Why New Technology Poses Legal Risks For Your Business

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New technology invites new challenges, but a business cannot refuse to innovate because the future is confusing

Businesses are rushing to adapt to a world where technology like drones and AI offer new possibilities. But with these new possibilities comes new risk, particularly from a legal perspective.

Technology is moving faster than governments can craft laws, which often leaves government bureaucrats and business managers forced to make ad hoc adaptations that can be changed with a stroke of a pen. Whether we are talking about criminal law, the privacy issues which surround new information gathering technology, or even the problems of bias in technology, companies have to be aware that new technology is not risk free. There are legal holes and traps which could weaken a business’s capabilities and expose it to a damaging lawsuit.

Big Data and the Bias Problem

People like to think of machines or AI as an objective tool which can lead to more rational moves free from human weaknesses. But as long as technology is built and designed by humans, businesses have to worry about the innate biases of humanity.

Even unconscious biases can seriously affect AI judgement. An infamous example of machine bias occurred last year when a beauty AI judged human photos to pick out the most beautiful. But observers noted after the judging that only one of the 44 selected photos had dark skin. The AI’s programmers did not program the AI to think that light skin was beautiful. But by showing it more photos of light-skinned models than dark-skinned as examples of beauty, the AI reached that conclusion by itself.

Unconscious examples of bias like this are a legal threat, especially when combined with the growing power of Big Data. These days, businesses strive to collect more and more data out of the desire to know more about customers, applicants, or other aspects of the market to grab an advantage.

But will this data create a fair picture? As CNN points out, data which aggressively targets those who have good credit or higher incomes will end up leaving out minorities. This perpetuates a cycle where blacks cannot get opportunities because they lack a credit or job history, which causes data gatherers to conclude that good credit is necessary, which causes them to more stringently enforce these limitations, and so on. This is only one example of how seemingly objective data can lead to unfortunate discriminatory conclusions.

Businesses are enthusiastic about Big Data for good reasons, but supposedly objective data can carry subjective implications. Businesses cannot blindly follow the data, but must always consider any biases hidden behind those numbers. If they do not, it could potentially open the door to racial discrimination and resulting lawsuits.

Government Regulations Catch Up

If you want an example of how law and government regulations can slow down even the biggest tech developments, look at Amazon’s plans for a drone delivery system. For years, Amazon had been talking about using drones to deliver products, which could massively improve shipping time. Other companies are interested in drone delivery as well. Last November, Domino’s delivered a pizza to a New Zealand couple, as they claim that the service is faster and safer.

But drone delivery appears to have been put on hold in the United States, as the Federal Aviation Administration issued new rulings that declared that company drones must be within the line of sight of the operator at all times. While the FAA did permit drones to carry external loads, this line of sight rule makes Amazon’s dreams of drone delivery impossible for now.

Drones are merely one area where government regulators will scramble to implement and enforce new rules for new technology. There is the matter of digital privacy, as tech companies like Amazon and Google store huge amounts of data on cloud software which hackers could break into.  While those companies certainly want to keep that data safe, it would hardly be surprising to see Congress move to enforce new burdensome regulations, increasing director and officer’s liability, which could force those companies to carry additional security measures or restrict how they can use that data.

The Trump administration has made a great deal of noise about cutting back on business regulations, which means that Amazon’s drone delivery plans may take to the sky again. But even Trump will not completely dismantle the regulatory administrative state. Businesses will have to keep a constant watch on how state, local, and federal governments will react to new technology and the restrictions they might place.

New technology invites new challenges, but a business cannot refuse to innovate because the future is confusing. But before a business rushes headlong into adapting any new technology, they must carefully consider any potential legal downsides such as potential government regulations in response to technological abuses as well as concerns about seemingly objective data. If companies do not take care to avoid technological legal problems down the road, they could suddenly find themselves in legal hot water.

Jeremiah Owyang

Jeremiah is an industry analyst, speaker and entrepreneur who helps corporations connect with customers using emerging web technologies. He has more recently focused his career on disruptive technology, helping create multiple crowd funded projects utilizing peer-to-peer networks and speaking at many conferences and events addressing this topic

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