TechNYC's Matt Henning warns against city-level AI patchwork
Matt Henning of TechNYC speaks on behalf of startups that build on frontier models. He warns that city-level AI rules would hold non-frontier deployers liable for things out of their control and that a city-by-city patchwork could force startups to leave New York City.
Good evening, Speaker Menon, Chair De La Rosa, and members of the Council.
My name is Matt Henning, and I'm the Director of Government Affairs at TechNYC.
Thank you for the invitation to testify today.
TechNYC's Frontier AI members already testified today, and we fully support their testimony and are proud to call them TechNYC members.
Today, I want to use my time to speak for the rest of our membership, the startups and businesses that build products on top of Frontier models rather than create them themselves.
New York's tech ecosystem has never been stronger.
According to a recent CBRE report, New York is now the largest tech talent market in North America, passing the Bay Area for the first time in the report's 13-year history.
That momentum isn't guaranteed, and the messaging that the city government sends matters.
That's why I was happy to hear Speaker Menon's comments to that effect in her opening remarks and hope the final language of this packet
package
aligns with that intent.
Our biggest concern is that this package holds non-frontier companies liable for things out of their control.
Most AI startups and many larger non-frontier companies have a frontier model under the hood.
The difference between a deployer and a developer is something I want to highlight when thinking about the various requirements and liabilities this package imposes.
Under the third-party validation bill, a startup can't deploy that model unless the developer had it validated and assessed, which these downstream companies can't commission or even verify.
If the developer is found to not be in compliance, the startup's product becomes illegal overnight at $25,000 per instance.
The AI misuse, chatbot, and advertising bills follow the same pattern, and the civilian complaint bill multiplies the exposure.
Finally, AI safety standards are most effective at the international, federal, or multi-state level.
A city-by-city patchwork with different rules in each city would be a compliance nightmare that many startups and small businesses could not survive.
Not only for New York City HQ'd startups, but for non-New York City HQ'd startups that serve New Yorkers.
As drafted, we are truly worried this would result in startups not choosing, but being forced to leave New York City.
We strongly urge the Council to engage experts at both frontier and non-frontier companies when moving forward with this package to ensure drastic negative unintended consequences are avoided.
ECNYC stands at the ready to help facilitate those conversations.
Thank you.