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Strategic use of AI
Context:
Since the launch of OpenAI’s ChatGPT in November 2022, major economies worldwide have integrated Artificial Intelligence (AI) into their national strategies. Emerging players like India and the UAE are competing alongside the US and China in AI development.
Global AI Growth and Market Size
- The global AI market size in 2023 was estimated at US$ 196.63 billion and is projected to grow at a CAGR of 36.6% until 2030.
- UAE’s AI sector revenue is expected to rise from US$ 5.22 billion in 2023 to US$ 46.33 billion in 2028, a CAGR growth of 43.9%.
Regulatory Frameworks
- Rapid advancements in AI technology have prompted global jurisdictions to develop regulatory and governance frameworks. Leading countries (US, China, India, UAE) and organisations (United Nations, OECD) have issued ethical guidelines and best practices for AI governance.
- The European Union’s Artificial Intelligence Act (EU AIA), finalised in August 2024, became the first legally binding AI governance framework.
- AI sandboxes are emerging as tools to balance innovation with safety, with countries like Spain and the UK piloting them in 2024.
AI Sandboxes: Controlled Testing Environments
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- Sandboxes provide a supervised environment for testing AI models, algorithms, and APIs using approved datasets.
- They allow regulators to grant temporary legal exemptions while ensuring compliance with transparency, bias mitigation, and data protection standards.
- Benefits include:
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- Accelerating market entry for startups and SMEs.
- Enabling venture capital investment.
- Facilitating adaptive regulation for fast-evolving technologies.
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- Drawbacks include:
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- Limited participant capacity (e.g., UK’s AI Airlock framework in 2024 had five participants; Dubai’s 2021 SANDBOX programme had twelve).
- Potential for regulatory arbitrage, where businesses seek jurisdictions with lenient frameworks, risking a downward spiral in governance standards.
UAE’s AI Landscape
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- The UAE ranks fifth in AI “vibrancy” on Stanford University’s global AI index in 2024.
- The UAE aims to diversify its economy by focusing on AI, appointing an AI minister in 2017 and establishing the UAE Council for AI and Blockchain.
- AI Sandbox Initiatives: Core42 (a G42 subsidiary) has developed a specialised sandbox framework, termed “regulated technology environment” (RTE), for testing Nvidia H100 and H200 chips.
- Priorities include:
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- Aligning with US export controls.
- Ensuring technological sovereignty.
- Localising data generated in the UAE.
- Compared to the UK’s sector-specific AI Airlock framework (focused on medical diagnostics), the UAE’s broader approach fosters local capacity-building.
Challenges
- AI models, once developed, can be exported, raising concerns about inconsistent international regulations.
- Variances in global standards (e.g., data protection, bias mitigation) highlight the need for comprehensive legislative frameworks.
- Sandboxes should be treated as interim measures, facilitating eventual alignment with global principles and cross-border collaboration.
Recommendations for the UAE’s Regulatory Path
- Balance attracting investment with crafting robust legislative frameworks.
- Align sandbox initiatives with international standards, leveraging the UAE’s strategic position between the US, EU, and Asia.
- Invest in UAE-based data centres and cloud infrastructure to address data localisation issues.
- Introduce phased models where sandboxes evolve into permanent frameworks.
- Use sunset clauses for sandbox-tested products, requiring periodic reauthorisation.
Future Outlook
- The UAE’s regulatory strategy must balance pro-business policies with cross-border alignment and long-term governance frameworks.
- A structured and adaptive approach to AI governance will help the UAE maintain its position as a global AI hub while mitigating risks associated with rapid technological advancements.
