Generative AI and the EU Pact: a responsible technological future

Artificial intelligence (AI) and its evolution into Generative AI (Gen AI) are playing a fundamental role in the creation of more efficient, personalised and disruptive business models.

Based on foundational models trained on vast amounts of digitised data, it has the ability to generate text, images, music and other types of content with unprecedented accuracy and complexity. Unlike traditional AI, which merely automates predefined tasks, GenAI creates new responses that can understand and adapt to user needs in real time.

Telefónica is integrating this technology into its processes to optimise networks, personalise services and improve customer experience. And, through strategic partnerships with leading technology companies, Telefónica is harnessing the potential of IAGen to be at the forefront of technological innovation.

However, as with any disruptive technology, there are risks associated with GenAI that need to be addressed with foresight and responsibility. In this context, we have prepared a document addressing the need for governance of AI and GenAI, as well as fundamental aspects on which it will have a very relevant impact, such as market competition, intellectual and industrial property, and the labour market. In this document, we provide an impact analysis and recommendations for policy makers and institutions.

Commitment to ethics and responsible governance

AI governance is essential to mitigate risks, requiring flexible regulatory frameworks that promote innovation and protect human rights, safety and health. The EU is moving forward in this area with the AI Act, which classifies systems according to their level of risk, from low to prohibited as dangerous.

In addition to the European legislative initiative, the coordination of principles at regional (OECD) and global (UN) levels is essential. In addition to regulation, self-regulation is a necessary complement, as innovation moves faster than institutional frameworks.

Since 2018, Telefónica has been developing ethical principles for AI, updated in 2024, to ensure a positive impact on society. The new update includes commitments on traceability and sustainability. These principles have led to the creation of procedures for responsible AI.

These ethical principles have led Telefónica to create the first procedures and compliance requirements for responsible AI. After the first pilots in 2022, with new roles and methods, a new governance model applicable to Telefónica was approved in December 2023. As part of its firm commitment to the development of responsible technology, Telefónica has signed the European Union's AI Pact, an agreement that reaffirms its position as a leader in responsible innovation.

In addition, Telefónica has taken its commitment a step further by actively participating in the development of the AI Office's Code of Conduct. Not only has the company positioned itself as a key player in the implementation of these regulations, but it is also helping to define standards to guide the development and use of generative AI.

Impact on labour market and lifelong learning

One of the biggest challenges of AI, and GenAI in particular, is its impact on the labour market. The automation of tasks that previously required human intervention may lead to job displacement, especially in medium-skilled sectors. However, AI also has the potential to create new job opportunities, especially in technology and innovation areas. The World Economic Forum estimates that 40% of new job vacancies will be for AI and machine learning specialists, representing a significant increase in demand for highly skilled talent.

To meet these challenges, Telefónica has implemented training and retraining programmes aimed at equipping its employees with the necessary skills to adapt to this new technological landscape. Developing competencies and "soft skills" such as creativity, critical thinking and interpersonal skills, which are harder to automate, will allow employees to remain relevant in an increasingly digital and automated work environment.

Intellectual property and market competition challenges

The emergence of Generative AI also raises complex intellectual property challenges. Generative AI systems that are trained on pre-existing data, may come into conflict with copyright law, as they may rely on the works of third parties to generate new content. This has led to intense debate about who owns the rights to AI-generated creations, especially when they have been developed without direct human intervention, or the terms of access to training data. Therefore, a public-private dialogue is being promoted, advocating the creation of flexible and adaptable regulatory frameworks that protect both creators and companies using these technologies.

It is also critical to ensure fair competition in markets. If access to key essential resources such as data and computing power is concentrated in a few hands, there is a risk that large technology companies will dominate the market, making it difficult for new firms to enter and limiting innovation. To address this challenge, policies are needed to encourage small and medium-sized enterprises as well as startups to have access to the resources needed to compete through innovation. In conclusion, the AI and GenAI-led digital transformation are redefining the way businesses operate, employees work and consumers interact with services.

By signing the AI Pact and participating in the creation of a global Code of Conduct for AI, Telefónica is expressing its commitment to a future where technological innovation goes hand in hand with social responsibility. The challenge of integrating these technologies in an ethical and transparent way is immense, but Telefónica has shown that it is possible to combine innovation with a strong sense of responsibility, leading the way towards an AI that benefits society as a whole.

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