South Korea's tech firms revive complaints about new AI regulatory regime

The South Korean tech industry has reiterated its complaints about the new artificial intelligence law, which is expected to take effect in January. With the law set to go live in less than a month, the tech industry has voiced out the need for clearer requirements.

The AI Basic Act is expected to go live on January 22, with the legislation facing criticism from all angles in the industry. Most industry participants are claiming that the law remains vague and its practice will be hard to implement.

The decree recently underwent a 40-day legislative period, which was finalized on November 12

South Korean tech industry voices concerns

Tech companies in South Korea have talked about the time they have to prepare before the law takes effect. While lawmakers are hailing the legislation as the first-ever nationwide law governing AI, the industry is concerned about provisions governing “high-impact AI.”

This is defined as systems that could pose major risks to life, safety, or fundamental rights, and require disclosure when content has been generated using artificial intelligence.

According to an official at a Korean firm, the situation is like being asked to construct a building without a blueprint. Under the new law, companies dealing in AI services will have to assess in advance whether their technology falls into the category. However, the firms in question have noted that guidelines for the category remain broadly defined.

The law defines the range to include energy supply, biometric data used in criminal investigations, and other areas affecting human life or physical safety. Any company that falls into these categories is considered a high-impact AI firm and must follow the requirements, such as mandatory risk management measures.

According to Jung Ju-yeon, a senior policy analyst at Startup Alliance, startups could be the most affected by the new law.

She noted that the level of requirements that they must follow is higher than that of general AI. Ju-yeon also added that sectors where startups are active, including health care and education, could easily fall into that category. She mentioned that companies would be looking to avoid many of these areas due to the legal risks.

According to a recent survey, only about 2% were preparing concrete response plans, with 98% noting that they had no concrete compliance strategy.

Larger firms are also facing a similar challenge. According to an executive, the law would force companies to build Korea-specific compliance frameworks. He mentioned that the situation could delay the launch of new services in the country. The executive added that companies will have to build legal frameworks that only apply to the country, adding that the ecosystem thrives on relationships.

The executive highlighted that with the close deadline and requirements remaining unclear, it is hard for companies to know how to prepare. He added that his firm plans to pause the launch of several products in Korea for the time being.

In addition, the requirement to label AI-generated content has also caused uproar in the industry, with officials asking if the law would be able to protect users even if AI-generated content is labeled.

Meanwhile, the Korean government plans to suspend fines under the AI Basic Act for the next year to reduce the potential side effects on firms. In turn, the companies have noted the move will not ease concerns.

According to an industry official, there is a possibility of complaints and other negative aspects holding back business decisions and operations.

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