Algorithms are everywhere

Google owes their dominance of search engines to its unique algorithm. Facebook uses them to decide what news is fed to your page. Algorithms tell companies who should see their online advertising, let politicians know which voters are undecided, and guide judges when sentencing criminals.

Data fuels algorithms and it’s assumed that more data can lead to more accurate algorithms. But more data can also involve probing and influencing people’s lives in ways that raise privacy and human rights concerns. In other words, an issue for regulators.

Do algorithms reflect the values in society or those of their creator?

Organizations who use algorithms see it simply as a more efficient way to bring products and services closer to their target markets. However, as with the trends of people buying vinyl records or paper books, the way humans interact with algorithms isn’t always simple or predictable.

This is a critical consideration often overlooked during conversations about the impact of algorithms, artificial intelligence (AI), and disruptive technologies—that is, how does human behavior disrupt the technology? Consider how studies have shown that algorithms used in US criminal cases can be racially biased. Or how algorithms were most likely used to target specific voters with specific “news” in the 2016 US election, with Russian interference now being investigated as the source of that news.

How do we fit such considerations into new regulatory models and ensure that there is transparency, fairness and equality in the way that algorithms, robotics, AI, and machine learning deliver services in a diverse society? Should there be a difference in service if I use my corporate email identity over my Hotmail account? What if I don’t have a corporate email?

What this means for the Regulator

Most people assume that data use, like justice, is meant to be blind and objective. But some regulators are already thinking beyond this assumption. Article 22 in the EU’s GDPR states that individuals have “the right not to be subject to a decision based solely on automated processing, including profiling, which produces legal effects concerning him or her or similarly significantly affects him or her.” In other words, if someone doesn’t like what the machine says, they can appeal and get a second opinion, this time from a human.

With that in mind, it may be fairly asked if regulators will have to start examining how algorithms are designed. How transparent are they when it comes to things like breaches? How accurate? How accessible? How biased? Do they seek to remove inequality? Or do they reinforce it?

As more and more organizations rely on data gathering and algorithms to help them make decisions, more inequality and bias is likely to be exposed, some with serious consequences for people as they interact with financial services, health care, government, employers, or even the justice system. While I may find it amusing when Netflix incorrectly suggests a film based on my spouse’s likes that I would find painful to sit through—it can often be no laughing matter when an algorithm fails to read the nuances of human behaviour.

To reiterate a key theme from my previous posts, regulators and technology companies must work together to help address these problems. The new GDPR framework is an excellent example of a debate around the use of data that needs to be extended to the use of algorithms. We need to be in front of this issue through honest dialogue between businesses, citizens, and regulators alike. Because, as Alibaba founder and Executive Chairman Jack Ma noted at Davos, “The computer will always be smarter than you are; they never forget, they never get angry. But computers can never be as wise.”

Too fast, too soon

The disconnect between regulators and tech innovators is the result of a few things. One is speed. From development to implementation, technology helps products grow and hit markets at incredible speeds, often too fast for regulations to keep up.  

Another is a lack of constructive dialogue between the two parties. Innovators tend to talk to other innovators, which is great for innovation. It’s not so great, though, when those products have to interact with people and societies—the very same people governments and regulators are tasked with protecting.  

Driverless cars might be the perfect illustration of the regulatory disconnect. On the one hand, these vehicles will have four wheels and engines and in that sense, existing rules for automobile regulation­—from emissions and safety to traffic laws—still apply. What creates challenges for regulators is what’s different about driverless cars.

For example: before they are ready for the road, traditional cars must be thoroughly tested. Do the brakes, steering, lights, etc. work properly? But with driverless vehicles, software will do the braking and steering and lighting. As yet, there is no testing for this outside the technology company itself.

Driverless vehicles will also have to satisfy regulators when it comes to interacting with cars driven by human beings. In some countries, a stop sign is merely a suggestion: drivers slow down but usually drive straight through. Will the software be able adjust to these different driving cultures? Complications like these explain why a manager from one large North American city recently told me that, while manufacturers see driverless cars on the road in five years, he can’t see regulations being in place for at least ten or more.

Get talking

Early dialogue addressing the concerns of regulators before problems arise will be critical to the future of regulation. In some ways, none of this is new. Regulators have been dealing with disruptive technologies for decades. What is new is the sheer speed and scalability. Today’s companies grow at extraordinary speed while regulators work at the same pace as always.

So the question is: how do regulators and innovators work together to close the gap? Over the next few months in this space, we’ll examine this issue more closely and look at a few solutions. We’ll explore some existing models and how regulators might adapt them for a future marked by disruption. We’ll show how regulators are becoming more networked. We’ll delve into the ongoing problem of human nature interacting with technology. And finally, we’ll look at how some jurisdictions are using regulations as a competitive advantage.

The thrill of new technology is undeniable – the world shares a common interest in seeing how these innovations will interact with and benefit communities across the globe. As technology drives forward, it’s critical to pause and consider the enormous responsibility government has in ensuring the safety and inclusivity of its citizens. Elon Musk’s outspoken position on AI highlights the need for regulators to stay focused on the long game—because while the role of the innovators is to disrupt, the role of the regulator is to find the balance between innovation and social responsibility. 

I invite you to learn more about Deloitte's thoughts and insights on the Future of Regulation.