Artificial Intelligence, Real Risks: Legal Due Diligence Issues And Purchase Agreement Provisions Aimed At Managing AI Risk In M&A Transactions

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There is broad consensus in Canada and around the world that artificial intelligence ("AI") has been a transformative force in recent years, driving innovation and efficiency in companies across industries, and that it will continue to do so at an increasingly rapid pace. A 2023 study by PricewaterhouseCoopers found that 54% of companies are increasing their investment in AI research and development, with many focusing on creating proprietary AI models and tools.¹ Other companies have benefited from these services and licensing arrangements, finding it more efficient and cost-effective to utilize the services and AI technology developed by other companies in order to grow their own businesses. McKinsey and Company reported that, as of early 2024, approximately 65% of organizations reported regular use of generative AI technologies, nearly double the share that reported using them in a similar survey just