How AI Companies Privatize Gains and Socialize Costs — and what we can do about it

Dennis Hillemann
8 min readJan 7, 2024

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In the rapidly evolving landscape of Artificial Intelligence (AI), a concerning trend has emerged — one that mirrors historical economic disparities, yet is distinct in its modern implications. As AI corporations utilize state-of-the-art technology to fuel progress and financial success, there is growing worry that the profits are being concentrated in private hands while the accompanying costs are being spread out among society. This pattern prompts important considerations about the involvement of the government in the AI story and the fair allocation of its rewards and consequences.

The Economic Imbalance of AI Innovation

The socialization of costs associated with AI innovation is a complex issue with no simple solution. However, there are several key factors at play that contribute to this problem.

1. Lack of Regulation and Oversight

The rapid advancement of AI technology has surpassed the capacity of governments to properly regulate and monitor its use. This leads to a void where AI corporations can function without any responsibility or openness, prioritizing profit over societal consequences. The executive order issued by Biden and the EU AI Act may provide some assistance, but it will take time for these regulations to be implemented. In the meantime, AI companies may have the opportunity to continue their operations with minimal restrictions.

2. Inadequate Investment in Education and Training

As AI technologies continue to advance, the skills needed for traditional jobs are becoming obsolete. However, there is a lack of investment in education and training programs to equip individuals with the necessary knowledge and skills to work alongside AI systems. This leads to job displacement and widens the gap between those who have access to AI-related education and those who do not.

Imagine being a marketer or content creator. You’ve probably already experienced the impact of Open AI’s ChatGPT and other Generative AI models, which can produce social media posts, blog content, images, videos, and professional advertisements in a fraction of the time and cost. And this is just the beginning — other white-collar jobs will inevitably be affected as well.

3. Unequal Distribution of Profits

The profits made by AI companies tend to benefit a select few individuals, while the expenses of their advancements are shared by the entire society. This further widens the gap between the rich and the poor and restricts financial progression for many people.

4. Ethical Dilemmas of AI Innovation

While AI innovation has the potential to bring about significant benefits, it also raises ethical concerns that must be carefully considered. Some of the most pressing issues are outlined below.

Algorithmic Bias

One of the most prevalent ethical dilemmas in AI is algorithmic bias. This occurs when an algorithm produces results that discriminate against certain groups of individuals based on race, gender, or other characteristics. This can have serious consequences in areas such as hiring, loan approvals, and criminal justice decisions.

For example, a study by ProPublica found that a widely used risk assessment algorithm used in the US criminal justice system was twice as likely to falsely label Black defendants as high risk compared to white defendants. This has led to increased calls for transparency and accountability in the development and use of algorithms.

Privacy Concerns

AI technologies often require access to large amounts of personal data in order to function effectively. However, this raises concerns about privacy and how this data is being used and protected by companies and governments.

For example, facial recognition technology has sparked controversy due to its potential for misuse and violation of individuals’ privacy rights. There have been numerous cases where this technology has been used without consent or transparency, leading to calls for stricter regulations.

Potential for Autonomous Systems to Cause Harm

As AI technologies become more advanced and autonomous systems are integrated into our daily lives, there is a concern about their potential to cause harm. This could range from accidents caused by self-driving cars to bias in decision-making processes that could result in harm or discrimination against certain groups.

There have been several instances where autonomous systems have caused harm or raised safety concerns, highlighting the need for thorough testing and regulation before these technologies are implemented on a larger scale.

5. Manipulation and Misinformation

AI technologies such as deepfakes have raised concerns about their potential for manipulation and misinformation. Deepfakes use artificial intelligence to create realistic but fake media, such as videos or audio recordings. This technology has the potential to deceive and manipulate individuals, leading to serious consequences for society.

What Are Deepfakes?

Deepfakes are a form of synthetic media that uses AI to manipulate existing images or videos in order to create new, false ones. They can be created using various techniques such as generative adversarial networks (GANs) or deep learning algorithms.

These technologies allow for the manipulation of facial expressions, speech patterns, and body movements, making it difficult for viewers to distinguish between real and fake content.

Potential Consequences of Deepfakes

Deepfakes have the potential to cause harm in several ways:

- Political Manipulation: With the ability to create fake videos or audio recordings of politicians, deepfakes can be used to spread false information and influence public opinion.

- Fraud: Deepfakes can also be used in financial scams by creating fake audio recordings of individuals authorizing fraudulent transactions.

- Reputation Damage: Individuals can also be targeted with deepfakes, damaging their reputation or causing harm to their personal relationships.

- National Security Threats: The use of deepfakes in spreading disinformation can also pose a threat to national security by causing confusion and chaos among citizens.

Challenges in Detecting Deepfakes

Detecting deepfakes is a challenging task due to the sophisticated techniques used in creating them. Some challenges include:

- Realism: As AI technology improves, it becomes more difficult to distinguish between real and fake content.

- Accessibility: The tools needed for creating deepfakes are becoming more accessible, making it easier for individuals with malicious intent to create them.

- Lack of Regulations: There is currently no comprehensive regulation in place for deepfakes, making it difficult to hold individuals accountable for their creation and dissemination

6. Lack of Public Involvement in Decision-Making

Society is often impacted by decisions made by AI companies without their input or involvement. As a result, there is a lack of transparency and accountability in the creation and implementation of AI systems.

The Public Sector’s Role in Shaping AI’s Future

Governments in the Western world hold a crucial responsibility in addressing these disparities. As AI continues to expand, their active involvement is necessary to ensure that it brings positive transformations for all of society. By implementing well-considered policies, we can steer the development of AI towards aligning with social values and priorities. Proactive regulations can prevent any potential misuse or unforeseen repercussions of deploying AI. Furthermore, fostering partnerships between the public and private sectors can establish shared responsibility for managing the societal impacts of AI advancements.

Strategies for Equitable AI Development

In order to navigate the complex landscape of AI and ensure that it brings positive transformations for all of society, several strategies can be employed:

Incentivize AI Research for Social Good

Governments can play a role in incentivizing AI research that prioritizes social good and equitable outcomes. This can be done through funding programs, grants, or tax breaks for companies that focus on developing AI technologies that benefit society as a whole.

Establish Standards for Transparency and Accountability

Transparency and accountability are crucial in ensuring that AI systems are being developed and used ethically. Governments can establish standards and regulations that require companies to disclose their use of AI systems and how they make decisions. This can build public trust and allow for better oversight of potential biases or discrimination in AI algorithms.

Invest in Education and Retraining Programs

As automation continues to replace jobs, it is essential to invest in education and retraining programs to help workers adapt to the changing job market. This will not only mitigate the negative impact of automation on employment but also prepare individuals for new opportunities created by AI.

Foster Partnerships Between Public and Private Sectors

Collaboration between the public and private sectors is crucial in addressing the societal impacts of AI advancements. Governments can work with companies to establish shared responsibility for managing these impacts, ensuring that companies are held accountable for their use of AI.

Consider Universal Basic Income (UBI)

As technology continues to replace jobs, policymakers may need to consider implementing a Universal Basic Income (UBI) system. This would provide a basic income to all citizens, regardless of employment status, helping to alleviate economic inequality caused by automation.

Promote Diversity in the Tech Industry

Diversity is essential in creating more equitable AI systems that consider different perspectives and avoid reinforcing biases present in our society. Governments can promote diversity within the tech industry through initiatives such as scholarships, training programs, and diversity hiring quotas.

The development teams in charge of creating AI systems are a diverse group of individuals, representing a variety of races, genders, and backgrounds. They work collaboratively in well-lit and modern offices, surrounded by whiteboards filled with diagrams and equations.

Encourage ethical standards in AI development

To ensure that AI is developed and used ethically, there must be clear guidelines and protocols in place. These can include:

Informed Consent Mechanisms

AI systems often collect and use personal data to make decisions. To protect individuals’ privacy and autonomy, there should be informed consent mechanisms in place for the collection and use of personal data. This means clearly explaining to individuals how their data will be used and obtaining their consent before using it.

Transparency in Algorithm Decision-Making

The inner workings of AI algorithms can be complex and difficult to understand. However, it is crucial for companies to provide transparency into how these algorithms make decisions. This includes disclosing the data used to train the AI, any biases present in the data or algorithm, and how decisions are made based on this information.

Mechanisms for Addressing Biases

AI systems are only as unbiased as the humans who create them. It is important for companies to actively identify and address potential biases in their AI systems. This could involve testing for bias during development, regularly monitoring for bias in use, and implementing processes to correct any biases that are found.

Regular Audits

Governments can also require regular audits of AI systems to ensure they are being used ethically. These audits can check for compliance with regulations, transparency in decision-making, and potential biases present in the system.

Collaboration with Ethical Experts

Companies developing AI should seek guidance from ethical experts who can help identify potential issues and suggest ways to mitigate them. This collaboration can also help ensure that ethical principles are incorporated into the development process from the beginning.

Whistleblower Protection

To encourage employees within companies to speak up about unethical practices involving AI, there should be protections in place for whistleblowers who report such behavior. This will promote a culture of accountability within companies.

International Cooperation

The development of ethical standards for AI should also involve international cooperation. As AI becomes more widespread globally, it is crucial for countries to work together to establish common ethical guidelines and prevent a

The rise of AI is not just a technological advancement; it is also a societal transformation that requires a united effort. The involvement of the public sector in shaping the landscape of AI is crucial to guaranteeing fair distribution of its advantages and preventing the most vulnerable from bearing disproportionate costs. As we come to a pivotal moment in determining the future of AI, it is vital that we strive for a harmonious equilibrium that encourages progress while upholding our moral and social obligations.

Your thoughts and perspectives are crucial in this discussion. What do you think is the appropriate involvement of the government in the AI ecosystem? How can we collaborate to distribute the benefits and responsibilities of AI fairly? Please share your ideas and participate in the conversation on how we can create a future where AI represents progress for everyone.

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Dennis Hillemann

Lawyer and partner with a track record of successful litigation and a passion for innovation in the legal field