Navigating the Realities of AI Washing
As companies jump on the AI bandwagon, some experts are warning that AI washing is becoming prevalent.
As of 2024, AI has become pervasive across industries, with companies enthusiastically marketing products and services powered by AI promising significant boosts in productivity. But as companies increasingly leverage AI as a trendy buzzword to make sales and funding, some experts are warning that "AI washing" (akin to greenwashing) is on the rise.
The term AI washing has emerged as a critical concept shaping discussions around authenticity and trustworthiness. AI washing refers to deceptive practices where companies exaggerate or misrepresent the role of artificial intelligence (AI) in their products or services to appear more innovative than they actually are. [1]
Capitalizing on the increasing integration of AI into everyday products and services across various industries and the perception that AI is key to getting ahead, AI washing uses ambiguous terms and jargon to take advantage of common misunderstandings of how the technology works.
Companies may use AI washing to align their brand with artificial intelligence to boost consumer and investor interest, enhance brand value, inflate the perceived worth of their products or services, justify higher prices, divert attention from flaws, stay competitive in a dynamic market, and create the impression of being more advanced than rivals. One 2019 study by tech investment firm MMC Ventures showed that 40% of tech firms were self-proclaimed AI startups in spite of using almost no AI. [2]
Marketers using AI washing mislead customers by using terms like "intelligent" incorrectly, implying their software employs algorithms capable of autonomous learning and decision-making without explicit programming. They also tend to offer vague definitions, leaving unclear distinctions between genuinely intelligent components and those that rely on traditional software or human input. Instead, many startups incorporate AI superficially without developing their own technology, adding basic AI features to traditional business models. [3]
Other companies employ AI washing by integrating AI into their campaigns to appear more innovative. A recent Coca-Cola campaign came under fire after the company claimed that it used AI to promote a new flavor without explaining how. Similarly, when McDonald's promoted its use of AI, it typically focused on how the technology could improve customer experience and enhance business outcomes. [4]
Without transparency on the applications and limitations of AI, companies risk overselling the role of AI in their business and product innovation.
So how can you tell if a company is AI washing?
Recognizing when companies are overstating AI involves developing a critical perspective on their claims. Note the models, technologies, or algorithms used, such as natural language processing, neural networks, or deep learning. Consider asking for proof. When examining AI tools, look for evidence of how AI is utilized within the products being offered. [5]
When speaking with a sales representative, inquire about steps taken to prevent bias in their data and algorithms or AI errors. If they don’t have answers, they might not be utilizing AI genuinely.
Like any misleading marketing strategy, AI washing can backfire. When consumers purchase products or services that don't actually provide the AI capabilities they were marketed to have, they often react by discontinuing their use and seeking alternatives that fulfill their expectations. They typically voice their dissatisfaction on social media or review platforms.
These kinds of examples make consumers more skeptical of genuine AI-powered products, making it more challenging for them to earn credibility and attract necessary investment.
At present, there isn't a singular, comprehensive law that explicitly deals with AI washing. Nevertheless, multiple existing and emerging regulations focus on broader aspects like AI transparency, ethics, and accountability, indirectly impacting the issue of AI washing. For instance, the European Union's Artificial Intelligence Act aimed to define AI legally and mandate transparency requirements. This could potentially combat AI washing by pushing companies to substantiate their claims regarding the use of AI technology.
Marketers may be tempted to capitalize on the vague understanding of artificial intelligence by labeling anything developed with AI tools as "AI-powered." However, for a product or service to rightfully claim it is "Powered by AI," artificial intelligence must be a fundamental part of its design and substantially enhance its value proposition. In other words, AI should play a crucial role in how the product or service functions, improving performance, efficiency, or user experience in ways not achievable through conventional computing methods alone.
