Governments today are teetering on a tightrope — and it’s not a comfortable one.

On one hand, there is AI innovation, which holds the promise of quicker healthcare diagnoses, more intelligent public services, and even economic expansion through industries powered by technology. On the other hand, there is data privacy, where the stakes are intensely personal: individuals’ medical records, financial information, and private discussions.

The catch? AI loves data — the more, the merrier — but privacy legislation is meant to cap how much of it can be harvested, stored, or transmitted. Governments are thus attempting to find a middle ground by:

Establishing clear limits using regulations such as GDPR in Europe or new AI-specific legislation that prescribes what is open season for data harvesting.

Spurring “privacy-first” AI — algorithms that can be trained on encrypted or anonymized information, so personal information never gets shared.

Experimenting sandbox spaces, where firms can try out AI in controlled, overseen environments before the public eye.

It’s a little like having children play at a pool — the government wants the enjoyment and skill development to occur, but they’re having lifeguards (regulators) on hand at all times.

If they move too far in the direction of innovation, individuals will lose faith and draw back from cooperating and sharing information; if they move too far in the direction of privacy, AI development could grind to a halt. The optimal position is somewhere in between, and each nation is still working on where that is.