Open Source vs. Closed Source AI: An In-Depth Comparison and Implications from the EU AI Act

The Origin of the Open vs. Closed Source AI Discussions

Recently, the debate between open source and closed source artificial intelligence approaches has intensified, as highlighted by a recent spat between venture capital heavyweights, Martin Casado of Andreessen Horowitz and John Luttig of Founders Fund. This clash underscores the high stakes and divergent philosophies at play, as both paradigms vie for dominance.

Open-source advocates like Martin argue that collaboration and accessibility drive innovation, while closed source proponents like John emphasise security, control, and economic sustainability.

This article delves into expert opinions and stakeholder insights, comparing the two approaches as well as exploring the implications of the EU AI Act on the future of AI development and open or closed source models.

The Case for Open-Source AI

1. Enhanced Innovation and Collaboration

Open-source AI fosters a collaborative environment where researchers and developers can contribute to and improve upon existing models. Yann LeCun, a prominent advocate of open research and Meta’s chief AI scientist, asserts, "People will only do this if they can contribute to a widely available open platform. They're not going to do this for a proprietary system. So the future has to be open source, if nothing else, for reasons of cultural diversity, democracy, diversity."

2. Cost Efficiency and Accessibility

Open-source software is often seen as more cost-effective. Mark Zuckerberg, in a Meta earnings call, highlighted that open source can make their products "typically safer and more secure, as well as more compute efficient to operate due to all the ongoing feedback, scrutiny, and development from the community."

3. Industry Standards and Integration

Open-source models have the potential to become industry standards, facilitating easier integration of new innovations. Zuckerberg notes, "When companies standardise on building with our stack, that then becomes easier to integrate new innovations into our products."

The Drawbacks of Open-Source AI

1. Security Risks and Misuse

One of the primary concerns with open-source AI is security. Critics argue that open-source models can be easily exploited for malicious purposes. Percy Liang of Stanford acknowledges these risks but emphasises the need for nuanced regulation, stating, "There’s also dissemination of misinformation or the manufacturing of bioweapons, and maybe regulation should be targeted more downstream as opposed to upstream on the actual raw model."

2. Financial Sustainability

Open-source AI often relies on the goodwill and resources of large corporations. John Luttig from Founders Fund highlights this dependency, suggesting that companies like Meta may eventually shift their focus from open-source to closed-source once the financial burden outweighs the benefits: "At some point, they’ll shift their focus from charity to profit."

3. Lack of Continuous Improvement

Without the financial incentives and structured development pipelines of closed-source models, open-source AI might lag in advancements. Luttig argues, "Open-source models are largely backwards looking. I don’t expect capabilities plateau until the capex spend on GPUs and data reaches the tens of billions, on par with semiconductor manufacturing."

The Case for Closed Source AI

1. Superior Quality and Performance

Closed source models typically offer higher quality and performance. Companies like OpenAI and Google DeepMind invest heavily in the continuous improvement of their models, ensuring they remain at the forefront of AI capabilities. Luttig points out, "The best software creators are aligned with paying customers. When you choose closed-source models, you’re paying for future model improvements."

2. Enhanced Security and Control

Closed source models provide better control over data security and usage. Enterprises handling sensitive data often prefer the security assurances that come with closed-source solutions. As Luttig notes, "As a customer, I’d trust Microsoft with healthcare data security more than my IT department’s self-managed data centre."

3. Economic Viability

Closed source models are driven by clear business models that ensure their sustainability and growth. Luttig emphasises, "The software frontier doesn't move forward in the long run without relentless and sustained obsession from correctly incentivized companies."

The Drawbacks of Closed Source AI

1. Restricted Access and Innovation

Closed source models restrict access, potentially stifling innovation. Jim Zemlin from the Linux Foundation argues for more openness, stating, "There’s an opportunity to educate policymakers on the nuances of the technology stack, where things are more or less open."

2. Dependency on Corporations

Relying on closed-source AI can create dependencies on specific corporations, limiting flexibility and control for developers and businesses. LeCun warns against this dependency, highlighting the importance of an open platform for maintaining cultural and democratic diversity.

3. Cost Implications

While closed-source models may offer superior capabilities, they come at a cost. Smaller enterprises and individual developers may find the financial burden prohibitive, limiting their ability to leverage cutting-edge AI technologies.

The EU AI Act and Its Implications for Open-Source AI

The European AI Act introduces a nuanced regulatory framework that impacts both open-source and closed-source AI models, but it tends to favour closed-source models in practice. This is because the stringent requirements and complex compliance measures imposed by the Act can be more easily managed by large, well-funded organisations typically associated with closed-source AI.

Open-source models face significant regulatory hurdles, such as the need for extensive documentation, compliance with high-risk AI system regulations, and restrictions on monetization. These requirements can be particularly challenging for decentralised open-source projects that rely on contributions from individual developers. While the Act includes some exemptions for non-commercial open-source models and scientific research, the overall regulatory burden could discourage open-source development and make it harder for these models to thrive compared to their closed-source counterparts, which are better equipped to handle the regulatory demands.

As Daniel Castro, director of the Center for Data Innovation, observes “While EU policymakers have tried to address some of the concerns of the open-source community, it is clear that many open-source AI projects will still fall under the AI Act’s rules. In some cases, such as when a company is unilaterally developing an open-source AI model, compliance will not be any different than if the company was developing a proprietary AI model.”

Open Source AI vs. Closed Source AI: Conclusion

The debate between open source and closed source AI is complex, with valid arguments on both sides. Open-source AI promotes innovation, accessibility, and collaboration, but faces challenges in security, financial sustainability, and continuous improvement. Closed source AI offers superior quality, security, and economic viability but can restrict access and innovation while fostering dependencies on large corporations.

As AI continues to evolve, a hybrid approach might emerge, balancing the strengths and weaknesses of both paradigms. The future of AI will likely depend on finding the right mix of openness and control to foster innovation while ensuring security and sustainability.