AI (Artificial Intelligence) is a novel technology that can cascade effects on various sectors of our daily lives. There is much hype and interest around the subject, and various companies are taking their short in this market. However, right now we are in a weird place where many companies are just plastering the word, AI in their products, without actually providing any intelligent computing just because it is a trending USP at the time.
Misleading consumers, investors, or media by making vague and misleading statements about the use of AI, to boost attention and drive sales is called AI washing. Some companies overstate the use of AI and exaggerate its capabilities just for clout. The practice of AI washing is growing exponentially in the tech industry, and finally, the SEC (Securities and Exchange Commission) is stepping up to put an end to these highly unethical and manipulative tactics.
We are here to explore more about AI washing, and how companies are manipulating users into spending extra just by using vague and exaggerated statements about AI. We will also look into how you can spot AI washing, and what government agencies such as the SEC, are doing to address this issue.
What is AI Washing?
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Companies use various marketing tactics, to garner the attention of the media, consumers, and investors. However, when companies make false claims about their operations and the product just as a marketing technique, that is a problem. The new “hot” and “trending” thing in the market is Artificial Intelligence. So, it is only natural that we are seeing a range of products, from mobile phones to TVs, and even toothbrushes coming with AI tags. While AI-powered products have been a game changer, some companies are trying to enter the market with false and groundless marketing statements.
Falsely using “AI” tags and claiming to provide AI capabilities in their products, services, or operations, without seeing it through is called AI washing. This marketing technique aims to leverage the interest in the technology sector and to disguise the products as more advanced than they are.
AI-washing often involves with:
- Overstating the capabilities of the AI model used in the product or services by stating they are more powerful and useful than they are.
- Falsely using the term “Intelligent”, when the algorithm used cannot learn from exposure and make decisions accordingly.
- Releasing vague statements about “AI capabilities” without explicitly explaining what parts of the products utilize AI, and at what capacity.
- Disguising underlying human inputs, as “AI”.
Why Companies Use AI Washing Marketing Technique?
AI is a novel technology that is still in its early stages. With the right nurturing and R&D, they can do amazing things that can advance the human race altogether to the next stage. Although the concept of AI, has been around for years, the interest exploded with the advent of generative AI models such as Midjourney AI, Dall-e, and ChatGPT.
It only took ChatGPT about days to cross the 1 million user bar, and within two months, the generative AI platform had about 100 million active users. So, yes, it is safe to say that the world went crazy, seeing what AI can do. At this point, companies realized that they need to offer AI-capabiliteies to attract more customers. So, they did some good examples of AI-integrated products such as the Bing browser with ChatGPT, Google with Gemini, Galaxy AI in the new Samsung phones, and the upcoming Apple Intelligence from the tech giant Apple.
Some cunning businesses quickly realized that there was a lot of money to be made from the market, just by using the term “AI” in their product, and started using exaggerating statements that do not represent reality. Even though many tech enthusiasts busted these tactics, they still stay prevalent.
Marketers use AI Washing to attract investments, boost stock prices, increase the appeal of the product with the mass audience, and gain a competitive advantage over competitors.
Examples of AI Washing
AI washing practices are happening around us, very aggressively. A lot of products that claim to be “Intelligent”, are just machines that can be controlled using the internet. These products cannot possess the capabilities to record how they are being used and adapt accordingly. Some examples of AI washing include:
Home appliances without autonomous properties
Many home appliances including refrigerators, microwave ovens, Air Conditioners, kettles, and vacuum cleaners, among others, are being labeled “intelligent”, but in reality only adapt to preset conditions and cannot learn from the user inputs and interact with the environment. For example, while a Robo vacuum cleaner that can identify objects and steer itself accordingly can be considered intelligent, an Air Conditioner that can be controlled through mobile is not.
Creative tools that require extensive human input
Companies offer tools and services claiming that they can help automate creative works such as video editing, photo manipulation, and copy generation. However, some of these tools require an immense amount of intervention from the user to tweak the generated results, to make them an output of acceptable quality.
Invest in management applications that claim to use AI analysis
Again, there are many investment platforms and trading platforms that use AI’s capabilities for analyzing vast amounts of data at a time to generate more informative trading signals. However, some companies take advantage of the hype around such applications and make false claims, exaggerating the extent of their AI capabilities.
How to Stay Away from AI Washing?
The sad reality of the world is that you can never believe what the marketing team is trying to say about the product. So, you should always be skeptical of advertisements and should investigate a little more into the specific details of the touted features, like how it works. But to do that you need to have a better understanding of AI, and what it is.
To explain simply, products tagged “intelligent” are products that are powered by software that can learn how to carry out tasks by being trained on real data, as opposed to being explicitly programmed to do tasks in a specific way. This process of learning using real-life data is called machine learning.
Generally speaking, companies that are creating legitimate AI tools and machines will mention the specific models, technologies, and algorithms used in the AI. Additionally, they may also provide information about what data sets the AI has been trained on. So, look out for the mentioning of technical aspects such as neural networks, deep learning, or machine learning. You may also look for companies that have made the types of data and algorithms involved accessible to the public.
You can typically, access this kind of information from the whitepaper or the official website of the project. If the company is actively going out of its way to keep further information about the AI algorithms used vague, it is a red flag.
So, skepticism is the one thing you need to stay away from AI washing. Never believe the claims of a company at face value, investigate a bit deep, and you will know for sure what you are getting yourself into.
Strict Regulations Against AI Washing
AI washing is not just affecting the users, but also the investors. Companies are using fake AI usage info and unethical, and illegal attention-building strategies of announcing false AI products to manipulate the stock market to their advantage. The fraudulence even grows to the point where some companies are even committing serious crimes such as inside trading, securities fraud, and wire fraud, through AI washing.
At this point, the SEC is stepping up and declaring a literal war against AI washing. They have already filed security fraud charges against the founder and former CEO of now-defund AI recruitment station Joonko. SEC action against new defunding stands as a warning for other companies, not to explore the path of fraudulence and criminal activities with AI washing.
The European Union (EU), and the UK are also tightening their policies to put an end to AI washing marketing techniques. So, every organization should have solid grounds to claim something is AI, regardless of the size of the company. Recently, Amazon’s “Just Walk Out” AI tech faced scrutiny, meaning that no AI claims will go unchecked.
Also Read: Machine Learning Vs Artificial Intelligence: Which Is More Powerful?
Conclusion
AI washing is a marketing technique that creates attention by falsely offering misleading statements regarding AI use in a product or service. The practice is being used by many companies regardless of their scale and reach.
While AI Washing was started as a harmless marketing technique, such as greenwashing – the process of misleading the users into thinking the products and policies are environment friendly. However, AI washing has evolved into complex issues and even criminal cases, that are prohibited by law.
So, the government agencies are stepping up to put an end to AI Washing. However, you should practice skepticism and do research on your own before believing claims and marketing statements. If you have more questions about AI washing or about any specific products or services, shoot in the comment section below.
