What is AI washing and why companies need to stop exaggerating their AI prowess

The buzz around generative AI has reached fever pitch over the past few years—to such an extent that it’s practically a death knell for any company to say it’s not investing massively in gen AI to transform their business. There’s only one problem: many companies are either being misleading or lying about the extent they are using such technology and what it’s capable of. This not only puts these companies at risk of litigation and regulatory scrutiny, but also needlessly increases their compliance costs as they provide assurance on risks neither the organization nor its technology actually poses.

The trend, known as “AI washing”, describes a deceptive marketing tactic where companies exaggerate or fabricate their development or implementation of AI solutions to give the impression that the tech alone may transform the business for the better. It has been going on for years. A 2019 study by investment firm MMC Ventures found that 40 percent of new European tech firms that described themselves as “AI start-ups” in fact used virtually no AI at all: it was purely a marketing pitch to help them raise investment capital. And it works.

According to Elika Dadsetan, CEO/executive director at business transformation consultancy Visions, AI washing “thrives in a climate where tech optimism is high, understanding is low, and oversight lags far behind innovation.”