Why is "AI washing" a concern, and what does it mean?
This year, revelations that questioned the "Just Walk
Out" technology that many of Amazon's real grocery stores had placed
garnered negative press for the company.
At several of its Amazon Fresh and Amazon Go stores,
shoppers can just choose their products and then leave thanks to the AI-powered
system.
To determine what you have selected, the AI consults a
multitude of sensors. Then, a bill is automatically sent to you.
But in April, it was publicly revealed that Just Walk Out
required almost 1,000 staff in India to manually review nearly 75% of the
transactions, as opposed to relying just on AI.
Amazon swiftly refuted the accusations, stating that
employees in India were not watching CCTV footage from every store and that
they were "erroneous."
Rather, it claimed that the Indian laborers were only going
over the system. Amazon went on to say, "This is no different from any
other AI system where human reviewers are common and that places a high value
on accuracy."
Regardless of the specifics of the Amazon case, it serves as
a prominent illustration of a recent and expanding inquiry into whether
businesses are exaggerating the extent of their usage of artificial intelligence.
Referred described as "AI washing" in relation to the environmental
phenomena known as "green washing,"
Let's review the definition of artificial intelligence
first.
Artificial Intelligence (AI), which is difficult to define,
lets machines learn and solve problems. AI is capable of this after undergoing
intensive training on enormous amounts of data.
The specific subset of artificial intelligence referred to
as "generative AI" has gained a lot of interest lately.
When it comes to creating original content, such as text
conversations, artwork, and music, this AI shines.
The popular chatbots Gemini from Google, Copilot from
Microsoft, and ChatGPT are instances of generative artificial intelligence.
Different kinds of artificial intelligence are used in
washing. While some companies make misleading claims about the use of AI while
really employing less complicated computation, others exaggerate the
effectiveness of their AI in contrast to earlier methodologies or incorrectly
claim that their AI solutions are fully operational.
Some businesses, in the meantime, are only adding an AI
chatbot to their already-existing operational software; this approach does not
use AI. According to Open Ocean, an investment business for early-stage
internet firms located in Finland and the UK, just 10% of digital start-ups in
2022 revealed utilizing AI in their presentations, but over 25% of them did so
in 2023.
This year, it
anticipates that percentage to exceed one-third.
Furthermore, according to Sri Ayangar, a member of the
Open Ocean team, some of these businesses have exaggerated their AI capabilities
in an effort to get investment or to look innovative.
"Some founders seem to believe that if they don’t
mention AI in their pitch, this may put them at a disadvantage, regardless of
the role it plays in their solution," adds Mr. Ayangar.
"And from our analysis, a significant disparity exists
between companies claiming AI capabilities, and those demonstrating tangible
AI-driven results."
Based on statistics from another digital investment firm,
MMC Ventures, it's a problem that has been going on for a while. According to a
2019 survey, 40% of brand-new digital companies that referred to themselves as
"AI start-ups" really employed hardly no AI at all.
"Today's problem is the same problem plus a new
one," explains MMC Ventures general partner Simon Menashy.
He said that every business may now get "cutting-edge
AI capabilities" for the same price as regular software. Nonetheless, he
claims that many businesses are only adding a chatbot interface to a non-AI
product rather than developing an entire AI system.
According to Douglas Dick, UK director of emerging
technology risk at global accounting firm KPMG, the lack of a single, accepted
definition of AI exacerbates the issue of AI washing.
"Everyone in the room would have a different definition
of artificial intelligence," he claims. "The phrase lacks a clear
point of reference and is used extremely loosely and generically. This
uncertainty is what's facilitating the emergence of AI washing.Businesses may
experience unsettling effects from AI washing, including as overspending on
services and technology or falling short of the operational goals AI was
supposed to assist in achieving."
Investors may find it more difficult to recognize truly
innovative firms as a result.
And according to Mr. Ayangar: "If consumers have unmet
expectations from products that claim to offer advanced AI-driven solutions,
this can erode trust in start-ups that are doing genuinely ground-breaking
work."
At least in the US, regulators are beginning to pay
attention. The US Securities and Exchange Commission (SEC) said earlier this
year that it was bringing charges against two investment advising companies for
making false and deceptive claims regarding the scope of their usage of
artificial intelligence.
According to Nick White, partner at international law firm
Charles Russell Speechlys, "the firm stance taken by the SEC demonstrates
a lack of leeway when it comes to AI washing, indicating that, at least in the
US, we can expect more fines and sanctions down the line for those who violate
the regulations."
The UK currently has rules and regulations addressing AI
washing, one of which is the Advertising Standards Authority's (ASA) code of
conduct, which requires marketing materials to intentionally mislead or be
likely to do so.
Ads under investigation by the ASA are increasingly using AI
claims, according to Michael Cordeaux, the regulatory team associate at Walker
Morris, a UK corporate law firm.
As to the ASA, a sponsored Instagram post titled
"Enhance your Photos with AI" is an instance of a misleading
marketing that exaggerates the program's capabilities.
"What is clear is that AI claims are becoming
increasingly prevalent and, presumably, effective at piquing consumer
interest," says Cordeaux.
Sandra Wachter, a renowned expert on artificial intelligence
from across the world and a professor of technology and regulation at Oxford
University, states that "I think we are at the peak of the AI hype
cycle."
But I think we've failed to consider whether using AI for
every work is necessarily a good idea. I recall seeing advertising for
AI-powered electric toothbrushes in the London Tube. For whom is this intended?
Who does this benefit?"
She adds that the effects of AI on the environment are
frequently downplayed.
"Artificial intelligence is not a tree... the
technology already has a greater impact on climate change than flying."
Instead of incorporating AI into everything, we should start
thinking about the specific sectors and tasks that it can assist with, rather
than continuing this one-sided, exaggerated argument.
However, Advika Jalan, head of research at MMC Ventures,
believes that AI washing may eventually go away on its own.
"AI is becoming so ubiquitous - even if they’re just
ChatGPT wrappers - that 'AI-powered' as a branding tool will likely cease to be
a differentiator after some time," she asserts. "It will be a bit
like saying 'we’re on the internet'."
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