In the ever-evolving landscape of data-driven technology, companies find themselves at a crossroads. On one hand, they hunger for more user data to fuel their artificial intelligence (AI) products. On the other hand, they have existing privacy commitments to protect their users. The tension between these two forces can lead to a delicate dance—one that the Federal Trade Commission (FTC) is now scrutinizing when it comes to user data being used for AI training.
The Data Dilemma
In a recent statement, the FTC describes data as the “new oil,” and lifeblood of innovation. “Just as oil must be extracted, refined, and harnessed to power engines, data must be collected, processed, and utilized to drive technological advancements. And when it comes to data-hungry AI, there’s no refinery quite like it.”
Companies developing AI products recognize the value of user data. Their insatiable appetite for information often leads them to tap into their own userbases. However, these same companies have privacy and data security policies in place—commitments they’ve made to safeguard user information.
The Conflict
Herein lies the conflict: How can companies reconcile their desire for data with their duty to protect user privacy? One tempting solution is to tweak their privacy policies, loosening restrictions on data usage. By doing so, they can tap into the rich stream of user data to fuel their AI engines. But there’s a catch – such changes must be transparent and fair.
FTC Warns on AI Training Data
The FTC recently issued a stern warning to companies that quietly alter their Terms of Service (TOS) or privacy policies to allow user data to be used for AI training. Why? Because surreptitious changes can be unfair or deceptive.
In the statement, the FTC warned that, “It may be unfair or deceptive for a company to adopt more permissive data practices—for example, to start sharing consumers’ data with third parties or using that data for AI training—and to only inform consumers of this change through a surreptitious, retroactive amendment to its terms of service or privacy policy.”
What does this mean for businesses?
- The Temptation: Companies facing this dilemma may be tempted to modify their privacy policies without fanfare. By doing so, they can bypass restrictions and use customer data more liberally.
- The Risk: The FTC emphasizes that any company reneging on its user privacy commitments risks legal consequences. Changing data practices—such as sharing data with third parties or using it for AI training—must be communicated openly.
- Historical Precedent: The FTC has a track record of challenging deceptive practices related to privacy policies. In the past, companies like Gateway Learning Corporation faced FTC charges for altering their privacy policies without notifying consumers. In a more recent example, the FTC alleges a genetic testing company violated the law when the company changed its privacy policy to retroactively expand the kinds of third parties with which it could share consumers’ personal data. “The company did that without notifying consumers who had previously shared personal data or obtaining their consent,” said the FTC.
The Silent Shifts
While the FTC’s warning is timely, some companies have already tiptoed around their privacy commitments:
- Google’s Update: In July 2023, Google revised its privacy policy to allow AI model improvement using public data.
- Zoom’s Stealth Move: In August 2023, Zoom silently adjusted its TOS, granting AI training access to user data without an opt-out option.
- Adobe Stock’s Surprise: Adobe Stock creators discovered that their uploaded work fuelled AI models without prior notice.
The Fine Print Fallacy
Most users don’t read TOS fine print. It’s a universal truth. A 2019 study found that over 99% of popular US websites had terms exceeding the reading level of most adults. So, while companies may think they can slip changes past users, the FTC is watching.
As AI continues to reshape our world, transparency and user trust are paramount. Companies must navigate the data dilemma with integrity, ensuring that innovation doesn’t come at the cost of privacy. The FTC message is clear, that quietly altering TOS for AI training won’t go unnoticed. It’s time for companies to honour their commitments and tread carefully in the data refinery.
This content was initially generated with the assistance of AI tools. However, it has undergone thorough human review, editing, and approval to ensure its accuracy, coherence, and quality. While AI technology played a role in its creation, the final version reflects the expertise and judgment of our human editors.
