What is ‘AI washing’ and why is it an issue?

Amazon acquired important headlines this yr when stories questioned the “Just Walk Out” expertise put in at lots of its bodily grocery shops.

The AI-powered system permits clients at lots of its Amazon Fresh and Amazon Go retailers to easily choose their objects, after which go away.

The AI makes use of a number of sensors to work out what you’ve chosen. You then get robotically billed.

However, again in April it was broadly reported that quite than solely utilizing AI, Just Walk Out wanted round 1,000 staff in India to manually examine nearly three quarters of the transactions.

Amazon was fast to assert that the stories have been “erroneous”, and that employees in India weren’t reviewing video footage from all of the retailers.

Instead it stated that the Indian staff have been merely reviewing the system. Amazon added that “this is no different than any other AI system that places a high value on accuracy, where human reviewers are common”.

Whatever the precise particulars of the Amazon case, it’s a high-profile instance of a brand new and rising query – whether or not corporations are making over-inflated claims about their use of AI. It is a phenomenon that has been dubbed “AI washing” in reference to the environmental “green washing”.

But first, a reminder of what precisely AI means. While there is no such thing as a actual definition, AI permits computer systems to be taught and clear up issues. AI is ready to do that after first being educated on enormous quantities of data.

The particular kind of AI that has made all of the headlines over the previous few years is so-called “generative AI”. This is AI that specialises in creating new content material, be it having textual content conversations, or producing music or photographs.

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

When it involves AI washing, there are a number of varieties. Some corporations declare to make use of AI after they’re truly utilizing less-sophisticated computing, whereas others overstate the efficacy of their AI over present strategies, or counsel that their AI options are totally operational when they don’t seem to be.

Meanwhile, different companies are merely bolting an AI chatbot onto their present non-AI working software program.

While solely 10% of tech start-ups talked about utilizing AI of their pitches in 2022, this rose to greater than 1 / 4 in 2023, in accordance with OpenOcean, a UK and Finland-based funding fund for brand new tech companies. It expects that determine to be greater than a 3rd this yr.

And, says OpenOcean workforce member Sri Ayangar, competitors for funding and the need to look on the leading edge have pushed some such corporations to overstate their AI capabilities.

“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,” says Mr Ayangar.

“And from our analysis, a significant disparity exists between companies claiming AI capabilities, and those demonstrating tangible AI-driven results.”

It is an issue that has quietly existed for a variety of years, in accordance with knowledge from one other tech funding agency, MMC Ventures. In a 2019 research it discovered that 40% of latest tech companies that described themselves as “AI start-ups” in truth used nearly no AI in any respect.

“The problem is the same today, plus a different problem,” says Simon Menashy, common accomplice at MMC Ventures.

He explains that “cutting-edge AI capabilities” are actually obtainable for each firm to purchase for the value of ordinary software program. But that as a substitute of constructing an entire AI system, he says many companies are merely popping a chatbot interface on prime of a non-AI product.

Douglas Dick, UK head of rising expertise danger at accountancy large KPMG, says the issue of AI washing isn’t helped by the very fact there not a single agreed definition of AI.

“If I requested a room of individuals what their definition of AI is, they might all give a distinct reply,” he says. “The term is used very broadly and loosely, 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 meet operational objectives the AI was expected to help them achieve.”

Meanwhile, for investors it can make it harder to identify genuinely innovative companies.

And, says 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.”

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

“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,” says Nick White, partner at international law firm Charles Russell Speechlys.

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

Michael Cordeaux, associate in the regulatory team at UK corporate law firm Walker Morris, says that AI claims have become an increasingly common feature of advertisements subject to ASA investigation.

Examples include a paid-for Instagram post about an app captioned “Enhance your Photos with AI”, which was held by the ASA to be exaggerating the performance of the app, and was therefore misleading.

“What is clear is that AI claims are becoming increasingly prevalent and, presumably, effective at piquing consumer interest,” says Mr Cordeaux.

“In my opinion we are at the peak of the AI hype cycle,” says Sandra Wachter, a professor of expertise and regulation at Oxford University, and a number one world knowledgeable on AI.

“However, I feel that we have forgotten to ask if it always makes sense to use AI for all types of tasks. I remember seeing advertisements in the London Tube for electric toothbrushes that are powered by AI. Who is this for? Who is helped by this?”

Also, the environmental impact of AI is often glossed over, she says.

“AI does not grow on trees… the technology already contributes more to climate change than aviation. We have to move away from this one-sided overhyped discussion, and really think about specific tasks and sectors that AI can be beneficial for, and not just blindly implement it into everything.”

But in the long term, says Advika Jalan, head of analysis at MMC Ventures, the issue of AI washing might subside by itself.

“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 says. “It will be a bit like saying ‘we’re on the internet’.”