Why 'AI-washing' will soon be a thing of the past

We see a growing trend of companies using the term “AI” to make their products and services more attractive. This phenomenon is known as “AI washing.” Companies often add the term AI to everything they do to take advantage of the hype around artificial intelligence. But how long will this trend last? Our forecast is that the number of companies involved in AI washing will decline dramatically in the short term. Here are the main reasons why:

1. Investors are making their way through AI washing

Investors are becoming increasingly critical and better informed about AI technologies. It's no longer enough to simply claim that a product or service is AI-based. Companies must be able to prove their AI propositions. This means that they must demonstrate how AI is actually being applied and what value it adds. Companies that are unable to prove this will quickly be punished by the market. A concrete and proven AI application not only increases a company's credibility but also the market value.

Why investors are becoming more critical

Investors are always looking for solid and profitable investments. The hype around AI initially helped many companies attract investment, but investors have learned that not every AI claim is equally valuable. They now want to see proof of the actual application and success of AI within a company. This means that companies are forced to be transparent and honest about their AI applications to convince investors of their value.

2. The impact of the EU AI Act

Within two years, the EU AI Act will become effective. This legislation sets strict requirements for companies that develop and implement AI applications, depending on the risk profile of these applications. Companies must be accountable and transparent about how they use AI. Failure to comply with these rules may result in heavy fines. This will lead to the reverse effect of AI washing: companies will try to label fewer applications as AI to reduce risks and regulatory pressure. They will label as AI only those applications that really deserve it and that meet the legal requirements.

Exactly what the EU AI Act entails

The EU AI Act was designed to provide a framework for using AI within the European Union. The goal is to promote safe and ethical AI applications by requiring companies to be transparent about and account for their AI developments. The law imposes different levels of supervision depending on the risk profile of the AI application, ranging from minimal risks to high-risk applications that require stricter controls.

3. Increased consumer awareness and trust

Consumers are becoming increasingly aware of the technologies they use and the impact they have on their lives. They want to know how AI uses their data and how decisions are made. Companies that are transparent and honest about their AI applications will gain consumers' trust. This trust is critical to the long-term success of any AI-driven service or product.

The importance of consumer confidence

Consumer confidence is a critical factor in the success of tech companies. Transparency about how AI is deployed and what data is used helps build this trust. Companies that are honest and clear about their use of AI will find that consumers are more loyal and more likely to recommend their products and services to others.

Conclusion

The days of unbridled AI washing are numbered. Investors are becoming increasingly keen in their evaluation of AI claims, and upcoming EU legislation is forcing companies to become more transparent and accountable. Companies that can't prove that their AI applications are real will lose market share and credibility. This will create a cleaner, fairer market where true AI innovations are recognized and valued.

The above factors will drastically reduce the number of companies engaging in AI washing, ultimately benefiting both industry and consumers. By being transparent and honest about AI applications, companies can not only satisfy investors and regulators, but also gain consumer trust and loyalty.