VanopdurpP-BUSN600-Part3Final

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1 Analysis of AI Implications in Canva's Business Operations Peter Vanopdurp American Public University COURSE: BUSN600: Artificial Intelligence (AI) Practices in Business Dr. Linda Ashar June 23 th , 2024

2 Analysis of AI Implications in Canva's Business Operations Canva is an online graphic design tool that leverages various AI tools to assist users in creating presentations, logos, social media posts, and more efficiently. The simplicity and high quality output of Canvas products have made the platform a staple for all types of clients, from individual users to large companies like Starbucks, PayPal, and SnapChat (Kitschke, 2023). With Canva's ability to create stunning professional designs in a matter of minutes, it's no wonder the business has become a favorite in the design industry. The reliance of AI on Canva’s business model makes the company a perfect study of the implications of AI in business. In this paper I will analyze issues concerning Canva’s use of AI, similarities of these issues within business as a whole, and some possible solutions for Canva in relation to these issues. Major Issues for Canva’s Use of AI Quality and Originality of Content. Canva uses many generative AI tools such as DALL- E, Magic Media, and Imagen to create content by analyzing existing online content. As a result of using existing content, this approach may result in creating content that lacks originality and raises concerns about potential copyright infringement issues. The platform’s reliance on these different AI tools and their reliance on pre-existing design elements can result in content that is too similar to what is already available, hindering users from creating unique brand identities. Data Privacy and Security . Canva collects user information and design content through cookies on the user's system, making its user data a target for cyberattacks. The 2019 data breach exposing the data of approximately 137 million users highlights the need for increased data security protocols to protect user data (Twingate Team, 2024). This isn’t the only issue of data privacy facing the platform; since Canva’s AI tools are developed by other companies, an

3 additional layer of needed security measures are required for safeguarding user data from unethical use. Bias and Ethical Concerns . The generative AI that Canva uses has the potential to inadvertently perpetuate biased content, and the risk of generating biased content increases daily. Additionally, there are ethical concerns regarding plagiarism and the potential misuse of AI generated content, which could harm Canva’s reputation and user trust. If Canva’s users rely on the AI without verifying its products, inaccuracy or plagiarism could occur, exposing the user to any associated consequences (Tiwari, 2023). Comparison of AI Use in a Business Quality and originality concerns are prevalent across all businesses utilizing AI, emphasizing the challenges of successfully integrating AI into business operations. Creative industries like graphic design and advertising might face challenges related to content originality, where the originality of their contents is critical to their success. The integration of AI in these businesses can either enhance the creativity of their employees by streamlining workflow and providing innovative solutions, or it can compromise it by creating repetitive, uninspiring content. While data privacy and security are relevant concerns for businesses collecting and storing user data, like Canva, the concern is not just about protecting user data from outside threats, but also from internal misuse. Under the Fair Trade Commission (FTC) model-as-a- service companies are especially at risk; these are companies that develop and sell products, such as large language models for use in chatbots, or image generating AI programs. Under the FTC, even though these model-as-a-service companies are not using the developed AI programs, they are still legally responsible for how the AI collects and uses collected data. If the AI takes user

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4 data and sells it to marketing companies without the explicit consent of the user (those individuals using the program, not the company), the model-as-a-service companies can be held liable (Staff in the Office of Technology, 2024). Bias and ethical concerns are significant issues for all businesses. For instance, AI systems can inadvertently perpetuate existing biases found in their training data, leading to discriminatory outcomes in applications ranging from hiring processes to loan approvals and advertisements. In the healthcare industry, biased AI could result in the unfair treatment of patients. When it comes to creative businesses like Canva, biased AI can result in stereotyped, culturally insensitive content, potentially alienating audiences and damaging a brand's reputation. Potential for Corruption in Business Applications The issues mentioned above could corrupt business applications if not adequately addressed. Biases in AI outputs can undermine user trust and lead to discriminatory practices that harm not only the business but also the user. Bias in creative companies like Canva can alienate audiences, damage brand reputations, and create public backlash. Security breaches have the potential to cause significant financial and reputational damage, reducing user trust. Regarding ethics, AI tools that generate content with no oversight may produce offensive, harmful, or inappropriate content. Causing loss of user trust as well as brand damage. It is essential to establish effective mechanisms to identify and resolve these issues to uphold the integrity and trustworthiness of AI applications in business. Business Proposal for AI Applications at Canva The following are some business proposals for Canva to not only resolve the potential issues we have discussed, but enhance user satisfaction allowing Canva expand within the creative industry.

5 Personalized Design. Implementing predictive analytics for personalized design suggestions can significantly enhance Canva’s user experience by tailoring recommendations to individual preferences. Predictive analytics can analyze user behaviors and design preferences to simplify the design process and offer templates that closely match individual user requirements closely. This personalized approach not only improves user satisfaction but also boosts conversion rates by encouraging users to stay with Canva instead of seeking alternative platforms (Engati Team, 2023). Predictive analytics use advanced algorithms to create user profiles based on their interactions with the platform. If a user frequently uses vibrant colors and modern fonts, the AI can predict and suggest templates incorporating these elements, saving time and enhancing efficiency. This approach mirrors how Netflix uses predictive analytics to recommend shows and movies based on viewing histories, which has significantly improved user engagement and retention (Engati Team, 2023). AI Generated Mechandise. Expanding AI tools to include automated brand merchandise creation using natural language processing (NLP) and image recognition would transform Canva into a comprehensive one stop shop for brand creation. This enhancement will allow users to design and visualize branded merchandise, such as T-shirts, mugs, and bags, directly on the platform. By ensuring consistency and professional appearance across all marketing materials, this approach can provide a seamless user experience. Current competitors in AI merchandising, like Covver, require pre-existing logo designs in order to start the process of taking that logo and augmenting it for different merchandising options (Swag Solution, n.d.). Canva’s fully integrated solution would save users time and money by eliminating the need to switch between platforms for different tasks. Users will be able

6 to create their brand elements and merchandise designs within the same platform, a unique approach that would set Canva apart in the market. This comprehensive solution addresses a critical need for business clients seeking a cohesive brand identity across various products. AI Content Moderation. AI content moderation using NLP and language matching algorithms can help Canva maintain high content quality and compliance. By automatically recognizing and flagging inappropriate, biased, or copyrighted content, Canva can protect users from potential legal issues and enhance the overall quality of the content (Holdsworth, 2024). This automated method reduces the requirement for extensive human review, enhancing operational efficiency. Facebook’s success in the use of AI for content moderation serves as an excellent example for Canva. Facebook’s AI tools manage vast amounts of user generated content quickly and accurately, ensuring that inappropriate content is swiftly managed while maintaining user trust. By combining AI with human moderation, Facebook is able to further minimize errors and ensure that it maintains its commitment to protecting users’ brands and upholding ethical standards (Singh, 2019). Canva can take that business practice and incorporate it within its own platform, further protecting its users. Benefits and Concerns with Canva Proposal I believe these proposals could be successful if implemented within Canva’s platform. Implementing predictive analytics for personalized design suggestions aligns perfectly with current user demand for a more tailored experience. Predictive analytics can significantly improve user satisfaction and retention by offering design recommendations that match individual preferences. This approach has already proven successful in other industries, such as streaming services, where Netflix has seen increased user engagement and retention through

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7 personalized content recommendations (Doig-Cardet, 2022). By applying similar strategies, Canva can enhance the user experience, making the platform more appealing and efficient for its users. By expanding the current AI tools to include automated brand merchandise, Canva’s position as a comprehensive solution for businesses seeking a cohesive brand identity would be solidified. The integrated approach has the benefit of saving its users time and resources by eliminating the need to switch between different platforms for brand creation and merchandising, allowing a user to develop logo variations, and have them placed on various items for their marketing needs. Given the competitive advantages this offers, Canva could leverage this to attract more users who value efficiency and consistency in their branding efforts. The adoption of AI moderation will ensure Canva maintains a high standard of content quality and compliance. This is a crucial benefit in today’s digital environment, where inappropriate or biased content can lead to significant legal and reputational risks for the platform and their clients. By using similar techniques as Facebook in management of large volumes of user-generated content through a hybrid of AI and human oversight while maintaining trust and safety on the platform (Singh, 2019). Canva can protect its users and uphold its reputation as a reliable and ethical platform, the downside of this proposal is the increased cost. A hybrid approach means the development of an language processing AI, and the growth of a dedicated moderation department. It must be noted that in order for these suggestions to be successful, Canva must address the potential challenges such as data privacy, accuracy of AI recommendations, and the quality of the generated content. It would be critical to implement robust data protection measures and

8 continuously improve AI algorithms through user feedback and advanced machine learning techniques. Potential for Legal and Ethical Issues There are a multitude of legal and ethical concerns for any business leveraging the power of AI. This is no different for Canva; data privacy and security are major concerns. As Canva implements predictive analytics and an NLP for personalized design suggestions, it will need to collect and analyze a vast amount of user data. This data collection raises additional concerns about how user information is stored, processed, and protected from potential breaches. Having already experienced a data breach in 2019, where 137 million users had their data stolen, this only highlights Canva’s need for robust security measures for Canva. It is imperative for Canva to prioritize transparency and accountability in their data practices to maintain trust with their users and ensure compliance with legal regulations (Twingate Team, 2024). Bias in Canva’s AI algorithms presents some ethical concerns. Generative AI systems have the potential to accidently perpetuate or amplify existing biases if they are not properly monitored and adjusted for. If Canva’s AI generated content moderation tools were to be corrupt in any way, they could disproportionately flag or suppress content from certain demographics, leading to the unfair treatment of some users. This issue has been observed in various AI applications, including the Dutch tax authority's AI in 2020, which mislabeled 26,000 immigrant parents as having committed childcare benefit fraud (O’Flaherty, 2022, p. 7). In ensuring that Canva’s AI systems are transparent and regularly audited for bias, they would maintain fairness and trust among users. Intellectual property (IP) concerns for the originality of AI generated content are complex; this new type of creative content is forcing the legal system to define what authorship

9 is (Lawton, 2024). As the AI tools implemented by Canva create designs and automate brand merchandise, the ownership and originality of the creations could come into question. There is an inherent risk that AI generated content might infringe on existing copyrights or leave a user open to having their products used, as the U.S. Copyright Office states that AI-generated content is not protected unless it is evident that a human contributed creatively (Lawton, 2024). If an AI generated logo closely resembles an existing trademark, it could result in costly litigation for Canva and the user defending their products. This issue highlights the importance of developing enhanced check and balance procedures to ensure the originality and IP compliance of this generated content. Further AI Research Canva should invest in enhancing the transparency of its AI systems. By focusing on explainable AI (XAI) providing insight as to how Canva’s AI leverages user data to make recommendations, moderate content, and automate the design process. The AI systems will become a more integral part of the platform, building trust among users who might be concerned with the accuracy and fairness of the AI generated content. XAI can also aid in detecting and mitigating biases within AI. By making the inner workings of AI systems more understandable, developers can identify any unintentional biases that may exist and take corrective measures to ensure fairness. This is particularly important for content moderation tools, where biased results can have significant ethical and legal implications. As mentioned earlier, AI systems have been known to disproportionately flag or suppress content from certain groups, leading to unfair treatment of the users (O’Flaherty, 2022). By integrating XAI, Canva can guarantee that its AI tools undergo regular audits and adjustments to avoid unintentional biases in the future.

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10 Enhancing the transparency of AI systems can improve user trust and encourage wider adoption of AI features on Canva’s platform. Users are more likely to engage with AI tools if they understand how these tools operate and how their data is being used. This increased engagement can lead to better user experiences and higher satisfaction rates. As governments and regulatory bodies around the world impose stricter regulations on AI and data usage, having XAI systems can help Canva stay compliant. With investment in research and development of XAI, Canva can address current ethical and legal concerns, positioning itself as a leader in responsible AI usage and setting a high standard for the industry (O’Flaherty, 2022, p. 25). Conclusion Canva’s use of AI has enhanced its business operations, allowing users to create high quality designs quickly and effectively. The platforms use of AI tools such as DALL-E, Magic Media, and Imagen has revolutionized the graphic design industry, making professional design accessible to a wide range of users. However, this use has also introduced an array of challenges related to the generated contents originality, data privacy, and ethical concerns. Addressing these issues is essential to maintaining user trust, and Canvas reputation. By continuously improving AI algorithms, developing enhanced protection measures, and ensuring ethical use of AI, Canva can reduce these challenges and continue to thrive. The potential implication of AI for Canva over the next 20 years is extensive. AI is likely to become even more integral to Canva’s operations, possibly utilizing tools such as personalized design, automated brand merchandise creation, and content moderation to further drive innovation. Advances in AI could enable even more sophisticated and creative design solutions, enhancing user experience and expanding the platform’s capabilities. However, the company must remain vigilant in addressing ongoing ethical and legal concerns, such as bias and

11 intellectual property issues. By prioritizing transparency, fairness, and user data protection, Canva can leverage AI’s full potential while upholding the values of creativity and trustworthiness. As AI technology evolves, Canva has the opportunity to lead the industry in responsible AI usage, setting a high standard for others to follow while improving their platform. Reference Doig-Cardet, C. (2022, April 11). Double the thumbs for even better recommendations. Netflix. https://about.netflix.com/en/news/two-thumbs-up-even-better-recommendations Engati Team. (2023, November 21). Predictive Analytics: Grow your business like Netflix! Engati Blog. https://www.engati.com/blog/predictive-analytics Holdsworth, J. (2024, June 6) What is NLP (Natural Language Processing)? IBM. https://www.ibm.com/topics/natural-language-processing Kitschke, Z. (2023). Home for every brand. Canva. https://www.canva.com/newsroom/news/home-for-every-brand/ Lawton, G. (2024, June 5). Is AI-generated content copyrighted? Content Management. https://www.techtarget.com/searchcontentmanagement/answer/Is-AI- generated-content-copyrighted O’Flaherty, M. (Director). (2022). Artificial intelligence and discrimination. In https://fra.europa.eu. Luxembourg: Publications Office of the European Union. https://fra.europa.eu/sites/default/files/fra_uploads/fra-2022-bias-in-algorithms_en.pdf Singh, S. (2019, 22 July). Case Study: Facebook (pg. 5). New America. https://www.newamerica.org/oti/reports/everything-moderation-analysis-how-internet-

12 platforms-are-using-artificial-intelligence-moderate-user-generated-content/case-study- facebook/ Staff in the Office of Technology. (2024, January 9). AI Companies: Uphold your privacy and confidentiality commitments. Federal Trade Commission. https://www.ftc.gov/policy/advocacy-research/tech-at-ftc/2024/01/ai-companies-uphold- your-privacy-confidentiality-commitments Swag Solution. (n.d.). Covver. https://www.covver.io/swag-solution Tiwari, A. (2023, December 6). Ethical considerations in AI-generated content creation. Content Bloom. https://www.contentbloom.com/blog/ethical-considerations-in-ai-generated- content-creation/ Twingate Team. (2024). What happened in the Canva data breach? Twingate. https://www.twingate.com/blog/tips/canva-data-breach#

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