As artificial intelligence (AI) technologies become increasingly integrated into business operations, companies handling personal data of European residents must pay close attention to how this affects their data protection obligations.
One key area impacted is the privacy policy—a vital document that communicates to individuals how their personal data is processed. If your company is using AI systems that involve personal data, updating your privacy policy is not optional—it’s a legal requirement under the EU’s General Data Protection Regulation (GDPR).
AI and Personal Data Processing
AI systems often rely on large datasets to learn, predict, or automate decisions. If these datasets include personal data — anything that can identify an individual, directly or indirectly — then the GDPR applies. This includes data used for training models, profiling users, or automating decisions that affect individuals.
What the GDPR Requires
Under Articles 12 to 14 of the GDPR, data controllers must provide clear, concise, and transparent information about how personal data is collected and used. This obligation becomes especially important when deploying AI, as the processing can be complex and opaque.
Companies must disclose:
- The fact that AI is being used
- The purpose of processing with AI
- The categories of data involved
- The logic involved in any automated decision-making, including profiling
- The significance and potential consequences for individuals
If an AI system is used for automated decision-making that has legal or similarly significant effects , Article 22 imposes stricter obligations, including the right to human intervention and to contest the decision.
Updating Your Privacy Policy
When implementing AI, companies should review and revise their privacy policies to reflect the above. Vague language or generic references to “automated tools” are not sufficient. The policy must be specific, understandable, and tailored to the actual data processing activity.
Additionally, updates should be communicated clearly to data subjects, especially when introducing new AI-driven features. This could involve direct notifications or prominently displayed banners on your website.