What is AI washing and why is it a problem?

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Legend, Amazon had to defend the use of AI technology in its physical grocery stores

  • Author, Emma Woollacott
  • Role, Technology journalist

Amazon made headlines this year when reports questioned the “Just Walk Out” technology installed in several of its brick-and-mortar grocery stores.

The AI-powered system allows customers at its Amazon Fresh and Amazon Go stores to simply choose their items and then leave.

Open to those registered via an app, the AI ​​uses facial recognition technology, as well as numerous sensors and cameras, to determine what you have chosen. You are then automatically billed.

Instead, he said Indian workers were simply overhauling the system. Amazon added that “this is no different from any other AI system that places a high value on accuracy, where human reviewers are common.”

However, Amazon also confirmed that it would reduce the number of stores using the Just Walk Out system.

Whatever the exact details of the Amazon case, it is a high-profile example of a new and growing question: Are companies making exaggerated claims about their use of AI? This is a phenomenon that has been called “AI washing” in reference to environmental “green washing”.

But first, let’s remember what exactly AI means. Although there is no exact definition, AI allows computers to learn and solve problems. AI is able to do this after being trained on enormous amounts of information.

The specific type of AI that has been making headlines in recent years is what’s called “generative AI.” This is AI that specializes in creating new content, whether it’s text conversations or producing music or images.

Chatbots like ChatGPT, Google’s Gemini, and Microsoft’s Copilot are popular examples of generative AI.

When it comes to AI washing, there are several types. Some companies claim to use AI when they are actually using less sophisticated computing, while others overestimate the effectiveness of their AI compared to existing techniques, or suggest that their AI solutions are fully operational when ‘they are not.

Meanwhile, other companies simply integrate an AI chatbot into their existing operating software without AI.

While only 10% of tech startups mentioned using AI in their presentations in 2022, that figure rose to more than a quarter in 2023, according to OpenOcean, a UK-based investment fund. Finland for new technology companies. He expects that figure to exceed a third this year.

And, according to OpenOcean team member Sri Ayangar, competition for funding and a desire to appear at the forefront has caused some of these companies to overestimate their AI capabilities.

“Some founders seem to believe that if they don’t mention AI in their pitch, it could put them at a disadvantage, regardless of the role it plays in their solution,” says Ayangar.

“And based on our analysis, there is a significant disparity between companies that claim AI capabilities and those that demonstrate tangible results using AI. »

Image source, Sri Ayangar

Legend, Sri Ayangar says some start-up bosses think mentioning AI is enough

This is a problem that has quietly existed for several years, according to data from another technology investment firm, MMC Ventures. In a 2019 study, it was found that 40% of new technology companies that describe themselves as “AI startups” actually use almost no AI at all.

“The problem is the same today, with a different problem,” says Simon Menashy, general partner at MMC Ventures.

He explains that “cutting-edge AI capabilities” are now available to every business, which they can purchase at the price of off-the-shelf software. But instead of building a complete AI system, he says many companies simply install a chatbot interface on top of a non-AI product.

Dougal Dick, UK head of emerging technology risk at accounting giant KPMG, says the problem of AI washing is not solved by the fact that there is no single agreed definition of AI .

“If I asked a group of people what their definition of AI is, they would all give a different answer,” he says. “The term is used very broadly and vaguely, without any clear point of reference. It is this ambiguity that is allowing AI washing to emerge.

“AI washing can have concerning impacts for businesses, from overpaying for technology and services to failing to achieve the operational goals AI was intended to help them achieve.”

At the same time, it may be more difficult for investors to identify truly innovative companies.

And, Ayangar adds: “If consumer expectations are not met by products that claim to offer advanced AI-based solutions, it can erode trust in start-ups doing truly revolutionary work. »

Regulators, at least in the United States, are starting to take notice. Earlier this year, the US Securities and Exchange Commission (SEC) said it was accusing two investment advisory firms of making false and misleading statements about the extent of their use of AI.

“The tough stance taken by the SEC demonstrates a lack of leeway when it comes to AI cleanup, indicating that, at least in the United States, we can expect more fines and sanctions in the future for those who break the regulations,” says Nick White. , partner of the international law firm Charles Russell Speechlys.

Legend, Nick White believes it is positive to see US regulators taking action on the issue

In the UK, rules and laws regarding AI washing are already in place, including the Advertising Standards Authority (ASA) Code of Conduct, which states that marketing communications must not materially mislead error, or be likely to do so.

Michael Cordeaux, a partner in the regulatory team at UK corporate law firm Walker Morris, says AI claims have become an increasingly common feature of advertised ads. an ASA investigation.

Examples include a paid Instagram post about an app titled “Enhance your photos with AI”, which was considered by the ASA to exaggerate the app’s performance and was therefore misleading.

“What is clear is that AI claims are becoming more prevalent and, presumably, effective in generating consumer interest,” Cordeaux says.

“In my opinion, we are at the peak of the AI ​​hype cycle,” says Sandra Wachter, professor of technology and regulation at the University of Oxford and a leading global expert on AI.

“However, I feel like we’ve forgotten to ask ourselves whether it still makes sense to use AI for all types of tasks. I remember seeing adverts on the London Underground for AI-powered electric toothbrushes. Who is it for ? Who is helped by this? »

Additionally, the environmental impact of AI is often overlooked, she says.

“AI doesn’t grow on trees…the technology already contributes more to climate change than aviation. We need to move away from this one-sided, over-the-top discussion and really think about the specific tasks and industries where AI can be beneficial, and not just blindly implement it into everything.

But in the longer term, says Advika Jalan, head of research at MMC Ventures, the AI ​​washout problem could abate itself.

“AI is becoming so ubiquitous – even if it’s just ChatGPT – that the ‘AI-powered’ branding tool will likely cease to be a differentiator after a while,” she says. “It will be a bit like saying ‘we are on the internet’.”

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