OpenAI faces another hurdle in its attempt to continue operating in the European Union, as German authorities have launched an investigation into the company’s privacy practices and GDPR compliance.
As reported by AFP, German regulators are demanding answers about the company’s intentions and ability to comply with strict data privacy laws enshrined in the EU’s General Data Protection Regulation (GDPR).
Marit Hansen, commissioner for the northern state of Schleswig-Holstein, told AFP reporters that regulators in Germany “want to know whether a data protection impact assessment has been carried out and whether data protection risks are under control.” They added that the country was also asking OpenAI for “information on issues arising from the European General Data Protection Regulation (GDPR).”
While this news is not a surprise (German watchdog groups have recently recommended increased scrutiny), it adds to an already complex situation for OpenAI.
The company introduced its GPT-4 model in mid-March. In the short time since then, OpenAI has faced increasing scrutiny from regulatory bodies, especially European ones. Italy has been the first western country to ban its products. At the same time, the company and local regulators are working out whether OpenAI can comply with GDPR and Italian privacy laws.
It is currently unclear how OpenAI intends to respond (no responses to requests for comment have been received), but German regulators have indicated that they expect the company to respond to their questions no later than June 11.
Essentially, the main issues raised by regulators across Europe concern the training data used to build ChatGPT’s AI models. Users currently cannot opt out of having their data included, nor can they correct models if they make a mistake.
Under the GDPR, individuals have the right to have their data amended to reflect accuracy or removed from systems entirely.
In the middle of it all are the many users of OpenAI, especially those who pay premium subscriptions to access the company’s GPT API.
Cryptocurrency traders and analysts who build advanced bots on top of the API itself, or those who use third-party applications built on top of the API for market forecasting or autonomous trading in the EU, could find themselves embroiled in binding litigation or blanket bans.
If such a ban goes into effect, it could force any company or individual that uses these bots for cryptocurrency trading and analysis – including exchanges, news sites and blockchain companies – to carry out such operations outside of the EU.
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