Home PublicationsCommentary Bad News, Europe: Consumers Do Not Want to Buy an “Ethical” Smart Toaster

Bad News, Europe: Consumers Do Not Want to Buy an “Ethical” Smart Toaster

by Daniel Castro

The conventional wisdom among European policymakers is that the best way to compete against China and the United States in artificial intelligence (AI) is to differentiate European products by emphasizing ethical design. However, a new survey from the Center for Data Innovation finds that consumers are not willing to pay a premium for products labeled “ethical by design.” If the European Union naively continues down this path, it may soon find itself falling further behind in AI competitiveness.

Many European policymakers have long been enamored of the notion that increasing consumer trust in the digital economy leads to greater adoption because it allows them to argue that additional regulation is unambiguously good. Rather than coming at the expense of innovation, European policymakers claim that strong regulations will spur greater consumer trust and therefore lead to greater adoption of digital innovations. For example, former EU Commissioner Viviane Reding argued that “high standards of data protection will also give Europe’s cloud providers a competitive advantage.”

This might sound like a plausible theory, but in practice it has not led to any measurable success for European businesses. Indeed, the evidence shows that more regulation does not lead to greater digital adoption. For example, despite Europe’s efforts to strengthen data protection regulation, trust levels in Europe are largely the same as those in the United States. Similarly, European consumers’ trust in the Internet has remained flat from 2009 through 2017, despite important changes such as the introduction of ePrivacy regulations in 2009 and the court decision establishing the right to be forgotten in 2014. And while the General Data Protection Regulation (GDPR) creates uniform data protection rules for the EU—thus making it easier for companies to achieve scale in the European market—the overly stringent nature of these rules has negatively impacted EU firms, causing a drop-off in venture capital to tech startups and losing market share to larger American tech firms.

Yet European policymakers have decided to double down on this failed strategy for its approach to AI. Digital Commissioner Mariya Gabriel has bluntly stated, “…I am personally convinced that ethical guidelines will be enablers of innovation for artificial intelligence. Trusted AI can be a significant competitive advantage for European companies. Ethics and business must go hand in hand, since without trust, citizens will not go for the new technology.”

These are not just words, they are policies. One of the key provisions of the coordinated plan for AI, jointly developed by the European Commission and member states, is to create AI “made in Europe” that will incorporate “ethics by design.” This point was echoed in the European Commission’s High-Level Expert Group on AI’s draft guidelines which state “these Guidelines are not meant to stifle AI innovation in Europe, but instead aim to use ethics as inspiration to develop a unique brand of AI.”

But, at least in the United States, there does not appear to be a market for “ethical AI.” In a recent survey, the Center for Data Innovation found that only 19 percent of Americans agreed with the statement “If I am buying a smart toaster (i.e., a toaster controllable by a mobile app), I am willing to pay more for one that is certified as ‘ethical by design.’” This is bad news for Europe, which is pinning its hopes of becoming a world leader in AI by being able to export its “more ethical” systems.

To be clear, there is nothing wrong with the EU wanting companies to design more ethical products. And, all things being equal, consumers will likely probably prefer a more ethical AI solution over a less ethical one. But when it comes to making a purchase, they will likely choose based on price and product quality. Indeed, a key point European policymakers seem to forget is that if China is the leading AI provider, European values will take a backseat to Chinese ones. So if Europe wants to lead the world in AI, its primary focus should be on expanding capabilities, improving accuracy, and lowering costs.

Moreover, if the worry is that European businesses will not use AI ethically, then requirements for AI systems that are ethical-by-design focuses on the wrong part of the problem. There is little reason to suspect that otherwise highly ethical companies will necessarily produce unethical AI in the absence of new regulations, or that new regulations can force otherwise highly unethical companies to act ethically with regards to AI. For example, the problem with Volkswagen that led to its diesel emissions scandal was not the absence of regulations on emissions standards, but a company culture that permitted the cheating. A better option is to address corporate ethics as its own unique problem, rather than attempt to address it as a technological one.

The competition around AI is often described as a global race because there will likely be a significant first-mover advantage for the countries and businesses that can be early leaders in using AI to solve various problems. And in a race, winning matters. Europe has the talent pool, research capabilities, and funding to transform itself into a world leader in AI, but a hyper-focus on ethics will not help it get there faster.

Image Credit: Griffin

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