameworks. For example, in January 2018, Gibraltar introduced its Distributed Ledger Technology Regulatory Framework. In a similar vein, Gibraltar has established itself as a leading, and reputable centre for both online gaming and financial services. It has done so using clear, and consistent regulation. It is this innovative, ambitious approach to regulation that makes Gibraltar well-equipped to develop a successful AI regulatory model.
Gibraltar itself is at a crossroads. With potential major investments such as the €2 billion Pelagos Data Centre, the jurisdiction is positioning itself as a potential European hub for AI and digital industries. Yet we must ask, is this what we, as a people, want? Is it growth without ethical considerations? One of the most pressing policy questions is therefore whether Gibraltar should introduce a forbidden list of AI practices, as the EU has done or allow broader innovation with robust oversight. Over regulation stifles development, technological advancement and risks leaving a jurisdiction behind when it comes to global competitiveness and economic growth. Conversely, a lack of regulation could result in significant breaches of privacy, discriminatory profiling and the worrying use of deepfakes for malicious purposes such as election interference.
Gibraltar’s ambition to become a European AI hub will depend on its ability to balance innovation with responsible governance. Considering our track record in areas such as DLT and online gaming, policymakers must consider to what extent Gibraltar should align with EU or US standards or chart its own course. Gibraltar may be well-positioned to find that perfect balance between innovation and safety in order to be the first once more to impact a new emerging sector. However, Gibraltar must engage with stakeholders and learn from the ongoing global developments and challenges, so that we may not just regulate AI responsibly, but effectively. The Government must also engage with its people and ask where they want the jurisdiction to ethically be. Get it right and such an opportunity is ripe for the taking, enabling us to attract ethical developers once more whilst equally maintaining public safety.
One thing we cannot do is nothing, AI will cost jobs in Gibraltar, especially in the public sector but also in gaming, insurance and other previously recession resistant areas. We have to be proactively able to not merely respond but initiate. It is a challenge Gibraltar has risen to before.
