Deutsche Bank’s analyst warns about GDPR posing risks to AI development in Europe

Maria Nikolova

As the development of AI systems based on machine learning heavily relies on access to vast datasets, GDPR may restrict this access and hamper the development of AI in Europe, says Deutsche Bank’s Kevin Koerner.

Less than a month after GDPR – the new data protection regulation, came into force across the European Union (EU), the effects for the business and the general public start to become clearer. The chorus of concerns about the potentially negative consequences of the implementation is growing, with Kevin Koerner, European Policy Research analyst at Deutsche Bank, warning about the impact GDPR might have on the development of artificial intelligence (AI) systems in Europe.

In his article, Mr Koerner notes that development of AI systems based on machine learning heavily relies on access to vast datasets in order to train and improve their algorithms. This gives countries like China with more than 700 million (mobile) internet users and (so far) rather lax privacy laws a huge competitive edge. In Europe, however, restrictions under the GDPR could put the AI industry into a disadvantageous position compared to international peers.

In particular, Mr Koerner warns, a right to transparency in automated decisions (e.g. regarding online loan-applications) gives AI developers a headache as for machine learning techniques based on deep neural networks, the decisions behind the algorithm are a black box – even to the developers – and are evolving over time. As the Center for Data Innovation argues, the regulatory requirements to make algorithmic decisions explainable could reduce the scope and accuracy of compliant algorithms. This could put at risk the EU’s ambition to catch up with the US and China in the global race for AI dominance and to the opposite, rather cause the continent to fall further behind.

On the brighter side, Mr Koerner says there are also ways to mitigate risks to Europe’s AI industry. For instance, GDPR only applies to personal data. Hence, Automated (AI-based) anonymisation and pseudonymisation of datasets could help to allow for AI-related research and algorithmic development without breaching privacy rights protected by the regulation. Indeed, there are increasing efforts to develop more interpretable AI, such as the “Explainable AI” program initiated by DARPA, the US Defense Research Agency, and the LIME (Local Interpretable Model-Agnostic Explanations) framework. These may indicate how to address the black box problem and the concerns regarding the GDPR’s right to explanation. AI could also help companies to comply with the GDPR’s requirements, for instance, by handling user requests and managing databases, thus rather supporting than suppressing innovation.

Let’s recall that in April this year, the European Commission published a statement with regard to what it dubs a “European approach” to AI research and development but that announcement was pretty vague as it outlined abstract future plans and imposed financial obligations on the EU public and private sectors, instead of saying what the Commission commits to do on its own.

Back then, the Commission told the EU (public and private sectors) to hike investments in AI research and innovation by at least €20 billion between “now and the end of 2020”. No names of particular entities that are set to provide this pretty lump sum of money are mentioned. The Commission itself committed to increase its investment to €1.5 billion for the period 2018-2020 under the Horizon 2020 research and innovation program.

The rest of the announcement, unfortunately, contained nothing more than idealistic statements, such as a forecast that as a result of the growing adoption of AI solutions, “many jobs will be created, but others will disappear and most will be transformed”. There was no specification on which business areas are set to be affected by this trend.

Read this next

Digital Assets

AAX ranked world’s second largest spot exchange, only behind Binance

Crypto trading volumes experienced their first surge in activity since March as the majority of digital assets began their recovery from the recent grim price action, according to a new report by Cryptocompare.

Digital Assets

Bitpay teams up with Cardlytics to provide 15% cashback rewards

Crypto payment service provider Bitpay announced a partnership with Cardlytics Inc (NASDAQ:CDLX), which it says will offer more rewards for BitPay cardholders on its platform.

Digital Assets

BlackRock digs further into crypto with spot bitcoin private trust

BlackRock, the world’s largest asset manager with almost $8 trillion in AUM, has launched a spot bitcoin private trust for institutional clients in the United States.

Digital Assets

SEC fines Bloom Protocol, orders refund to BLT token purchasers

Blockchain startup Bloom, which raised $30 million in funds via an initial coin offering (ICO), has agreed to return the money to token purchasers and pay a $300,000 fine, the SEC announced.

Institutional FX

FX volume takes step back at Singapore Exchange in July

The Singapore Exchange (SGX), the country’s paramount exchange operator, has released its monthly volumes across its FX, derivatives and commodities segments for July 2022.

Market News

The Week Ahead: 12 August from David Madden, Market Analyst at Equiti Group

There was a spike in volatility last week when the US CPI report ticked down to 8.5% from 9.1%, missing the forecast of 8.7%. The announcement led to chatter the Fed might not carry out a 0.75% interest rate hike in September.

Digital Assets

Pomelo Pay adds crypto payments capabilities from TripleA

According to a June survey conducted by Deloitte, nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years.

Executive Moves

Talos appoints “boss, mentor, and friend” Neal Pawar as strategic advisor

“Foundational technologies are needed for institutions to fully embrace this potential, however, and in my opinion Talos’s platform is steadily becoming the de facto industry standard for digital asset trading.”


Avelacom enhances Middle East connectivity amid new market trends

Avelacom found that smaller markets in the region were not sufficiently covered by third-party vendors.