AI, verification and impacts on commercial due diligence

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Since the launch of ChatGPT in late 2022, AI has captured the attention of individuals and businesses around the world. This technology was previously understood to be very promising, but a matter for the future. Today, it’s been heralded, catching companies off guard as they move to make sense of its exciting potential to automate processes and increase efficiencies.

An important aspect to examine is where investors are currently focusing their attention. This latest wave of AI has focused early attention on those startups and companies already using AI in their products and services (loosely referred to as AI adopters). Other factors to consider are whether investors are pausing their investments and causing illiquidity in the market. In this, investors consider the potential consequences and disruptions across industries and update their business and technical due diligence approaches as they seek to sidestep dangers and seize opportunities.

New approach to content platforms

For example, since the advent of long language models (LLMs) like GPT and its chatbot variant ChatGPT and text-to-image models like Midjourney, investors have reconsidered their approach to business models involving content platforms. Given the ability of LLMs to operate at incredible speed, digesting vast amounts of information (whether ‘contained’ from internal data warehouses or directly from the Internet) to produce detailed summaries and information, as well as process visual inputs, it is not surprising that Investors would anticipate significant disruption to markets for stock images or more complex types of content such as website builders.

Inevitably, this disruption to established business models translates into opportunity for some, as innovative models are developed to replace them and challenging companies outperform or integrate with the incumbents. In the near term, there may be some “winners” in the AI ​​adoption space. However, it is sensible to expect that these product offerings are likely to be outpaced by the Googles and Microsofts of this world, with outliers being bought up and integrated into larger companies in the medium term. Ultimately, this will be an exciting time to see these innovators vying to establish market dominance, delivering these cutting-edge solutions.


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critical due diligence

Looking beyond AI companies to businesses in general, the starting point for any AI approach should be the same. The AI ​​genie isn’t going back in the bottle, and it will almost certainly have the ability to speed up slower, more inefficient, or more manual processes wherever possible to optimize costs and free up employees to do more work. interesting and attractive. This is where it becomes important for investors to ensure that their due diligence efforts can protect against any harmful impacts as they assess AI’s ability to disrupt, deliver enhancements, and transform business value.

For digital experts, accurate and reliable information is essential to make informed business decisions. There are a host of potential data sources for the AI ​​to choose from, such as specific financial data in the case of BloombergGPTOr the Internet itself.

However, when it comes to AI-generated content, platforms often lack an out-of-the-box ‘built-in’ method of verifying the information being presented, as the algorithm doesn’t always provide the sources at generation time. A more damaging habit of AI is its ability to deliver plausible quotes that are completely made up or “hallucinated”. This presents a huge challenge as companies need complete confidence in the data they work with.

Verifiable sources and critical context

Without verifiable sources, companies and individuals who rely on AI-produced content for decision-making can inadvertently make decisions based on inaccurate or unreliable information. This can have serious consequences, ranging from missed opportunities to financial loss and reputational or legal damage.

It is equally important to consider the context in which the AI ​​is applied. For example, more regulated industries, such as healthcare, limit the degree of automation possible without human supervision. Similarly, people may reject AI handling sensitive information in one area of ​​their life and have no qualms about trusting AI in another, such as planning a vacation or shopping for a new outfit.

To avoid these risks, it is essential that companies carefully evaluate the sources of any AI-generated content they use in their work. Leaders should partner with AI developers using LLMs that have shown the highest degree of transparency in their reasoning and citation selection processes. They must also invest internally to insert human review stages to verify the accuracy of any AI-generated content before serving it to customers. With this in place, companies can help trust that the information they provide is accurate, reliable and trustworthy.

Lack of clear ownership is a concern

The lack of clear property rights over AI-generated content is another area of ​​focus. It may be unclear who owns the intellectual property rights to AI-generated content, leading to disputes over control. It will be vital to pay close attention to eventual legal rulings, especially for multinational companies, which may have to account for different rulings for different regions.

Another potential misstep for companies using AI is the importance of ensuring that any sensitive or confidential company information remains internal and is not simply returned to the provider of the AI ​​model. Here it can be vital to introduce internal policies on the correct use of AI, such as anonymizing all data before processing it or even using locally implemented models.

While all industries are considering the shape of their future once AI is properly integrated, some will inevitably be shaped more than others, for example those that implement limited and deep expertise, such as legal agencies and law firms. . As they anticipate the likely impacts of the democratization of AI knowledge, sooner rather than later they may feel stimulated to invest and build their skills and knowledge creation.

Toni Stork is CEO and partner of OMMAX.


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