newtech.law - legal aspects of new technologies

To maintain the essential balance, I suggest sometimes taking a sceptical look at the tech rapture which we are increasingly swept up in. Then we will grasp that investing unheard-of amounts in the growth of AI and other digital technologies is not our most pressing need now.

For some time I’ve been bothered by the Solow paradox. This is the entirely counterintuitive connection observed since the 1980s between the growth of digital technologies and productivity. The economic data for the last 40 years show that the most advanced economies have not achieved a significant growth in productivity, despite the spread of computers, the internet, and various digital tools. Indeed, the productivity indicators during this period have been clearly lower than in periods preceding the digital revolution.

In its lofty aims and declarations, the EU’s Artificial Intelligence Act clearly calls for human oversight of AI systems. But drilling down to the particular duties of entities using AI systems, the AI Act isn’t so clear. This article seeks to outline the key challenges in this context facing providers and users of AI systems.

EU regulations banning certain AI practices go into effect on 2 February 2025. Some institutions may assume that the bans only apply to extreme practices, which they would never be involved in. But the ban on using AI systems to assess the risk of that someone has committed a crime, or will commit a crime, shows that this is not the correct approach. A more in-depth analysis reveals that some market practices now considered standard, especially in financial services, may prove questionable once the bans enter into force. This is particularly true for monitoring of money-laundering risk and more broadly the risk of fraud.

The Digital Markets Act or DMA (Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector), which entered into force on 1 November 2022, creates many new obligations for businesses operating in the digital sector, particularly so-called “gatekeepers.”

The DMA will impact the functioning of the entire digital ecosystem—not only gatekeepers, but also other participants in digital markets, including business users and end users of core platform services, competing providers of core platform services, and providers of other digital services.

This is because the obligations and prohibitions imposed on gatekeepers will either directly or indirectly vest other groups with rights they can pursue before national courts.

Regardless of whether we see benefits or an existential threat in the latest AI technologies, the gravity of the challenges these technologies bring is undeniable. Over the past few decades, technological advances have far outpaced reflections on their possible consequences. This need not and should not be the case. That technologies are not solely a source of good is becoming apparent today as we begin to perceive the destructive impact that certain digital technologies have on our democracies, security, and mental health. In the face of recent technological advances, such as artificial intelligence, we have an opportunity to avoid mistakes and at least try to redirect the development of these technologies toward authentic benefits, while at the same time mitigating risks. In this context, I decided to sign an appeal to temporarily halt work on AI systems. I also encourage others to do so. Below I present the main rationale that guided me.

“Dark patterns” used by online platform providers have been controversial for some time, but recently there has been a growing buzz about them, in particular due to actions undertaken by EU and national data protection and consumer protection authorities. (For an overview of cases and decisions by EU and national authorities, see the European Commission’s “Behavioural study on unfair commercial practices in the digital environment: Dark patterns and manipulative personalisation, Final Report,” pp. 61–70.) Primarily, these measures are intended to combat deceptive practices in the digital environment, but also to educate consumers and draw their attention to the most common types of practices.

The harmfulness and prevalence of dark patterns has also been noticed by EU lawmakers, who expressly banned such practices by online platform providers in Art. 25(1) of the Digital Services Act (Regulation (EU) 2022/2065 on a Single Market for Digital Services—DSA). The DSA entered into force on 16 November 2022, but most of the obligations in the regulation will apply from 17 February 2024. Therefore, the application of dark patterns may violate not only data protection laws (especially the General Data Protection Regulation) and consumer protection laws, but also (from February 2024) the Digital Services Act.