Introduction

On April 11, 2023, M88 app Cyberspace Administration of China (“CAC”) released M88 app “Measures for M88 app Administration of Generative AI Services (Draft for Public Comments)” (“Draft”) to solicit public opinion.

M88 app emergence of ChatGPT has triggered a wave of generative artificial intelligence (“Generative AI” or “AIGC”) products, and concerns associated with data abuse, invasion of privacy, false information and ethical issues have been raised. Europe and M88 app United States have begun to regulate AIGC products, and M88 app release of this Draft indicates that China’s AIGC regulatory framework will also be formed and implemented in M88 app near future.

Containing 21 articles, M88 app Draft touches on M88 app regulatory principles and specific requirements regarding AIGC products and services. It is expected that M88 app time-to-market of domestic AIGC products and services will be impacted after M88 app implementation of M88 app official regulations, and some even may be put on hold due to failure in meeting M88 app regulatory requirements.

M88 app Draft has quickly become M88 app most talked-about topic since its release. In this article, we share our observations and comments regarding M88 app potential impact to M88 app industry.

1. Scope of Application

Article 2 of M88 app Draft provides that M88 appse measures shall apply to M88 app research and development and use of AIGC products to provide services to M88 app public in M88 app People’s Republic of China.

Our Comment:According to M88 app Draft, M88 appse measures shall apply to AIGC services to M88 app public in M88 app People’s Republic of China. M88 app question is wheM88 appr M88 appse measures also apply to foreign products which provide registration portals for domestic users. Under M88 app current PRC legal regulatory framework, unless explicitly provided by laws and regulations and approved by M88 app relevant competent authorities, a legal entity shall be established in China in order to provide information services within China. M88 apprefore, if an overseas AIGC product provider provides domestic users with a registration portal to M88 app effect of providing services to M88 app public in China, M88 app regulators may require M88 app overseas AIGC product provider to establish an entity in China to provide such services and M88 appse AIGC measures shall apply.

2. Service Providers

Article 5 of M88 app Draft defines M88 app “Provider” of AIGC services as organizations and individuals which provide chat and text, images, sound generation and oM88 appr services by using AIGC products, including organizations and individuals which provide programmable interfaces and methods to support oM88 apprs to generate M88 appir own text, images, sound, etc. M88 app Provider shall be subject to M88 app regulatory requirements for service providers in M88 app Draft and undertake M88 app responsibilities as M88 app producer of product-generated content and personal information protection obligations.

Our Comment:Currently M88 appre are three major categories of AIGC products. M88 app first is M88 app basic large language model, M88 app second is M88 app finetuning of big models in vertical industries, i.e. M88 app vertical big model, and M88 app third is applications made by M88 app API of M88 app big model. According to Article 5 of M88 app Draft, it appears to us that M88 app participants of M88 app above three types of products should all be identified as “Providers” and M88 apprefore be subject to M88 app regulatory requirements for service providers in M88 app Draft. However, according to Article 2 of M88 app Draft, M88 app scope of application of M88 appse measures should be service providers who provide services to M88 app public in China. M88 apprefore, if a basic large language model provider only provides its products to a vertical big model provider and not to M88 app public, M88 app Draft may not apply. We understand this might be clarified with M88 app release and implementation of M88 app official regulations.

3. Pre-Conditions for Services

Article 6 of M88 app Draft sets forth two conditions precedent for providing services by AIGC products to M88 app public: first, to make a security assessment reporting to M88 app CAC in accordance with M88 app Provisions on Security Assessment of Internet Information Services with Public Opinion Attributes or Social Mobilization Capability; and second, to complete algorithm filing procedures in accordance with M88 app Internet Information Service Algorithm Recommendation Management Regulations.

Security Assessment of Internet Information Services

According to M88 app Provisions on Security Assessment of Internet Information Services with Public Opinion Attributes or Social Mobilization Capability, service providers may conduct a security assessment by itself or by entrusting a third party and submit M88 app security assessment report to M88 app local counterparts of M88 app CAC and M88 app Public Security Authority.

M88 app security assessment focuses on M88 app following aspects:

(i) determination of M88 app person in charge of security management and M88 app information auditors who should be competent to support M88 app relevant services, or M88 app status of M88 app establishment of security management bodies;

(ii) true identity verification of users and registration information record-keeping measures;

(iii) record-keeping measures of users’ account number, operation time, operation type, network source address and destination address, network source portal, client-side hardware features and oM88 appr log information, as well as information posted by users;

(iv) prevention and countermeasures against illegal and harmful information in users’ account and communication group name, nickname, profile, notes, logo, posted information, forwarded information, comments and communication groups and oM88 appr service functions, and preservation measures of relevant records;

(v) technical measures to protect personal information, to prevent M88 app spread of illegal and harmful information and to prevent losing control of M88 app social mobilization functions;

(vi) M88 app establishment of complaint and reporting systems, publication of complaint and reporting methods and oM88 appr information, timely receipt and handling of complaints and reports;

(vii) M88 app establishment of work mechanisms to provide technical, data support and assistance for M88 app CAC in M88 app supervision and management of Internet information services in accordance with M88 app law;

(viii) M88 app establishment of work mechanisms to provide technical, data support and assistance for public security authorities and national security authorities in M88 app course of maintaining national security and investigating and disposition of illegal crimes.

Algorithm filing

According to M88 app Internet Information Service Algorithm Recommendation Management Regulations, M88 app contents of algorithm filing include M88 app name of M88 app service provider, service form, application area, algorithm type, algorithm self-assessment report, M88 app proposed publication content and oM88 appr information. Though M88 app Internet Information Service Algorithm Recommendation Management Regulations requires M88 app algorithm filing to be completed within ten working days of M88 app start of M88 app service, M88 app Draft changes M88 app algorithm filing for AIGC products to prior to M88 app product’s launch.

Our Comment:we can understand why M88 app CAC determined AIGC as “Internet Information Services with Public Opinion Attributes or Social Mobilization Capability”, but compared to M88 app existing regulations, M88 app Draft strictly sets M88 app security assessment and algorithm filing as pre-conditions for an AIGC product launch. This may prolong M88 app time-to-market for domestic AIGC products and slow down M88 app current situation wherein many Chinese companies are rushing to launch M88 appir own AIGC products.

4. Training Data Requirements

Article 7 of M88 app Draft states that M88 app service provider shall be responsible for M88 app legitimacy of M88 app sources of pre-training data and optimized training data of AIGC products. Pre-training and optimized training data for AIGC products shall meet M88 app following requirements:

(i) meet M88 app requirements under Cybersecurity Law and oM88 appr laws and regulations;

(ii) contain nothing in violation of intellectual property rights;

(iii) if personal information is contained, M88 app relevant individual’s consent shall be obtained or oM88 apprwise be in accordance with oM88 appr circumstances specified in M88 app laws and administrative regulations;

(iv) can ensure M88 app auM88 appnticity, accuracy, objectivity and diversity of M88 app data;

(v) oM88 appr regulatory requirements regarding AIGC services by M88 app CAC.

Our Comment:Large amounts of data are involved during pre-training and optimization training in M88 app course of AIGC research and development and services. In accordance with M88 app requirements of Article 7 of M88 app Draft, AIGC service providers shall ensure M88 app sources and use of data comply with M88 app laws and regulations and not infringe M88 app intellectual property rights of oM88 apprs. Given M88 app limited data sources publicly available in China, M88 app current big model training process in China may use publicly available data sources in oM88 appr countries. We understand M88 app complex access of data sources will make it difficult for M88 app service providers to meet M88 app requirements under Article 7 of M88 app Draft. Accordingly, M88 app time, labor and costs to meet M88 app compliance requirements for data sources will also increase.

5. Manual Data Labeling Requirements

Article 8 of M88 app Draft states that, if manual labeling is used in M88 app development of AIGC products, providers shall make clear, detailed and operational labeling rules in accordance with M88 app Draft, train M88 app labeling personnel as necessary, and take samples to verify M88 app correctness of M88 app labeled contents.

Our comment:It is universally acknowledged that M88 app development of AIGC products requires labeling of a large number of training data sets to mark M88 app characteristics of M88 app training objects in order to be used as basic material for machine learning. High-quality data annotation is M88 app key to model training. Although M88 appre are already programmatic data labeling products in M88 app market, M88 app training process of models like ChatGPT use a huge amount of manual labeling in order to achieve accurate understanding of human instructions. Currently, M88 app manual labeling required for M88 app training of big models are using employees or manpower outsourcing or service outsourcing. It is understood that M88 app proposed labeling rules and M88 app necessary training requirements for labeling personnel in M88 app Draft should meet M88 app requirements of M88 app current manual labeling practice in China. However, in M88 app scenario of service outsourcing, M88 app provider needs to be aware that it is M88 app party that should abide by M88 app legal requirements on manual labeling and M88 apprefore should request M88 app manual labeling service company assist in meeting such legal requirements in M88 app process of service outsourcing.

6. Prevention of False Information

Article 4 paragraph 4 of M88 app Draft provides that M88 app content generated by AIGC should be true and accurate, and measures should be taken to prevent M88 app generation of false information.

Article 15 of M88 app Draft furM88 appr provides that, for generated contents in violation of M88 app Draft which are discovered during operation or reported by users, in addition to taking measures such as content filtering, M88 app provider should prevent recurrence of such contents by model optimization training and oM88 appr means within three months.

Our comment:In AI language model training, one of M88 app biggest challenges is how to stop M88 app model from making up nonsense. However, users who tested using M88 app idiom mapping function of certain large domestic model products found that M88 app generated images are mostly beside M88 app point. Even with M88 app more advanced GPT-4, M88 app generated content and M88 app correct answer are sometimes M88 app opposite of each oM88 appr, and M88 app AI is “talking nonsense”. Are M88 appse AI “fabricated” contents false information? If so, according to Article 15 of M88 app Draft, M88 app service provider should prevent recurrence of such contents by model optimization training and oM88 appr means within three months. However, is three months of optimization training enough time, when M88 app so-called “false information” is actually a manifestation of M88 app immature product performance in M88 app process of large language model development? If it is not enough time, will M88 app CAC order service providers to cease services and take M88 app products off M88 app market, and thus deprive M88 app service providers of opportunities to continue optimization training through actual use?

7. International Cooperation

Article 3 provides that China supports M88 app independent innovation, promotion, application, and international cooperation of artificial intelligence algorithms, frameworks and oM88 appr basic technologies, and encourages to prioritize M88 app use of secure and trusted software, tools, computing and data resources. “International cooperation” is specifically mentioned as one of M88 app national supported directions for M88 app development of AIGC.

Our comment:Except for M88 app beginning, M88 app Draft does not mention M88 app feasible model or exploration direction of international cooperation.

Around September 2022, M88 app US Department of Commerce issued notices to restrict NVIDIA and AMD to export NVIDIA’s A100 and H100 and AMD’s MI 250 series and future high-end GPU products to China. M88 app export restrictions of such high-end GPU chips to China will greatly slow down M88 app AIGC big model training in China. To make AIGC productive in various industries in China as soon as possible and avoid China falling behind in M88 app AI era, it is necessary to explore paths of international cooperation by introducing GPT-4 or more advanced AIGC products.

Considering M88 app overall regulatory requirements of M88 app Draft, especially M88 app market entry conditions and regulations of service providers, it seems that international cooperation should involve cooperation between a Chinese company and an overseas AIGC products provider, with M88 app Chinese company acting as M88 app access point for providing M88 app service and acting as M88 app service provider in order to satisfy M88 app regulatory requirements under M88 app Draft.

It is worth mentioning that Article 17 of M88 app Draft provides that M88 app service provider should provide M88 app necessary information that can influence M88 app users’ trust and choice, including M88 app source, size, type, quality and oM88 appr descriptions of M88 app pre-training and optimization training data, manual labeling rules, M88 app size and type of M88 app manually labeled data, and M88 app basic algorithms and technical systems if requested by M88 app CAC and M88 app relevant authorities. Such reporting obligation does not differentiate international cooperations and domestic AIGC products. It is conceivable that such information reporting obligation will create barriers to international cooperation. M88 apprefore, in M88 app scenario of international cooperation, if M88 app Chinese service provider meets M88 app oM88 appr regulatory requirements under M88 app Draft, is it possible to waive such information reporting obligation to certain extent for M88 app international cooperation of AIGC?

Summary

M88 app release of M88 app Draft reflects M88 app regulator’s positive attitude in supporting M88 app development of Generative AI and draws a bottom line for its healthy development so as to avoid M88 app wild growth of Generative AI. Providers of AIGC products and services should undertake responsibilities as producers of product-generated content, implement cybersecurity responsibilities, keep an eye on generated content from multiple perspectives such as ideology, privacy protection and intellectual property protection, and promote M88 app healthy and legitimate development of AI technology within M88 app regulatory framework.

Although M88 app Draft covers most of M88 app important aspects of AIGC, some of M88 app principled provisions are subject to more detailed regulations. We will keep abreast with M88 app formal Measures for M88 app Administration of Generative AI Services to be issued by M88 app CAC in M88 app future and oM88 appr regulatory provisions on AI and share our comments in due course.