Snap Stock: Regulator Warns Snapchat AI Chatbot May Pose … – Investor's Business Daily
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Snap (SNAP) has been hit with a potential enforcement notice in the U.K. where regulators said the company may have failed to assess privacy concerns for children with its My AI chatbot. SNAP stock closed lower Friday.
The U.K.’s Information Commissioner’s Office (ICO) said Friday that Snap’s artificial intelligence chatbot could be banned if the social network fails to address its concerns. The scrutiny comes as Snap’s much-larger social media rival, Meta (META), is planning to launch dozens of new chatbots.
“The provisional findings of our investigation suggest a worrying failure by Snap to adequately identify and assess the privacy risks to children and other users before launching ‘My AI,'” U.K. Information Commissioner John Edwards said in a written statement. “We have been clear that organizations must consider the risks associated with AI, alongside the benefits.”
However, the ICO notice is a provisional decision. “No conclusion should be drawn at this stage that there has, in fact, been any breach of data protection law or that an enforcement notice will ultimately be issued,” the ICO said.
In response to the notice, Snap said it is closely reviewing the ICO’s provisional findings. “In line with our standard approach to product development, My AI went through a robust legal and privacy review process before being made publicly available,” a Snap spokesperson said. “We will continue to work constructively with the ICO to ensure they’re comfortable with our risk assessment procedures.
On the stock market today, Snap stock closed down 1.3% at 8.63.
Snap, one of the earliest social media adopters of AI chatbots, launched the ‘My AI’ program in February. OpenAI’s ChatGPT large language model powers the product. Further, it made the program free to use for all of Snapchat’s roughly 750 million users in April.
Since then, Snap said “over 150 million people have sent over 10 billion messages, which we believe makes My AI among the largest consumer chatbots available today,” according to its second-quarter earnings release in July.
Further, Snap had 21 million active users in the U.K. has of May, according to the ICO notice.
Despite the growth of the company’s My AI product, Snap stock has not been able to benefit from investor excitement around AI. Shares are down about 5% this year as earnings have slumped. Further, Snap stock is off nearly 90% from a high point in September 2021.
The company last week confirmed reports that it was shutting down a division focused on creating augmented reality applications for businesses. Chief Executive Evan Spiegel said in a memo to employees that “the advent of generative AI has made it easier for companies of all sizes to create try-on experiences for their customers and made it harder for us to differentiate our offering.”
The U.K. message to Snap appears to be a warning shot across the technology industry. Previously, the regulator said companies must “address the privacy risks generative AI can bring before rushing to adopt the technology.”
Regulators are playing catch-up as companies race to integrate chatbots across their services.
Notably, Meta recently announced plans to launch dozens of AI chatbots, each with distinctive personalities. Some of the bots were based on the likenesses of celebrities, including hip-hop artist Snoop Dogg. Alphabet (GOOG) said Thursday its Google Assistant product will soon be powered by its Bard generative AI technology.
Meanwhile, the European Union is working on what could be the world’s first comprehensive legal framework for regulating AI. In the U.S., lawmakers have been conducting hearings on AI. The Biden Administration also said last month it is working on an executive order related to generative AI.
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