Artificial Intelligence and Personal Data Protection: Complying with the GDPR and CCPA While Using AI

Artificial intelligence (AI) is here to stay. AI tools have become easily accessible to everyone with an internet connection these days.

You likely love to use AI, but if you don't live under a rock, you must have heard about the risks of AI to personal data privacy. Some don't care at all, and others see AI as doomsday.

We want to take a rational and pragmatic approach to online data privacy, and that's how this article will explain how AI affects data protection and how data protection affects AI.

What is artificial intelligence and how does it work?

At its core, AI is a branch of computer science dedicated to creating machines capable of mimicking human intelligence. Unlike traditional software that follows explicit instructions, AI systems learn from data, refining their operations over time.

The heart of many AI systems is a neural network inspired by the human brain's structure. These networks process vast amounts of data, identifying patterns and making decisions. For instance, when you upload a photo to a social media platform and it automatically recognizes and tags your friends, that's AI in action.

Machine learning, a subset of AI, allows systems to learn from data without being explicitly programmed. By feeding these systems vast amounts of data, they "learn" and improve their performance. Deep learning, a further subset, uses large neural networks to analyze even more complex data sets.

In essence, AI operates by continuously learning from data, adapting its responses, and offering solutions that were once considered the exclusive domain of human cognition.

But sometimes that data is personal data. And with AI tools becoming mainstream and accessible to everyone, we cannot help but consider the risks.

How are AI and privacy related?

The use of AI processing tools is nothing new. For years, big tech companies like Google and Meta have harnessed the power of AI to refine their advertising tools, ensuring that users receive ads tailored to their unique preferences and behaviors. This personalization is achieved by analyzing vast amounts of personal data to deliver the most relevant content.

YouTube's recommendation algorithm amazes with its ability to suggest videos that align with a user's interests. It wouldn't have been possible without its sophisticated AI mechanisms.

But the data collection and use of personal information with AI technologies were not limited to the world's most popular social networks and entertainment sites.

Insurance companies, financial companies, and HR companies have been leveraging AI in their work in ways that significantly impact the lives of individuals whose personal data is being processed.

Insurance companies use AI to generate precise insurance quotes. Recruitment agencies employ AI tools to sift through resumes and applications. Financial institutions process personal data to decide who is eligible for loans.

Even fitness applications now come equipped with AI features that provide insights into an individual's health metrics, offering personalized workout and diet recommendations.

Chances are, whether you're aware of it or not, you've interacted with or benefited from these AI data processors in your daily life.

Yet, the AI landscape witnessed a significant shift with the introduction of models by OpenAI. This marked a turning point where AI transitioned from being a tool used by tech giants to something more mainstream. It became more accessible to businesses of all sizes overnight. This accessibility, combined with increased robustness, has enabled businesses to process and analyze personal data on an unprecedented scale. The development and deployment of AI tools have become a breeze for many entrepreneurs.

However, as with all technological advancements, this comes with its own set of challenges. The primary concern is the potential risks associated with AI. And that's where data protection laws come into play.

How does GDPR and CCPA affect the use of AI?

The General Data Protection Regulation of the European Union protects personal data. The California Consumer Privacy Act protects consumer privacy.

As soon as the use of AI involves the use of personal data, GDPR is triggered and applies to such AI processing. The amount of data doesn't matter. You can't say it was just a little bit of AI data processing. The GDPR applies to such processing as long as the controller, the person whose data is processed, or the AI system are from the EU.

When the CCPA applies to a business, they are obliged to respect individuals' data privacy in the processing of personal data with AI. The CCPA is not as strict as the GDPR and relies only on the opt-out principle, yet businesses must be careful with its implementation.

Having said that, we have to clarify the following: the GDPR, CCPA, and other privacy regulations apply only when personal data is processed. AI is related to many other risks that do not involve personal information, but they are not subject to this article. Our focus here is on data privacy issues only.

The most common risks of personal data processed by AI include:

• A legal basis is required. In most cases, you'll need consent. In rare cases, you can rely on other legal bases. It is highly unlikely that you can rely on your legitimate interest to process personal data with AI tools because the concerns about privacy will likely be greater than your interests.
• It may be hard or impossible to delete the data. Every data privacy law grants data subjects the right to have their data deleted. However, once personal information goes into the AI algorithms, it may be impossible to take it out of there.
• Data breaches are possible. Everyone seems to be on the AI bandwagon these days. Many entrepreneurs start AI startups without caring about the individual privacy and data security of their users. Their systems are an easy target for malintentioned people who would take advantage of them.

Also important to note: if you use generative AI without using personal data, such as to write articles or social media posts, the data privacy laws do not affect you.

Checklist for complying with the GDPR, CCPA, and other privacy laws while using AI

Now you may want a quick checklist of what to do to use AI without violating the data protection laws. Here are a few tips:

• Avoid processing personal data with AI. Implement privacy-by-design practices and avoid processing it altogether whenever possible.
• Ensure that there is a processing purpose. This means that you must know why you need to process personal data with an AI system and limit the processing for that purpose. If you process financial information to determine who can get a loan, do not share it with advertising networks to target the user with other offers.
• Process only the minimum amount of data. When you know the processing purpose, you'll know the minimum amount of data needed to reach the purpose. Do not process large amounts of personal data just because you can.
• Vet your vendors. Your vendors, also known as data processors, may process data with AI on your behalf. If that's the case, make sure that they process data lawfully and that it is secure.
• Be transparent with your users. Inform them in your privacy policy that you use AI systems to process their data. Also, respond timely to their requests to know, access, or delete the data, or any other privacy-related request.
• Limit the data retention period. Limit the retention period to as little as possible. Also, check out how long the AI tools store the data. It must be included in your data processing agreement with them.
• Do not transfer data to unsafe countries. The GDPR is strict about transferring personal data to unsafe countries, so always take this into account. If your process is in the United States, make sure they are certified with the EU-US Privacy Framework.
• Conduct a data protection risk assessment. It is required for many cases of processing data by both EU and US laws. It is highly likely that using AI to process individuals' information falls under the scope of risk assessments.
• Appoint a data protection officer. It may be required under the GDPR.
• Train your employees and contractors. If you know all this information but your employees do not, you are under threat of penalties. Your company is as strong as its weakest link, so act accordingly.

If you use personal data to train your own AI models, the rules applying to you could be completely different. You must think about all these recommendations from the moment you start building the product.

Implementing privacy by design is essential for AI product builders. It all starts with processing as little personal data as possible, keeping it as secure as possible, and processing it where there is a real need for it, particularly sensitive data. Otherwise, it is likely that the product will violate the GDPR and maybe the CCPA by itself.

Final Thoughts

AI is useful, but companies collecting and processing personal data with it must be careful with what they do. AI raises serious concerns about privacy for a good reason, and you have to address them.

AI has the potential to change our lives in ways that we may not be able to envision. However, it may also lead to harms that are hard to envision so far. Artificial intelligence evolves too fast for regulations to follow properly, but you should not think that many uses are not covered by the laws.

Some ways of using artificial intelligence systems are covered by data protection laws; others are covered by copyright; and others are covered by anti-discrimination laws and criminal laws.

Take advantage of the use of AI technology, but do not forget to implement proper safeguards to protect personal information. This technology can bring good only if used without doing harm to others. And you have to act responsibly.