Privacy in the AI era: what you need to know

Privacy in the age of AI is currently a hotly debated topic. Artificial intelligence (AI) is rapidly changing the way we work, communicate and process information. From smart algorithms that recommend products to chatbots that provide customer service, AI is becoming increasingly intertwined with our daily lives. While the benefits of AI are enormous – think time savings, personalized experiences and better insights – these technological advances also bring new challenges. One of the most pressing issues is privacy.

After all, AI systems run on data, which means your data plays a crucial role in how this technology functions. The more data an AI system has, the smarter and more efficient it becomes. But what exactly happens to that data? Are they stored securely? Who has access to this data? And how do you prevent your data from being misused or shared without your permission? In this blog, we dive deeper into the key privacy issues surrounding AI. We look at where the risks lie, what legislation already exists to protect your privacy, and what you yourself can do to keep your data safe.

What is AI and why does it need so much data?

AI, or artificial intelligence, is the technology that allows machines to perform tasks that would normally require human intelligence. Consider recognizing speech, understanding images, predicting behavior or even making decisions. The power of AI lies in its ability to recognize patterns and learn from experiences. This is made possible by algorithms, or smart computational rules, that are trained with large amounts of data.

How does AI actually work?

AI systems are developed by training them with data. For example, an AI system that can recognize faces is fed thousands, sometimes millions, of images of faces. Through this data, the system learns what a face looks like, including details such as eyes, nose and mouth. But the system learns not only by simply recognizing patterns – it also makes assumptions about what features are important for recognizing a face.

Those assumptions are tested against the data and, if found to be incorrect, the system adjusts them to better fit the data. The better the data, the more incorrect assumptions are adjusted or rejected. For example, if the system makes the assumption that eye color is not important and all the photos in the dataset are of people with blue eyes, this assumption remains true. The more data the system gets, the better it is able to provide accurate results.

AI depends on data because it builds its “knowledge” by analyzing examples. Without data, an AI system cannot recognize patterns or make predictions. Data acts as the fuel for AI, and the better this fuel is, the better the performance of the technology becomes.

Accuracy

An AI system is only as good as the data it is trained with. The more good data a system has, the better it can understand the fine nuances of a task.

Take, for example, an AI designed for invoice processing. If the system has seen invoices from one industry, such as construction, it will have trouble with different layouts from, say, the cleaning industry.

Using a large number of purchase invoices from different industries and in a variety of formats, AI can learn to recognize patterns in invoice information, such as VAT numbers, customer details and payment terms. This precision is crucial to avoid errors, such as incorrectly copied amounts or lines.

Diversity

To be effective in different situations, AI must be trained on data that reflects various scenarios. In document processing, this means that AI must understand not only documents that are neatly structured, but also messily scanned documents or invoices in different languages and formats.

Incidentally, it may be a good idea to train multiple models if the recognition tasks are substantially different. A purchase invoice and a passport, for example, will have so little overlap that it is more efficient to train two models for them. For example, if the system makes the assumption that eye color is not important and all photos in the dataset are of people with blue eyes, this assumption will hold.

Continuous learning

The world of intelligent document processing is constantly changing. New invoice formats, changing legislation and even minor vendor layout changes can be challenging. An AI system must continuously adapt to these changes, which is known as “continuous learning.” For example, if a supplier suddenly offers its invoices in a new format, AI must be able to recognize and process it without having to retrain the model (from scratch). Without a constant stream of current data, an AI model can quickly become obsolete and less effective.

Legislation and protection around AI

Privacy laws play a crucial role in protecting our personal data in a world where AI is increasingly being used. While AI offers enormous benefits, it also carries risks, such as unlawful data collection, misuse of information and opaque decision-making. Fortunately, there are laws and regulations that protect both companies and individuals. Two important laws in Europe are the General Data Protection Regulation (AVG) and the AI Act, which came into effect on Jan. 1, 2025.

General data protection regulation (AVG)

The AVG, which went into effect in the European Union in 2018, is one of the strictest privacy laws in the world. The law is designed to give individuals control over their personal data and places strict requirements on how organizations handle data. For AI, this means companies must be transparent about; what data they collect, how they process it and for what purpose they intend to use the data.

The AVG requires companies to collect data only if there is a legitimate reason for doing so, such as user consent or a legal obligation.

For companies deploying AI, this means not only being compliant, but also being careful with data analytics to avoid unnecessary or unlawful processing.

The AI act: new rules for artificial intelligence

The AI act is an emerging European law specifically aimed at regulating artificial intelligence. With this law, the European Union aims to provide a framework that on the one hand encourages innovation, but on the other hand protects individuals from the risks of AI. The goal of the AI act is to make AI systems safe, transparent and ethical so that the technology can be used responsibly.

Low risk: for example, chatbots and recommendation systems, which are subject to minimal rules.
High risk: for example, AI in healthcare or lending, where there are strict requirements for transparency, honesty and data management.
Unacceptable risk: applications that may violate fundamental rights, such as facial recognition for mass surveillance, are completely prohibited.

The AI act offers companies not only challenges but also opportunities. By developing transparent and responsible AI, organizations can build trust with customers and differentiate themselves from competitors. Companies that invest in ethical and compliant AI applications now will be ahead of the curve and benefit from a solid reputation in the long run.

The impact of the AI act on individuals

For individuals, the AI act gives more protection and clarity. Users have the right to transparency and to know when and how AI is applied. They can also better defend themselves against discriminatory or erroneous decisions by AI systems, thanks to stricter requirements on companies to avoid bias.

Practical tips: this is how to protect your privacy

AI systems are collecting and processing more and more data. While legislation such as the AVG and the AI act helps ensure your privacy, there are steps you can take yourself to better protect your data. Here are some practical tips you can apply right away:

Be critical of what you share

Not all the information that an app or service requests is actually needed to use it properly. They often ask for more data than is strictly necessary, simply because companies want to collect that data for marketing or other purposes. By consciously choosing what to share, you can avoid giving away more information than necessary.

Always ask yourself: is this information really necessary to use the service? If an app requests access to your contacts, location or photos when it has no direct function for what the app is doing, it is smart to deny that access. Many apps and platforms work fine without filling out your full profile or allowing access to sensitive information.

Check your settings

Adjusting the privacy settings in the apps and platforms you use is a simple but effective way to protect your data. By default, many services collect more information than is strictly necessary, but often you can limit this by adjusting the settings. While this can take some time, it is an important step in getting a handle on your privacy.

Read privacy statements

Privacy statements are often long, technical and not very accessible, but they contain crucial information about how your data is collected, stored, shared and used. While it may be tempting to skip over these documents, it’s smart to at least scan through them. This will give you insight into how a company handles your privacy and help you make a more conscious decision about whether to use their service.

What should you look for in a privacy statement?

Data collection: see what data is collected and why. Pay particular attention to information such as your location, browsing history or contacts. Companies often state whether this data is essential to the operation of the service or is used for marketing purposes.
Data sharing: read who has access to your data. Do they share your data with third parties, such as advertisers or data analytics services? If so, be extra vigilant!
Your rights: check what options you have to manage your data. For example, can you access your data, have it corrected or deleted? Also look for information on how to object to the use of your data for certain purposes, such as profiling.
Retention periods: how long does the company keep your data? A short retention period is often a sign that they take your privacy seriously, while a long period carries additional risks.
Location of data storage: is your data stored locally, within the European Union, or in countries with less stringent privacy laws? This can affect how secure your data is.

What if the statement is unclear?

If a privacy statement is unclear, vague or difficult to understand, be extra careful about using that service. Companies that take your privacy seriously usually provide transparent and accessible statements. Also beware of unclear descriptions such as “we may use data to improve your experience” – this may indicate broad and non-specific purposes, increasing the risk of misuse.

The future of AI and privacy

AI is developing at lightning speed, bringing both opportunities and challenges. Privacy remains a critical concern as AI’s impact on data continues to grow. How regulations, businesses and technology work together will determine how we balance innovation and the protection of fundamental rights in the future.

How regulations around AI are evolving

The emergence of laws such as the AI act shows that lawmakers are taking the challenge of AI seriously. But regulations around AI and privacy are still in their infancy. In the future, these laws are likely to become more specific and comprehensive to better match the speed at which AI is evolving. Key trends in AI regulation include:

Global harmonization: with countries such as the United States and China also working on AI regulations, there will be increasing pressure to establish international standards. This can help companies operate more efficiently and protect consumers from abuse regardless of their location.
Specific guidelines for new applications: while current rules are often broad, there will be increasingly specific guidelines for new AI applications, such as generative AI, deepfakes and autonomous vehicles.
Greater focus on transparency: regulations will require AI systems to become more explainable so users understand how decisions are made and who is responsible for mistakes.

Privacy in the AI era

AI offers unprecedented opportunities to make our lives smarter, more efficient and easier. From invoice processing to personalized recommendations, AI systems are becoming increasingly sophisticated and indispensable in our daily lives. But with these technological advances also come significant challenges, perhaps the biggest of which is privacy.

By developing technology with respect for fundamental rights and by educating ourselves better and making more conscious choices, we can enjoy the benefits of AI without sacrificing our privacy. AI and privacy need not be opposites; together they can ensure a future where technology truly serves humans.