(qlmbusinessnews.com Wed. 3rd July, 2024) London, UK —

Understanding ‘AI Washing' and Its Implications.

Amazon faced scrutiny earlier this year regarding its “Just Walk Out” technology in its Amazon Fresh and Amazon Go stores. This AI-powered system, designed to let customers pick items and leave without traditional checkout processes, came under fire when reports suggested it required around 1,000 workers in India to manually check nearly three-quarters of transactions.

Amazon disputed these claims, stating that the reports were erroneous and that Indian staff were merely reviewing the system, similar to other AI systems that prioritise accuracy with human reviewers.

This incident highlights a growing concern: companies potentially exaggerating their AI capabilities, a practice known as “AI washing,” akin to “greenwashing” in environmental claims.

AI, while lacking a precise definition, generally refers to computers learning and solving problems. The most talked-about form in recent years is “generative AI,” which creates new content like text, music, or images, with ChatGPT, Google's Gemini, and Microsoft's Copilot being prime examples.

AI washing manifests in several ways. Some firms claim to use AI while relying on simpler computing methods. Others overstate their AI's effectiveness or suggest their AI solutions are fully operational when they are not. Sometimes, companies simply add an AI chatbot to existing non-AI systems.

According to OpenOcean, a UK and Finland-based tech investment fund, mentions of AI in start-up pitches increased from 10% in 2022 to over a quarter in 2023. This trend is driven by competition for funding and the desire to appear cutting-edge, leading some companies to overstate their AI capabilities.

Sri Ayangar from OpenOcean notes a significant gap between companies claiming AI capabilities and those delivering tangible AI-driven results. MMC Ventures found in a 2019 study that 40% of new tech firms describing themselves as “AI start-ups” used little to no AI.

Simon Menashy, a general partner at MMC Ventures, explains that cutting-edge AI capabilities are now widely available for the price of standard software. Many firms opt to add a chatbot interface to non-AI products rather than develop comprehensive AI systems.

AI Tech Companies

Douglas Dick, UK head of emerging technology risk at KPMG, attributes AI washing to the broad and loose use of the term “AI,” which allows for ambiguity and misuse. This can lead to businesses overpaying for technology and failing to meet operational goals, while investors struggle to identify truly innovative companies.

AI washing can also erode consumer trust when products fail to meet advanced AI-driven expectations. Regulators, particularly in the US, are starting to address this issue. The US Securities and Exchange Commission (SEC) recently charged two investment advisory firms with making false claims about their AI use.

In the UK, existing rules from the Advertising Standards Authority (ASA) mandate that marketing communications must not materially mislead. The ASA has investigated several AI-related advertisements for exaggeration.

Sandra Wachter, a professor at Oxford University, criticises the overhyped AI discussion and stresses the need to evaluate where AI genuinely adds value. She also highlights the significant environmental impact of AI, which contributes more to climate change than aviation.

Advika Jalan from MMC Ventures suggests that as AI becomes ubiquitous, the hype around “AI-powered” branding will diminish, much like the early days of the internet.

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