Technology
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It is an interesting question of what constitutes human art compared to machine generated art. Ultimately it is the human who guides the creation process and curates the final image using their aesthetic. The process doesn't seem that different from photography. And as you note, it's not clear where you draw the line in terms of computer assisted art. Drawing using Photoshop takes a lot less training than oil painting for example, yet we don't see digital art as being a lesser medium.
All that said, I imagine the area that China is concerned with would be AI generated content passed off as news. You can easily generate deepfake video of a politician for example, and having rules to prevent such a video being passed around as real seems prudent.
The solution to that is verifying sources and cross-referencing to make sure that its actually real. It has been possible for a very long time to edit images and videos in a way that appears real, AI just makes the process faster.
I think the speed does make a qualitative difference though. With AI it's now possible to churn out content very quickly and very cheaply. So, having a way to track factual content is becoming increasingly important. I do agree that focusing on watermarking factual footage to make it verifiable instead of AI generated content would probably be more productive.
Watermarking factual footage in a way that people can verify metadata would also be an interesting tool for journalism to be able to focus on evidence to improve confidence of facts. Taiwan fights misinformation by having easily available tools people can use to verify information and focus on improving critical thinking of the people. fighting the infodemic and pandemic without takedowns and lockdowns seems to be the best approach. Tools that prevent people getting tricked by disinformation and verifying information for the infoedmic and improving clean air with things like CR boxes and c02 sensors and clean air regulation for the pandemic.