Similar to so-called greenwashing (where some Wall Streeters make exaggerated promises that their investments will save the planet when they really want to make money), AI washers are trying to exploit the trend. Some companies try to inflate valuations, deceive investors, and mislead consumers by branding their products with the word “AI,” even if their products are just nifty software. .
The SEC is not the first regulator to sound the alarm. Last February, the Federal Trade Commission warned companies against using AI as a deceptive marketing tactic. “At the FTC, one thing we know about trendy marketing terms is that some advertisers can’t stop overusing and abusing them,” commission attorneys said in a blog post. . “Before labeling a product as leveraging AI, also note that just using AI tools in the development process is not the same as a product with built-in AI.”
But pointing out a problem is not the same as stopping it. And as with many things about AI, it is much easier to identify its dangers than to suppress them.
One problem with artificial intelligence is that it’s an umbrella term that doesn’t mean much to engineers. Its subfields such as “neural networks” and “machine learning” convey real meaning to the academic researchers and corporate scientists who study and develop them. It’s been just a year since the new field of “generative artificial intelligence,” the technology behind ChatGPT’s groundbreaking product, entered the public consciousness.
Consider the case of Bay Area software company C3.ai. The company sells a number of AI-powered products to companies, and went public in a flashy initial public offering in 2020 with the catchy stock symbol “AI.” But a few years ago, C3 promoted itself as a provider of software to monitor sustainability efforts. Its name stood for “Measuring, Mitigating, and Monitoring Carbon Reduction.” C3’s stock price has soared and fallen with the ups and downs of the AI boom.
We’ve seen these tactics before. When it began to be commercialized in the 1990s, the Internet was a true paradigm shift in technology, profoundly impacting everything from publishing to email delivery. Still, that hasn’t stopped charlatans from slapping the word “dot-com” on the end of ordinary companies in an attempt to sprinkle fairy dust on their company’s valuations. In 1998, the SEC created the now-quaint-sounding Office of Internet Enforcement to pursue fraud on the web. Regulators then and now pursued cases of fraud and false claims, which were illegal no matter where they occurred in the economy, but with the advent of the Internet, they seemed to exist everywhere. In the end, the agency was disbanded.
The Internet bubble was fully inflated when the SEC intervened. Now, Wall Street regulators are belatedly beginning to embrace this new technology. It is reportedly carrying out so-called mass inspections of financial firms, asking a slew of questions about how they use AI-powered programs in all aspects of their operations. . Gensler also warned that a strong AI “monoculture” in the hands of a few corporate players could lead to dangerous overreliance on AI by capital markets, which is also subject to the FTC. This is an area of interest.
Just because fraudsters exploit the appeal of AI doesn’t diminish its real impact on every corner of society, for better or worse. The simultaneous occurrence of fear and excitement can be seen everywhere. Chief Justice John G. Roberts Jr. recently spent much of his annual report on the state of the federal judiciary teasing the impact of AI on the legal profession. At the recent World Economic Forum Annual Meeting in Davos, concerns about AI, and in particular AI-enabled misinformation, dominated the conversation. But that didn’t stop the wealthy crowd from joining in on the hype. One observer counted more than 20 Davos events that directly mentioned AI in their titles.
And Elon Musk, one of the world’s foremost authorities on AI and anxiety, has repeatedly warned that robots could take over the world, even as he launches his new AI company, X.AI. (He also warned Tesla’s directors that he would not pursue AI advances within the automaker unless he was given more stock in the company.)
In other words, AI is a perfect storm in the investment world and beyond, a huge opportunity both for progress and for getting fooled and losing your shirt.
