Today’s A.I. needs data. And some of the biggest A.I. ethics questions are about how that data is obtained and used.
So it ought to be alarming when a sizable number of senior executives admit that their collection and use of consumers’ personal information is sometimes unethical.
That’s the shocking finding of a recent survey by consulting firm KPMG that asked 250 “director-level or higher” executives at companies with more than 1,000 employees about data privacy. Remarkably, 29% of them admitted how their own companies collect personal information is “sometimes unethical.” What’s more, 33% said that consumers should be concerned about how their company uses personal data.
Orson Lucas, the principal in KPMG’s U.S. privacy services team, says he too was surprised by the survey results. He says most companies he works with seem to be trying to do the right thing with people’s data. “For some companies there may be a misalignment between what they say they are doing on data privacy and what they are actually doing,” he tells me.
Lucas says businesses are starting to move from a philosophy of “collect everything” and then later sort out how best to use it, to one based around gathering only the data that is absolutely necessary to serve the customer.
One reason is regulation. The European Union and many U.S. states that have passed data protection laws—such as California, Colorado, and Virginia—have made it more difficult for companies to collect data they don’t need for an immediate business purpose without explicit consent.
There are other drivers too: data security and risk mitigation, for instance. Lucas points out that data a company doesn’t hold is data that can’t be stolen by a hacker or inadvertently disclosed. Data breaches can result in serious damage to a company’s reputation and trust with consumers, as well as leaving the company on the hook for millions in fines and potential civil penalties in lawsuits.
But Lucas says more forward-thinking businesses are starting to consider data privacy less from a compliance perspective—which is a conversation mostly about risk, he says—to one in which data privacy is seen as an opportunity to engage with customers and better understand what they want to get out of the business. This then can result, he says, in a transparent negotiation with customers about what data they are willing to provide, and for how long, in order to potentially obtain more personalized products or streamlined services.
The KPMG survey starkly indicates, however, that most companies are not there yet. In fact, 70% of the executives interviewed said their companies had increased the amount of personal information they collected in the past year, and 62% said their company should be doing more to strengthen data protection measures. So much for that transparent conversation.
The dangers of getting it wrong on data privacy are also clear. In addition to speaking to company executives, KPMG asked 2,000 adults in the general U.S. population about their views on data privacy and 40% of them said they didn’t trust companies to behave ethically with their personal information. Consumers will ultimately punish a business, Lucas says, if they don’t do the right thing when it comes to collecting and using people’s data. Hmm...someone must have forgotten to mention that to Facebook.
Meanwhile, concerns about data privacy and protection are helping to drive the adoption of some key A.I. advances within companies. The use of synthetic data (which is made up information designed to match the overall distribution of the real dataset) to help train A.I. systems is one of those. The interest in federated learning—where A.I. systems are trained using data that is encrypted and then shared—is another.
As we’ve said before in this newsletter, expect to hear a lot more about both of those developments in the year to come. In the meantime, be careful out there!
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Before we get to this week's A.I. news, I want to tell you about a great event Fortune and Accenture have coming up: How can data make your business more resilient? Find out from an amazing lineup of panelists, including Susan Doniz, Boeing's chief information officer and senior VP for information technology and data analytics, Sandra Nudelman, head of consumer data and engagement platforms at Wells Fargo, Bonnie Titone, chief information officer at Duke Energy, along with Joe Depa, global managing director and data driven reinvention lead at Accenture. Join them for a fascinating discussion on September 27 from 12 pm to 1 pm. Register to attend here.
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Oh, and while you are here, I also wanted to invite you all to sign up for a fantastic new newsletter that Fortune launched today. Called "The Modern Board," it's a monthly newsletter focused on how to master the new rules of corporate leadership. Sign up for it here.
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And with that, here’s the rest of this week’s A.I. news.
Jeremy Kahn
Jeremy.kahn@fortune.com
@jeremyakahn
