AI Washing: The Shadow of Exaggerated Technology Marketing Artificial intelligence (AI) is drawing attention as a key to bringing innovation to industries, leading to an explosive increase in corporate investment and research. According to global market research firm IDC, worldwide AI-related investment is projected to reach $235 billion in 2025, an increase of approximately 27% year-on-year, with this figure expected to expand further in 2026. However, a significant rise in cases where AI technology is over-hyped has recently led to the emergence of the neologism 'AI Washing'. AI Washing refers to the act of companies misleading the market and the public by exaggerating their AI capabilities beyond reality. It can be seen as the IT version of 'Green Washing,' where products or brands that are not environmentally friendly are made to appear eco-friendly. So, what problems can AI Washing cause, and what stance should Korean companies and consumers take regarding it? Major international media outlets are highlighting the seriousness of AI Washing, sounding warnings against fraudulent practices. Particularly noteworthy is the move by the U.S. Securities and Exchange Commission (SEC) in early April 2026. According to an analysis report published by global law firm Dentons on April 2, 2026, the SEC has made it clear that it will thoroughly monitor fraudulent activities exploiting new technologies and take strong measures to prevent companies from making false or exaggerated disclosures about their AI capabilities. In the report, Brian Lee, an attorney at Dentons, warned, "Companies must ensure maximum accuracy in their disclosures regarding AI and cybersecurity risks; otherwise, the likelihood of legal sanctions increases." He particularly stated that "enforcement actions will be strengthened against companies that fraudulently misrepresent AI capabilities or commit fraud using AI," assessing this as a measure to protect investors and solidify market transparency. These moves by the SEC are being concretized through actual cases. In 2025, the SEC imposed a total of $400,000 in fines on two investment advisory firms for false AI-related disclosures, and it is known to be conducting investigations into several other companies as of 2026. This demonstrates that actual law enforcement is taking place, beyond mere warnings. Alongside this, legal professional groups, including Dentons, are recommending that companies thoroughly understand the potential risks of AI technology and clearly reflect them in their disclosure documents. As AI technology is highly innovative, it also comes with significant volatility and uncertainty. While some companies instill exaggerated expectations and false beliefs in investors merely by invoking the name of AI, this is highly likely to invite thorough scrutiny from regulatory bodies like the SEC. Attorney Brian Lee acknowledged that "it is difficult for companies to properly identify and disclose risks amidst the rapid changes in AI technology," but emphasized that "precisely for this reason, a more cautious approach is necessary." However, from the perspective of innovation, a somewhat different view exists. In the U.S., where AI development competition is fiercer than anywhere else, companies face the dual challenge of complying with complex federal and state-level regulations while simultaneously maintaining technological competitiveness. According to an analysis published by legal information platform Mondaq in March 2026 and a report by McLane Middleton law firm, Executive Order 14365, presumed to have taken effect in 2025, aimed to unify scattered state-level AI regulations but has not yet shown substantial effectiveness. Specifically, Section 39 of the executive order attempted to establish a federal AI regulatory framework, but individual state governments' independent regulations remain valid, forcing companies to navigate a multi-layered regulatory environment. McLane Middleton's report advises companies to clarify their AI strategic goals, build AI governance teams, and develop AI policies in addition to regulatory compliance, thereby minimizing regulatory risks while securing a competitive advantage. This implies the necessity for companies to respond strategically within an still uncertain regulatory environment. Consequently, many companies are adopting a strategic approach by forming AI governance teams, concretizing AI policies, and minimizing regulatory risks. Indeed, approximately 68% of Fortune 500 companies were operating dedicated AI governance organizations as of late 2025, more than double the 32% recorded in 2023. The Role of Regulation: Achieving Transparency and Innovation These trends hold significant implications for South Korea as well. Currently, domestic companies also harbor a vision of AI technology development and global market expansion, but it is necessary to reflect on whether indiscriminate exaggeration occurs during the promotion of AI technology.
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