Artificial Intelligence in Business: A Legal and Business Guide for Malaysian Enterprises

Introduction

Adobe’s latest study of the State of the Digital Customer Experienceⁱ in the Asia Pacific region has revealed that while 47% of Malaysian Consumers enjoy AI Brand interactions, only 10% of brands utilise it to provide a better customer experienceⁱⁱ. Clearly, Malaysian brands can benefit from incorporating generative artificial intelligence into the consumer experience they provide.

While this innovative technology can offer significant benefits, including efficiency improvements, cost reductions, and the creation of new products and services, it also presents unique legal and business challenges. This article outlines five crucial points that Malaysian enterprises should consider when integrating generative AI into their business practices.

1. Compliance with Local Data Protection Regulations

Malaysia's Personal Data Protection Act 2010 (PDPA) governs the processing of personal data in commercial transactions. Businesses using generative AI need to ensure that the data used for training AI models complies with the PDPA.

This involves obtaining consent from individuals before collecting their data, ensuring data is used for its intended purpose, and implementing adequate security measures to protect the data. Non-compliance can result in significant penalties, underscoring the importance of understanding and adhering to these regulations. Click here for an overview of obligations under the PDPA.

2. Intellectual Property (IP) Rights

Generative AI's ability to create new content raises complex IP issues. In Malaysia, the law typically recognises a human author's or creator's rights. Therefore, businesses must navigate the unclear terrain of ownership for AI-generated works. Until the legal framework evolves, companies should establish clear agreements that address IP rights related to AI-generated content. This may involve specifying the ownership of such content, whether it belongs to the company, the AI developer, or is considered a joint creation.

3. Contractual Agreements and Liability

The use of generative AI in business operations often requires partnerships with AI service providers. Malaysian businesses must carefully draft contractual agreements to address liability issues, including who is responsible for the AI's actions, especially in cases of malfunction or when the AI generates unlawful or harmful content. Clear terms regarding confidentiality service levels, data handling, and intellectual property rights should be established to mitigate risks.

4. Ethical Considerations and Public Perception

Apart from legal compliance, ethical considerations are paramount. Businesses must consider the societal impact of deploying AI, including potential biases in AI algorithms that could lead to discriminatory practicesⁱⁱⁱ. Public perception can significantly influence a company's reputation and, ultimately, its success. Transparency about AI use, efforts to eliminate bias, and engagement in ethical AI practices can enhance trust among consumers and the general public.

5. Drafting and Adopting Internal Usage Policies

Adopting internal usage policies for Generative Artificial Intelligence (AI) within Malaysian businesses is crucial to navigate the complex landscape of technological innovation responsibly. These policies serve as a foundational framework, ensuring that the use of AI aligns with local regulations, such as the Personal Data Protection Act 2010 (PDPA), and international best practices.

They help in delineating clear guidelines on data handling, intellectual property rights, ethical AI use, and mitigating biases, thereby protecting businesses from legal risks and reputational damage. Furthermore, well-defined internal policies promote transparency and accountability in AI applications, fostering trust among consumers and stakeholders. As Malaysian enterprises increasingly integrate AI into their operations, establishing robust internal usage policies becomes indispensable for sustainable growth and maintaining a competitive edge in the digital economy.

Conclusion

Integrating generative AI into business practices offers immense potential for Malaysian companies. However, to fully leverage this technology while mitigating risks, businesses must navigate the complex interplay of legal, ethical, and business considerations. By focusing on compliance, intellectual property rights, contractual clarity, ethical deployment, and adaptability to regulatory changes, businesses can position themselves for success in the AI-driven future. As Malaysia continues to advance in the digital economy, embracing these challenges and opportunities will be crucial for sustainable growth and innovation.

If you would like advice on Data Protection Compliance, Intellectual Property, Contractual Agreements and Liability, Ethical and Societal Impact Consultation and Internal Policy Development in the context of Artificial Intelligence, email info@aqranvijandran.com.

‍ _____________________________________________________________________

ⁱ ‘The State of Digital Customer Experiences across APAC’ <https://business.adobe.com/au/resources/ebooks/sdk/state-of-cx-apac-research-report.html> accessed 8 February 2024.

ⁱⁱ Dashveenjit Kaur, ‘The AI Divide in Malaysia According to Adobe’s Study’ (Tech Wire Asia, 8 February 2024) <https://techwireasia.com/02/2024/the-ai-divide-in-malaysia-according-to-adobes-study/> accessed 8 February 2024.

ⁱⁱⁱ Janna Hastings, ‘Preventing Harm from Non-Conscious Bias in Medical Generative AI’ (2024) 6 The Lancet Digital Health e2.

‍