Use of Artificial Intelligence in the digital economy sector: opportunities and challenges

Technological developments are increasingly rapid and still make everyone always pay attention to developments.

Technological developments are increasingly rapid and still make everyone always pay attention to developments. At the beginning of the emergence of technology known as the first industrial revolution which was started by the people of Europe and the United States, at that time the manufacturing industry they formed experienced changes in the way they worked. Changes in the manufacturing process which initially used human power and then switched to using machines or mechanical systems. Until then moving on to the third industrial revolution. where in this revolutionary phase. We have been shown significant technological advances. The transition from mechanical and analog devices to digital electronic devices. This phase also marked the beginning of mass production of electronic components such as transistors and integrated circuits.

Now technological developments are much better than before. Being in the fourth industrial revolution phase or what is known as Industry 4.0 means that everyone can easily get access to technology that they can use in their daily lives. We can now use technologies such as the Internet of Things (IoT), cloud computing, autonomous vehicles, and even artificial intelligence. This technology is the result of innovation that can be utilized in developing the economic sector. As we know, the technology currently being developed can be a tool for processing data and can then provide new objectives to users such as business value. Technological developments then provide new opportunities for entrepreneurs to take a role in developing their businesses. This is then believed by the public to be one manifestation of the digital economy which is currently a new economic trend in world society.

Economy Digital was created by Tapscott Don in 1994. The digital economy is the adoption of technology in the economic sector so it has a broad impact on society and the country. The ever-advancing technological developments mean that the term digital economy continues to have new meanings. Today’s digital economy can be interpreted as business conducted through virtual media, the creation and exchange of value, transactions, and relationships between mature economic actors using internet media. The digital economy can be seen as an economy that is based on the use and empowerment of digital information and communication technology. If we look at the development trend of the digital economy in the Southeast Asia region, at least we can classify several things that are important in developing the digital economy, such as mobile internet, big data internet of things, automation of knowledge, and cloud technology (Aprilia et al., 2021).

The development of the digital economy certainly creates a transition in certain sectors. In the business sector, new business models are emerging that allow entrepreneurs to develop their businesses using currently developing technology. The development of this business model can be used as an example of how the transition from a classical economy is shifting towards a digital economy. Of course, not all entrepreneurs can make this transition due to several factors such as limited abilities and knowledge of technology.

The classical economic paradigm that has been used in society is indeed one of the challenges of transformation to a digital economy. There are at least four key factors that lead to the transformation towards a digital economy. The first is technological advancements. The use of technology such as the internet, cloud computing, and mobile technologies will create new foundations for economic activity in society. The second is data analytics. The use of data is important in the digital economy. The data obtained can be processed and analyzed into several data so that it can help determine business strategies and determine future business decisions. Third is the digitalization of products and services. If goods and services can be digitized, these goods and services will be easier to consume and distribute to society. Fourth, changing consumer behavior. Consumers have a huge desire for convenience, customization, and more personalized experiences (Diakopoulos, 2021).

Artificial intelligence on e-commerce

If we want to see how the digital economy is developing massively, we can look at one of the business sectors such as e-commerce. E-commerce is a business sector that utilizes information technology to increase sales and business efficiency of goods and services. E-commerce can be an option in society because it offers the convenience of shopping from home without having to visit a mall or shop. E-commerce also provides various choices so that it gives people many options when shopping. Easy accessibility is also an important point in using e-commerce. For some people who live in suburban areas, e-commerce is an important platform to use.

E-commerce is currently making innovations to make it easier for its customers to carry out shopping activities. The use of Artificial Intelligence is very important in carrying out this innovation. E-commerce platforms use artificial intelligence as a tool for personalization and recommendation engines. This system uses machine learning algorithms to analyze customer data and make various recommendations that are personalized with customer data. This data is obtained from purchase history and browsing history previously carried out by a customer. The e-commerce platform can send its recommendations via the e-commerce platform’s “home” screen or customer email (Behera et al., 2020).

Apart from providing product recommendations to customers, in e-commerce platforms, some chatbots can help customers communicate online. Chatbots are used to carry out customer service activities, answer frequently asked questions and transactions via e-commerce platforms. This feature can be an option to get customer support quickly and comfortably. Artificial intelligence is also used in fraud detection. With artificial intelligence, e-commerce can identify and take preventive action to avoid the possibility of fraudulent activity occurring on their platforms(Porwal & Mukund, 2019). If fraud occurs on one platform, the losses that then arise will not only come from financial losses but will also have a huge impact on reputation and other legal problems that will ensnare the platform. In carrying out fraud detection, e-commerce uses machine learning algorithms, natural language processing, and video and image analysis (Shaji & Panchal, 2017).

Artificial intelligence can perform sentiment analysis. Sentiment analysis is important for a business because it can find out customer opinions about the business they run. This analysis will provide input to sellers regarding the way they sell, looking at customer attitudes toward the goods and services they provide. In the end, this analysis can be a factor in forming decisions for existing businesses(Vanaja & Belwal, 2018).

Challenges in using Artificial Intelligence in the digital economic sector

In terms of e-commerce, sellers and customers gain many benefits. This gives rise to greater economic movement in society. The presence of artificial intelligence in e-commerce helps platforms in carrying out daily operations. However, in using artificial intelligence several things need to be considered by the public. Artificial intelligence currently still faces ethical and bias issues. Artificial intelligence is a machine that can help humans in everyday life. However, these machines can be used based on the information we give them. When the operator provides incorrect information, of course, the results obtained will then be wrong. This certainly requires a high level of responsibility if you want to use artificial intelligence. In addition to ethical issues and bias, there are other issues such as privacy and surveillance efforts. A person’s activities can be monitored using artificial intelligence. This happens because the data that we previously provided to the machine was then analyzed. The results of this analysis can provide information about our daily patterns. The responsibility ultimately lies with each technology user. As users, we must be aware of the privacy of the data we have. Privacy data could be leaked due to data hacking. However, several countries currently pay attention to personal data.

Triokta Pela
Triokta Pela
Master of International Relations student with an interest in digital transformation and competitiveness studies at gadjah mada University, indonesia. My research focuses include digital transformation, cybersecurity, global technology competition and regional digital policy.