Small print.
Wide open.

Table of Contents

Services  Act  imposes  requirements  on  online  platforms,  while  the  EU’s  Data  Act  introduces  rules  on  data 
switching  and  data  sharing.  With  respect  to  security,  the  EU’s  Network  and  Information  Security  Directive 
requires  risk  management  and  incident  reporting.  These  laws  and  regulations  may  be  subject  to  differing 
interpretations or conflict with the obligations imposed by other legal regimes, such as laws of the United States 
concerning  government  access  to  data.  Compliance  with  these  laws  and  regulations  requires  significant 
investment  in  technical  and  organizational  measures,  and  these  laws  and  regulations  are  subject  to  frequent 
changes  and  evolving  interpretations.  Any  actual  or  perceived  non-compliance  could  result  in  regulatory 
investigations,  enforcement  actions,  significant  fines,  litigation,  reputational  harm,  loss  of  customer  trust, 
interruptions  in  the  availability  or  performance  of  our  models,  platform,  and  applications,  requirements  for 
unfavorable  changes  to  existing  models,  platform,  and  applications,  and  delays  in  the  introduction  of  future 
offerings, which could adversely affect our business.

Export Controls and Trade Regulations

As a global company, the provision of our models, platform, and applications across borders is subject to laws 
and  regulations  including  international  treaties,  export  controls,  economic  and  trade  sanctions  laws,  customs 
regulations, and local trade rules around the world. The scope, nature, and severity of such controls vary widely 
across different countries and may change frequently over time. Such laws, rules, and regulations may delay the 
introduction of our models, platform, and applications or impact our competitiveness through restricting our 
ability  to  do  business  in  certain  places  or  with  certain  entities  and  individuals.  For  example,  the  U.S. 
Department of Commerce continues to tighten export controls and add firms to the Entity List, which identifies 
foreign parties that are subject to specific license requirements for the receipt of certain items. Obtaining the 
licenses needed to serve or otherwise do business with such parties could limit our ability to conduct business 
with certain potential customers.

Such restrictions have already affected our offerings directly. For example, in June 2026, the U.S. Department 
of Commerce imposed worldwide export restrictions on our Fable 5 and Mythos 5 models. In collaboration with 
the  U.S.  government  and  industry  partners,  we  updated  our  safeguards,  and  we  re-deployed  our  Fable  5  and 
Mythos 5 models once the U.S. government lifted its restrictions. If similar restrictions were to be imposed in 
the  future,  they  may  limit  our  ability  to  recruit  talent,  to  fully  utilize  our  existing  workforce,  to  continue  to 
improve our models, and to make our products available internationally. For more information, see the section 
titled  “Risk  Factors—Governmental  trade  controls,  including  export  and  import  controls,  sanctions,  customs 
requirements,  and  related  regimes,  could  subject  us  to  liability  or  loss  of  contracting  privileges  or  limit  our 
ability to compete in certain markets.” Additionally, changes in the scope or application of export controls or 
other trade restrictions on AI accelerators and compute could impact our access to the infrastructure necessary 
to  develop  and  deploy  our  models,  platform,  and  applications.  As  this  is  an  emerging  technology  area, 
governments  are  continuing  to  refine  and  could  potentially  expand  the  export  controls  and  other  trade 
restrictions  applicable  to  AI  models  and  related  technologies.  These  restrictive  governmental  actions  and  any 
similar  measures  that  may  be  imposed  on  U.S.  companies  by  other  governments  could  limit  our  ability  to 
conduct business globally.

Other Regulations

In addition to the specific regulatory areas discussed above, we are subject to various other laws and regulations 
that  affect  our  business.  These  include  intellectual  property  laws  governing  patents,  trademarks,  and  trade 
secrets.  The  evolving  patent  landscape  for  AI  technologies  creates  risks  of  infringement  claims  and  uncertain 
patent protection for our innovations. We may also be subject to evolving copyright regimes. Additionally, we 
are  subject  to  employment  and  labor  laws  governing  wages,  employee  classification,  working  conditions, 
benefits,  non-discrimination,  workplace  safety,  and  termination,  with  worker  misclassification  and  evolving 
standards  potentially  creating  significant  liabilities  and  increased  labor  costs.  We  are  also  subject  to 
competition  and  antitrust  laws  in  the  United  States,  the  EU,  and  other  jurisdictions  which  prohibit 
anticompetitive  conduct,  and  increased  regulatory  scrutiny  of  technology  companies  regarding  market 
dominance, acquisitions, and AI systems could result in investigations, enforcement actions, significant fines, 
or  requirements  to  modify  business  practices.  We  may  also  be  subject  to  consumer  protection  laws  which 
prohibit  unfair  or  deceptive  practices  and  may  require  disclosures  about  our  AI  systems,  quality  and  safety 
standards, and protection from unfair practices, with violations resulting in enforcement actions and fines. We 
also  face  complex  and  evolving  tax  obligations  across  multiple  jurisdictions,  including  income,  sales,  value-

239