1Norwegian Consumer CouncilJune 2023Ghost in the machineRunning headerGHOST IN THE MACHINEAddressing the consumer harms of generative AIJUNE 2023 TABLE OF CONTENTSEXECUTIVE SUMMARY 51 – INTRODUCTION 61.1 An overview of generative artificial intelligence 7 1.1.1 Examples of generative AI models 8 1.1.2 The generative artificial intelligence actor chain 11 1.1.3 Open source or closed source models 12 1.1.4 General purpose AI 121.2 Consumer applications 132 – HARMS AND CHALLENGES OF GENERATIVE ARTIFICIAL INTELLIGENCE 142.1 Structural challenges of generative AI 15 2.1.1 Identifying the concrete risks of generative AI 15 2.1.2 Technological solutionism 17 2.1.3 Concentrating power in the hands of big tech 17 2.1.4 Opaque systems and lack of accountability 192.2 Manipulation 22 2.2.1 Mistakes and inaccurate output 22 2.2.2 The personification of AI models 23 2.2.3 Deepfakes and disinformation 25 2.2.4 Detecting AI-generated content 27 2.2.5 Generative artificial intelligence in advertising 282.3 Bias, discrimination, and content moderation 29 2.3.1 Bias in training data 29 2.3.2 Content moderation 302.4 Privacy and data protection 31 2.4.1 Privacy challenges related to data sets used for model training 31 2.4.2 Privacy challenges related to generated content 32 2.5 Security vulnerabilities and fraud 322.6 Replacing humans in consumer-facing applications with generative AI, wholly or in part 33 2.6.1 Challenges related to combining human- and automated decision-making 33 2.7 Environmental impact 34 2.7.1 Climate impact 34 2.7.2 Water footprint 36 2.7.3 Greenwashing & hopes for Green AI 37 2.8 Impact on labour 37 2.8.1 Labour exploitation and ghost work 37 2.8.2 Labour automation and threats to jobs 38 2.9 Intellectual property 383 – REGULATIONS 403.1 Data protection law 45 3.1.1 Data subject rights 46 3.1.2 The Italian DPA’s decision concerning ChatGPT 47 3.2 Consumer law 48 3.2.1 Consumer law in a U.S. setting 49 3.3 General product safety law 50 3.3.1 The General Product Safety Directive 50 3.3.2 The General Product Safety Regulation 50 3.4 Competition law 513.5 Content moderation 51 3.6 The draft Artificial Intelligence Act 52 3.6.1 The EU Commission’s proposal 52 3.6.2 The EU Council’s position on the AIA 53 3.6.3 The EU Parliament’s position on the AIA 53 3.6.4 The Artificial Intelligence Act must protect consumers 54 3.7 Liability 54 3.7.1 Product Liability Directive 54 3.7.2 Revised Product Liability Directive 55 3.7.3 AI Liability Directive 55 3.8 Industry standards and guidelines 564 – THE WAY FORWARD 574.1 Consumer rights principles that are key for safe and responsible AI 594.2 Policy recommendations 60 4.2.1 Calls to action and empowerment of enforcement agencies 60 4.2.2 Decision makers – strategic measures 61 4.2.3 New legislative measures 61ENDNOTES 65Ghost in the machine – Addressing the consumer harms of generative AI Norwegian Consumer CouncilJune 2023www.forbrukerradet.no/aiDesign by: Von Kommunikasjon 5Norwegian Consumer CouncilJune 2023Ghost in the machine Executive summaryThere has been an explosion of consumer facing gener-ative artificial intelligence services. These applications can be used to generate synthetic text, images, sound, or video that closely resemble human-made content. As generative AI systems become integrated into popu-lar platforms and tools, adoption of the technology is poised to keep rising. Meanwhile, a number of emerging challenges have spurred numerous debates about how to ensure that generative AI is safe, reliable, and fair. This report is a contribution to these discussions, and aims to provide policymakers, lawmakers, enforcement agencies, and other relevant entities with a robust start-ing point to ensure that generative AI does not come at the expense of consumer and human rights. We cannot know for certain how the technology will develop in the months and years to come but believe that the direction of technological advancement should happen on soci-ety’s terms. Therefore, we present a number of overar-ching principles that can help define how generative AI systems can be developed and used in a consumer- and human-centred way. We also strongly urge governments, enforcement agen-cies and policy makers to act