FTC addresses ‘AI hype’ with warning about potential abuse in advertising

    The Federal Trade Commission (FTC) issued a warning shot to companies that are getting overzealous with artificial intelligence (AI) claims in their advertising. In a blog post published Tuesday, the agency described the technology as a “marketing term” and, following that definition, something that is subject to overuse and abuse. Missteps include exaggerations about what can be accomplished through AI in its current state and using the AI label as a reason to inflate prices or influence labor decisions. 

    “AI hype is playing out today across many products, from toys to cars to chatbots and a lot of things in between,” wrote Michael Atleson, an attorney with the FTC’s Division of Advertising Practices, in the blog post titled “Keep your AI claims in check.” 

    “Breathless media accounts don’t help, but it starts with the companies that do the developing and selling,” Atleson added. 

    Words of caution from U.S. regulators come as AI has entered a feverish hype cycle set off by new solutions like the language-learning model ChatGPT. OpenAI, the software’s developer, recently secured a whopping $10 billion investment from Microsoft and is working with the tech giant to enhance its Bing and Edge offerings. In the past few weeks, the startup has struck further partnerships with Snap Inc. and Bain & Company, while other tech platforms are racing to ramp up their AI initiatives in response. Marketers including Coca-Cola, the first company to take advantage of the Bain alliance, see the sector as a potential game-changer.

    “We are excited to unleash the next generation of creativity offered by this rapidly emerging technology,” said James Quincey, chairman and CEO of the Coca-Cola Company, in a statement around the Bain and OpenAI deal’s announcement.

    At the same time, new AI ventures are cropping up quickly, chasing the promise of fresh capital during an otherwise rocky investment period for tech. Earlier this week, an AI workflow product called Typeface came out of stealth, announcing an overbooked $65 million in funding from the likes of Google and Microsoft. 

    With the noise around AI getting progressively louder, the FTC outlined four main points for marketers to keep in mind: To not exaggerate AI performance capabilities; to not promise AI is more effective than non-AI products without concrete proof; to be accepting of risks and repercussions, such as the possibility for AI to create biased results; and to ensure that the product itself actually relies on AI in a demonstrable fashion. 

    “Before labeling your product as AI-powered, note also that merely using an AI tool in the development process is not the same as a product having AI in it,” said Atleson, underscoring the nuances.

    Just how harshly the FTC will crack down on false AI claims remains to be seen, but Atleson emphasized that this type of work is the agency’s “bread and butter” and that it has experts on hand to look “under the hood” and see if the tech is up to snuff. The FTC has had AI in its sights for several years now, with a high level of scrutiny around algorithmic bias that’s produced some substantive changes from major ad-supported platforms. 


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