Why AI Washing is the Snake Oil of the 21st Century

Remember that scene in Back to the Future 2 where Marty McFly walks into a cafe and orders a "Pepsi Perfect" from a holographic waitress? We were promised a future brimming with intelligent machines seamlessly integrated into our lives. Fast forward to 2024, and the reality feels a lot closer to a scene from Idiocracy, where a "smart" air conditioner keeps asking you if you're "cold, cold?"

Let's face it, folks, the tech industry has a problem. It's a problem wrapped in buzzwords, splashed with shiny marketing campaigns, and packed with exaggerated claims. I'm talking, of course, about the rampant epidemic of AI washing. Companies are slapping the "AI" label on everything from refrigerators and toothbrushes, to chatbots and fraud detection tools, creating a tsunami of hype that drowns out genuine innovation.

Take the recent case of the US Securities and Exchange Commission (SEC) charging two investment advisors – Delphia Inc and Global Predictions Inc with making false and misleading statements about their purported use of AI. While Delphia claimed to use AI to predict which companies and trends were about to make it big so that it could invest in them before everyone else, Global Predictions boasted of being the first AI-regulated financial advisor. The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties. In another glaring investigation done by Hindenburg Research, Equinix – a global data center REIT with a market capitalization of $80 billion, has been trying to sell the AI pipe dream by saying data centres would require more power to run AI/ML models, which, they claim, would power up their revenue growth.

Image by Gerd Altmann from Pixabay

It's clearly a wave, that’s engulfing companies, big and small alike and everyone wants to ride the AI bandwagon. The reasons could be plenty that range from increasing consumer/investor interest, driving valuations higher, inflating the perceived value of a product/service, justifying a higher price point, adding a differentiation marker to stay competitive or simply to distract attention from a product’s shortcomings. All these may well seem to be the standard (but deceptive) tactics businesses deploy in the normal course. So, what then is the problem with AI washing, you ask.

The dangers of AI washing go far beyond a disappointing product/service. It erodes trust in a technology with the potential to revolutionize healthcare, combat climate change, and even personalize education. When companies make unsubstantiated claims about "AI-powered" features that turn out to be glorified algorithms or fancy data analysis, they create a culture of skepticism. Investors become wary, customers turn into detractors, research gets sidelined, and the true potential of AI remains locked away.

So how do we, as savvy consumers or enterprise buyers, spot AI washing? First, be wary of vague claims. "AI-powered" doesn't tell you anything. Dig deeper.  Does the product actually learn and adapt based on your input?

Second, look for transparency and explainability.  Does the company explain how AI is used in their product?  For example, the buying team might ask what models or code libraries the product uses. Merely using an AI tool or a ubiquitous AI model in the development process doesn’t make the product ‘AI-powered’. Likewise, we need to ask what kind of data is used to train the AI models, and how do they deal with bias and model drift.

Third, hunt for evidence. Check out published case studies and customer testimonials that explain how the product/solution has helped them solve a very specific problem. Sales collaterals such as white papers and product guides/brochures which include a glossary of AI terms and explain the tech architecture by breaking it down by layers, can help lend some degree of confidence.

Four, demand risk disclosure. It’s important that companies disclose specific operational, IT/security and legal risks regarding their use of AI, as well as the specific business function.

Finally, trust your gut. Does the advertised functionality seem like something out of a sci-fi movie? Does it feel a little too good to be true? It probably is. Research similar products from reputable brands and see if they deliver on their promises.

The SEC’s actions to enforce penalties for AI washing could be a tell-tale of what lies ahead. Others must follow suit to rein in the deceitful promotional practice. The European Union’s AI Act is meant to offer a legal and regulatory framework for developing responsible AI systems, while addressing the inherent risks. Earlier this year, the US saw the signing of a landmark Executive Order by President Biden to strengthen AI safety and security, protect Americans’ privacy, and advance equity and civil rights. India currently lags on this, and needs to act soon. The Advertising Standards Council of India (ASCI) in January this year released guidelines to prevent deceptive or unsubstantiated environment-related claims by brands in advertising often referred to as greenwashing. It might well serve as a starting point and a reference guide to set the ball on AI regulation rolling.

Let's not be fooled by the glitzy marketing campaigns and empty promises. The future of technology hinges on our ability to call out AI washing for what it is: the snake oil of the 21st century. Let's demand truth in tech and pave the way for a future where AI lives up to its true potential, not just the hype.