Artificial intelligence technology (or AI) has developed rapidly during the past decade, and the effects of the AI revolution are already being keenly felt in many sectors of the economy. A growing chorus of commentators, scientists, and entrepreneurs has expressed alarm regarding the increasing role that autonomous machines are playing in society, with some suggesting that government regulation may be necessary to reduce the public risks that AI will pose. Unfortunately, the unique features of AI and the manner in which AI can be developed present both practical and conceptual challenges for the legal system. These challenges must be confronted if the legal system is to positively impact the development of AI and ensure that aggrieved parties receive compensation when AI systems cause harm. This article will explore the public risks associated with AI and the competencies of government institutions in managing those risks. It concludes with a proposal for an indirect form of AI regulation based on differential tort liability.