Venture capital is crucial to promoting ‘ethical’ standards in AI and technology

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When whistleblower Frances Haugen revealed last year that Facebook knew about the impact of its products on teens and the extent of misinformation on its platforms, it was just the latest, albeit devastating, warning. , damage that technologies once hailed as transformative can inflict if not harnessed properly. Lawmakers and regulators in Europe, the Middle East and the United States are gearing up for more regulations to hold Big Tech to account, but venture capital has a unique role to play in keeping Big Tech alive. ethics of artificial intelligence – today and in the future.

Because not only do venture capitalists finance start-ups and fast-growing companies in the field of technology, but they also offer advice and guidance to the entrepreneurs and founders behind future unicorns, i.e. startups valued at over US$1 billion. According to CB Insights. At the end of 2021, there were 959 unicorns in the world, compared to 569 in 2020.

With so much power in the hands of VC, one can surely ask for responsibility. And indeed, institutional investors have begun to require venture capital partners to implement ESG (environmental, social and governance) principles into their investment mandates, much like they demanded private equity funds in recent years. But AI is arguably the most important vertical where scrutiny is needed.

AI creates enormous value potential and, in turn, the possibility of outsized returns. It also presents significant risks. Recommender systems, for example, direct users to products and services that match their past behavior online, creating echo chambers and the potential for polarization, even radicalization.

The risk of damage goes both ways: Following Haugen’s disclosures, Facebook reported that its user numbers fell in the last three months of 2021 – the first drop in its history. Using technology responsibly is not just the right thing to do, but a smart business decision analogous to organizations’ ESG initiatives.

We need to build a future digital world that is safe and beneficial for everyone today. It’s time for venture capital investors and founders to work together to develop a materiality index and meaningful tools to measure and assess the risks of AI-based business models, track the development of start-ups, and continue to iterate to arrive at a widely accepted standard on “ethical AI” practices.

Meanwhile, companies are adopting new practices, processes and tools to ensure, among other things, that the AI ​​and content platforms they deploy respect basic principles, including human rights, fairness and security. Measures range from smart content moderation, AI monitoring systems, new governance structures such as AI ethics boards, as well as AI product development practices that integrate the risk and liability everywhere. While many of these steps are only practical for large organizations, there are plenty of opportunities for early-stage technology companies.

All other stakeholders, from consumers to civil society to regulators, need to better understand the risks associated with AI and know how to manage them. Regulators are currently developing frameworks to strengthen our collective safeguards. For example, the EU is drafting laws to govern online platforms and strengthen online trust and security as well as AI risk management. Lawmakers from Australia to North America are taking similar action.

Perhaps it is time we managed technology risks as seriously as those related to ESG. We must use technology responsibly and maintain the ethics of AI – or prepare for social disruption on an even larger and more dangerous scale.

Theodoros Evgeniou is Professor of Decision Science and Technology Management at INSEAD. He has been working on machine learning and AI for almost 25 years. Theos is also an Academic Partner of the World Economic Forum for Artificial Intelligence, a member of the OECD Expert Network on AI, an advisor to the BCG Henderson Institute and co-founder and Chief Innovation Officer of Tremau, a B2B SaaS company for secure and compliant digital. technologies.

Claudia Zeisberger is Senior Affiliate Professor of Entrepreneurship and Family Business at INSEAD and Founder and Co-Academic Director of the school Global Private Equity Initiative. She is the author of Mastering Private Equity and Private equity in action. Follow her on Youtube to learn more about private capital.

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