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GDPR Compliance for AI-Driven Companies: Key Considerations for Data Processing

Artificial Intelligence (AI) has become a cornerstone for businesses worldwide, transforming traditional processes and paving the way for a new era of insights and efficiency. However, it's not all about optimization and profit - companies utilizing AI must also navigate the labyrinth of legal obligations when their operations involve the processing of personal data.


One primary legal framework that comes into play is the General Data Protection Regulation (GDPR), which sets forth stringent guidelines for data protection and privacy for all individuals within the European Union.


Roles Defined: Controllers and Processors


Before diving into the specifics of GDPR compliance, it is crucial to discern the roles an AI-using company might occupy – the Controller and the Processor. These roles are determined based on the level of discretion the company exercises in determining how AI functions, the kind of personal data used, how AI processes this data, and the terms under which AI retains or shares this information.


The Controller: A company is deemed a "Controller" when it dictates how and why personal data is processed. In other words, it has a high degree of discretion and authority in shaping the AI's operations, deciding what personal information is used for training the AI and establishing guidelines on data processing and retention.


The Processor: Conversely, a "Processor" carries out data processing on behalf of the controller. Their activities are more oriented toward executing tasks dictated by the Controller and could include, for instance, a third-party hosting the personal data used to train an AI model.


The delineation between these two roles plays a vital part in determining the legal obligations your company has under GDPR.


GDPR Requirements for Controllers


With great power comes great responsibility; a statement that resonates profoundly when analyzing the various provisions of GDPR for entities acting in the capacity of a Controller.


Identifying Lawful Basis of Processing (Article 6)

The first stepping stone to GDPR compliance lies in identifying a lawful basis for data processing. The GDPR provides six options, and the company must decisively choose one that aligns with its objectives and operations. An intriguing perspective arises when we consider the usage of publicly sourced data for AI training, such as data scraped from the internet. The most likely lawful bases are (1) the consent of the individuals, or (2) the legitimate interest of the controller. It is, therefore, imperative for companies to tread carefully while selecting their lawful basis, as it can have a significant impact on their compliance journey.


Upholding Data Minimization Principles (Article 5(1)(c), (e))

Data Minimization encapsulates the concept that companies should use only the bare minimum of personal data necessary for their purposes. Controllers must limit the scope of personal data utilized and the duration of its identifiable form. To apply this in an AI context, a company should scrutinize the type and quantity of data fed to the AI for training and regulate the length of time the AI retains this data.


Access Rights (Article 15)

The key to GDPR's data subject rights lies in empowering individuals with control over their personal data. Access rights provide one such channel of empowerment. Controllers must be ready to comply with requests from individuals who wish to access personal data about them, which was used in AI training. It is the intersection of technology and law where Controllers must demonstrate the ability to respond accurately to these requests, contributing to an environment of trust and transparency.


Obligation to Provide Privacy Notice (Article 12 - 14)

GDPR underscores the need for transparency via the obligatory Privacy Notice. Companies donning the hat of Controllers must provide detailed information on their data processing activities to data subjects. Here's where it gets captivating: AI-driven companies aren't exempted from this, and indeed, it's suggested that such firms must craft a comprehensive privacy notice elucidating how data is processed in AI training. This notice should also explain the underlying logic and an overview of the rights of the individuals involved.


Enabling Correction Rights (Article 16)

Controllers should provide mechanisms for individuals to correct any inaccurate personal information. When the data is used for training an AI model, especially if it's sourced publicly, the legal landscape becomes even more nuanced. Companies may be required to develop an online tool to facilitate data rectification requests. This tool would handle not only the data used in AI training but also any data generated by the AI.


Maintaining Records of Processing Activities (Article 30(1))

The next key requirement for controllers is record-keeping, which might appear administrative but carries significant legal weight. Article 30(1) mandates Controllers to maintain records of their data processing activities, including information about the type of personal data used to train the AI, the individuals involved, and the specific purpose behind the data utilization. This record must also detail any restrictions for the AI’s usage or data retention.


Rights to Withdraw Consent / Object (Article 7(3), 21)

If a Controller bases the use of personal data on the individual's consent or its legitimate interest, they must provide a mechanism for the individual to withdraw consent or object to the use of their data. These mechanisms should be clear, accessible, and efficient, ensuring that the rights of individuals are actively exercisable in practice.


Data Protection Impact Assessments (Article 35)

The GDPR requires Controllers to conduct Data Protection Impact Assessments (DPIA) under the conditions set out in Article 35. Specifically, if new technologies, such as AI, could result in a high risk to individuals' rights and freedoms, a DPIA becomes obligatory. In the AI context, this involves a comprehensive assessment of the potential impact of AI algorithms on data protection.


Cross-border Data Transfers (Article 44-50)

But when personal information finds its way to an AI hosted outside the European Economic Area (EEA), the GDPR's cross-border data transfer rules come into play. Controllers need to protect personal data when it travels across borders, a mandate of particular significance to AI training that uses data from the EEA.


Mandates for Vendor Management (Article 28)

The responsibilities of Controllers under the GDPR also extend to their third-party vendors. For instance, if an AI system is hosted by a third-party provider, Article 28 of the GDPR demands specific contractual provisions to safeguard personal data. Controllers, therefore, need to manage their vendors prudently, ensuring that they are compliant with the GDPR.


Erasure Rights (Article 17)

Known as 'the right to be forgotten,' the erasure rights allow individuals to erase their personal information if its processing is no longer necessary concerning the purposes for which it was initially collected. In the AI realm, this translates to Controllers contemplating a mechanism to erase personal data from the training set upon receiving a deletion request.


Conclusion: Adhering to GDPR for AI Training Using Personal Data

As we conclude, it's crucial to note that the GDPR presents both a challenge and an opportunity for companies using AI. The nuanced requirements necessitate companies to not only understand and implement complex legal provisions but also to balance these with the technical realities of AI training using personal data.

From identifying the lawful basis of processing and upholding data minimization to conducting DPIAs and managing vendors, adherence to GDPR's requirements isn't a mere legal mandate - it's a step towards trustworthy AI. The journey may be complex, but it promises a future where AI respects individual privacy, building a stronger, more sustainable bond between AI innovations and their human users.


Navigating the intricate intersection of AI and GDPR compliance can be challenging. If you find yourself in need of guidance, don't hesitate to reach out to us at Prokopiev Law Group. Our team is always here to help, providing clear, actionable advice to help you align your AI strategies with GDPR regulations. Give us a call or drop us an email today - let's create a future where innovation and privacy go hand in hand. DISCLAIMER: The information provided is not legal, tax, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be AI-generated. The information provided is for general educational purposes only and is not investment advice. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information. A professional should review any action based on the information discussed. The author is not liable for any loss from acting on the information discussed.

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