Market, privacy and artificial intelligence

Jose Luis Escobar

Director of Strategy and Business Development, GAMCO

Artificial Intelligence technologies (IA) are currently used in companies to transform business processes, boost customer interaction, improve decision making and increase employee productivity.

Gartner predicted that in this decade 85% of customer interactions will be handled by Artificial Intelligence and, overall, it is estimated that the AI market could reach $127 billion by 2025, well up from $2 billion in 2015. The United States and China will lead the way in terms of investment. 

Evolution of artificial intelligence regulations in Europe

This major market challenge could not be left out of a certain regulatory structure, especially considering its exponential growth. Therefore, both the market and the privacy of companies and customers must be safeguarded. 

In a nutshell, AI works through algorithms that learn from history and from the success or failure of their own predictions. AI-based applications can be applied to a multitude of companies in different industrial and service sectors. Therefore, for define and control what data can be collectedIn this regard, it is becoming increasingly necessary to consider its normative reality.

AI customers are not only large corporations. In fact, all it takes is for any one company to come up with a predictive need, viz:

  • How to better serve the customer, based on their observed behavior: (number of purchases, value or periodicity).
  • How to make better decisions using the data currently available.
  • How to review business processes to make them more agile and customer-oriented, analyzing what automatic response can be offered.

These generic demands that we have given as examples are the basis for the development of AI in companies.

In this regard, we can consider two perspectives on the normative aspects of AI:

  1. Privacy

The crucial issues are security and privacy from the user's perspective. That is: how far and how far the data can be accessed, as well as the permits and consents and users. In a way, these are new challenges for existing European data protection laws. This regulatory structure is already in place. 

  1. The market

What rules should regulate the market, its size and its borders (which is particularly relevant in the EU) to ensure the growth and development of digitalization in general and AI in particular. The key is to regulate the European space, ensuring market volume and free circulation of ideas and patents.

This market and volume dimension is crucial. There are industrial sectors in Europe that continually complain about legislation that is extremely local and prevents them from competing with companies based in much larger markets, such as the United States. The telecommunications business is a clear example.

Evolution of regulations in Europe about artificial intelligence

Both of these perspectives (privacy and market) are addressed by the EU in its measures to address the opportunities and challenges of AI. Parliament is working on a Commission proposal, April 2021, for Europe to become the global hub for trust-building artificial intelligence.

This is the first legal framework for this technology, which is also accompanied by other regulations on machinery and robots. 

The new regulation aims to "ensure safety" and "strengthen investment in AI in the European Union".The new law, creating various levels of risk and prohibiting, for example, facial recognition in certain situations associated with robotics. Such data and privacy protection probably does not exist in other environments outside the EU.

In this regard, in October last year the European Parliament approved three reports on how to regulate AI to boost innovation, respect for ethical standards and trust in the technology.

On the one hand, work is being done on human intervention and supervision, which is an essential issue, for example, in the field of robotics. On the other hand, a number of ethical standards are being outlined to ensure safety and transparency.

Regulation levels 

Likewise, we are studying how regulations and patents should protect the European space, avoiding both regulatory localisms and the absence of regulation, which could lead to the invasion of technology from third countries. 

This last regulatory challenge is fundamental. Because it is necessary to guarantee an efficient market size for companies. Think of sectors such as security and defense, where it is necessary to ensure own and local developments for their projects. 

Although the cascade of regulations has not yet begun to bear full fruit, they will have to be adopted by local legislation. The objectives of citizen protection and market creation (including the stimulation of innovation and business size) seem to be inspiring European regulators.

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