Baidu in court: AI hallucinations are not grounds for a fine

Imagine building your career in law for years, and then one day you go online and discover that a popular neural network is crediting you with participation in a series of crimes. This is exactly what happened to Beijing lawyer Huang Guigen, who decided he was not going to tolerate the antics of algorithms. He sued Baidu, demanding one million yuan in compensation for damage to his business reputation.

Recently, the first hearing took place in the Haidian District Court, and Baidu's defense arguments force us to think about what kind of wonderful new world we're living in. The company doesn't deny that its product generated a lie, but claims it wasn't intentional. Baidu's main argument revolves around the term "hallucinations."

The company's lawyers argued that this phenomenon is an inevitable stage in the development of any large language model. By their logic, since the technology is in the process of improvement, the developer shouldn't be held responsible for mistakes it makes during this "transitional period." Baidu insists they had no intent to insult the lawyer, and therefore there is no wrongdoing.

This is a classic example of how corporations try to shift responsibility from the subject to the imperfection of the tool, pretending that AI is some kind of elemental force that cannot be fully controlled. Context here is extremely important. China is currently at the forefront of AI regulation, trying to strike a balance between supporting its tech giants in the race against the United States and tight control over information.

If the court sides with Baidu, it will create a dangerous precedent. Essentially, it would mean that any company can release a raw product to the market that generates slander, and use the technical complexity of the algorithm as an excuse. On the other hand, if Baidu loses, the industry faces a wave of lawsuits.

Every incorrect word from a chatbot could become a reason for multimillion-dollar settlements, forcing developers to "tighten the screws" and make models as cautious as possible and, most likely, less useful. It's interesting how Baidu tries to separate technology from responsibility. They claim they committed no direct or indirect violation of rights because text generation is an automatic process.

But here we encounter a logical deadlock. If a company profits from the work of this algorithm and promotes it as a reliable source of information, why should it be exempt from responsibility when the algorithm makes mistakes? In traditional media, an editor cannot say that a false article was a "hallucination" of the printing press.

But in the world of LLMs, the old rules of the game somehow stop working, or at least companies very much want us to believe so. This trial in Beijing is just the first of many legal battles to come. While OpenAI and Google defend themselves against copyright lawsuits, Baidu faces a more mundane but no less important problem—protecting the honor and dignity of an ordinary person.

The outcome of this case will show how "smart" and "irresponsible" artificial intelligence is allowed to be in modern society. If hallucinations are recognized as a legal right for machines to make mistakes, we should all be prepared for the fact that digital reality will become even more unpredictable and toxic. The key question: Will "hallucination" become a legal term that exempts companies from responsibility, or will Baidu have to pay for every false token?