PESTLE Analysis of Artificial Intelligence: The 6 Factors that Affect AI

PESTLEanalysis Team
PESTLEanalysis Team
Table of Contents
Table of Contents

This PESTLE analysis of artificial intelligence delves into the sociopolitical, economic, technological, and legal factors that inform its usage.

The use of Artificial Intelligence and big data technology has been a divisive topic across several industries, but there are rapid development and moves for adoption either way. While there are real-world uses and benefits to using AI to streamline standard systems and processes, there are several reservations about its utilization as well, chief of which is the discussion over ethics and the extent to which AI should be incorporated into everyday life. 

This PESTLE analysis of artificial intelligence delves into just that – the sociopolitical, economic, technological, and legal factors that inform its usage. 

Political factors of Artificial Intelligence

Most cases show that Artificial Intelligence can be a threat to democratic institutions. These threats can range from data-surveillance, privacy breaches, to election hacking, among many others. 

Through its machine learning and intelligence algorithms, it is no secret that fanatics and lobbyists alike have tapped Facebook as a platform for propaganda. A prime example of this is the spread of fake news and fake accounts proliferating Facebook since the 2016 elections in the Philippines, which brought President Rodrigo Duterte to his current designation. Another example are Facebook ad campaigns, which are tailored to "suit" the personalities of the people they are targeting, almost aggressively, considering the amount of information gathered within Facebook’s platform.  

Whether users like it or not, AI is here to stay. It is also set to make waves in politics over the coming years. Laws and regulations as they stand can use more safeguards to bolster the protection of users on platforms that use AI technology. Still, there are at least measures in place to ensure that a company's external data usage adheres to the law. 

Despite possible apprehensions to the application of AI, there is no denying that it can assist with consolidating institutions, procedures (in government or otherwise), cultures, and ideologies. Artificial Intelligence offers to ease administrative burdens if used correctly. 


Economic factors of Artificial Intelligence

In economics, AI is integral to consolidating aggregate data. Though not yet considered exacting, Artificial Intelligence holds promise over empowering predictive analytics in forecasting economics. On a smaller scale, there is use for it in portfolio optimization. On a larger scale, there is talk that it will become possible for businesses and organizations to implement AI techniques in understanding consumer behavior and have it down to a science.  

AI algorithms are already tracking how media headlines can influence the financial market. There are reports on how JPMorgan works with an algorithm that determines the effect President Donald Trump's tweets may have on the economy. 

There is also the possibility that institutions can use Artificial Intelligence to predict supply and demand changes to mitigate or even prevent the impact of economic downturns. These changes that AI can bring about can take economics to greater heights. 

Investments in AI are also set to go up over the coming years. COVID-19 impacted many aspects of how people conduct business or go about their daily lives and with it the accelerated adoption and utilization of AI overall

Social factors of Artificial Intelligence

Spending on research and development has gone up in the last decade, and there are more significant social implications on the horizon when it comes to adopting Artificial Intelligence into systems. 

More personalization is on the horizon as AI drives internet giants such as Google, Alibaba, and Amazon to deliver more tailored experiences to its users. It will allow providers to get to know clients, returning customers, and even prospects in a way they never have before. Some of the features Artificial Intelligence can deliver already exist but are likely to be further refined as innovation in the tech space moves forward. 

There is also talk of working alongside AI-powered tools and bots. Easing administrative and otherwise tedious tasks is a niche that Artificial Intelligence can fill, even in its early stages. 

Technology factors of Artificial Intelligence

AI provides a lot of time-saving and efficiency-related measures. With automation comes increased work output. However, many still cite the hurdles surrounding full digitization and implementation of AI technologies. There are serious operational risks attached to the rapid adoption of AI and machine learning into organizations. 

Thorough research and a proper strategy can mitigate these risks. Disruptive technology does not necessarily entail problems. It can even bolster innovation. If done with strategic goals in mind, it is highly possible to cut costs by utilizing Artificial Intelligence and eventually improving consumer outreach. 


As a component in the legal profession, Artificial Intelligence creates circumstances that allow industry professionals to automate the work done by entry-level lawyers or paralegals. In some cases, AI can even make contract reviews more accurate. Artificial Intelligence lets lawyers take more data-driven approaches to their practices. Overall, it offers efficiency. 

Some of the smaller tasks it can assist with include finding terms in large volumes or vast sets of data and documents. It is also capable of filling out certain forms when adequately implemented. 

There are also existing automated lawyer services or legal chatbots. They replace more clerical and customer-service oriented roles like taking down potential client information or compiling initial data for later submission. Automated lawyer services can also mean being able to dole out cursory and simple legal advice quickly and at a more regular cadence than waiting for a lawyer to become available. These legal chatbots are not meant to replace lawyers but are there to enhance their work. 

The future of Artificial Intelligence in legal services is bright, and embracing it means a more efficient law firm able to streamline their service lines and give existing clients and potential clients what they need. 


Environmental factors of Artificial Intelligence 

There has yet to be widespread discussion over the carbon footprint generated by Artificial Intelligence. The MIT Technological Review released a study in 2019 that determined the carbon footprint created by training or working with artificial intelligence using a single high-performance graphics card is roughly the same as taking a flight across the United States. It also showed that working on more sophisticated AI technology could even generate higher CO2 emissions. 

Dealing with the environmental cost of utilizing AI is a challenge, and the systems that support it must work toward making these improvements sooner rather than later. Mitigating the environmental effects of AI is compounded with present problems in the demands of the current climate crisis. 

The main issue in averting the environmental risks brought about by Artificial Intelligence is keeping data centers cool. While technology exists to reduce the amount of heat they produce—and warming the environment further-- the demand for processing and technology that networks and organizations require goes up every year, so much that cooling technology is rendered useless. 

There are developments in data center cooling which utilize local geography. In some cases, organizations choose to locate their facilities or data centers in colder climates such as Northern Europe to reduce the staggering amount of energy needed to cool these spaces.

The most effective means of combating the environmental impact of AI and disruptive technology is holding the technology industry accountable continuously as advancements and innovation move forward. 

There are as many advantages as risks when it comes to fully utilizing Artificial Intelligence and machine learning in organizations worldwide and maximizing the use of this technology without being exploited means doing the proper research and putting efficient risk management systems in place. With those safeguards, Artificial Intelligence usage can eventually seek to benefit all.

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