US Treasury Secretary Janet Yellen will caution about the risks of AI in the financial sector in her upcoming speech while Meta, the parent company of Facebook and Instagram, receives criticism for using user data for AI training purposes. The two events highlight growing concerns over the impact of AI on financial stability and data privacy.
Janet Yellen’s AI Speech Highlights Financial Stability Risks
On Thursday, May 31, 2024, US Treasury Secretary Janet Yellen will deliver a speech at a conference on financial stability held at the US Treasury Department and the Brookings Institution. This address is expected to highlight both the vast opportunities and the significant risks associated with the use of artificial intelligence (AI) in the financial sector.
Yellen’s remarks, shared in advance with CNN, will emphasize how AI is already aiding investors through forecasting and portfolio management and helping banks combat fraud and improve customer service. However, she will also warn about potential dangers including the “complexity and opacity” of AI models, which operate as “black boxes” that are challenging for regulators to understand.
The speech will note additional risks like “inadequate risk management frameworks” and the high concentration of AI model providers, which could lead to systemic issues if one provider faces problems. Yellen plans to discuss the possible biases in financial decision-making caused by inadequate data, and stress that regulators will continue to monitor AI’s effects on financial stability.
Previous warnings by Yellen and the Financial Stability Oversight Council (FSOC) identified AI as an “emerging vulnerability” in the financial system. The conference will feature a mix of regulators, tech executives, asset managers, insurers, academics, and banking representatives to address these concerns.
Meta Faces Backlash Over AI Data Use for Facebook and Instagram
Meta, the parent company of Facebook and Instagram, has sparked privacy concerns with its new policy of using user data to train its AI systems. According to an email sent to users, Meta will begin using information from posts, photos, and messages to enhance its AI tools, including its virtual assistant and the recently released Llama 3 model.
The changes are set to take effect on June 26, 2024. Despite Meta’s assurance that private messages won’t be used, the policy includes collecting data from users who do not even use its services. Users can officially object to this data use by filling out a form on Instagram’s website. However, Meta retains the right to process data in some cases under “legitimate interests,” a legal basis under the GDPR that does not require explicit consent.
This policy has led to outrage on social media, with users criticizing the potential misuse and unforeseen consequences of their data being utilized for AI training. Meta’s move raises significant questions about privacy and the transparency of AI development practices.
Key Points
- What: Janet Yellen to discuss AI risks in financial stability; Meta to use user data for AI training
- When: Yellen’s speech on May 31, 2024; Meta’s policy effective June 26, 2024
- Where: US Treasury Department and Brookings Institution for Yellen’s speech; Globally for Meta’s policy
- Who: Janet Yellen, US Treasury Secretary; Meta, Facebook, and Instagram users
