The dark side of artificial intelligence in service: The “watching-eye” effect and privacy concerns

The potential privacy issues associated with artificial intelligence (AI) in service delivery require careful attention but remain understudied. Through the lens of the watching-eye effect, this research examines the impact of AI on customers’ uneasiness through the mediation of privacy concerns. Study 1 confirms the watching “camera eye” effect of AI devices. Moreover, it identifies the service setting as a contextual boundary condition, wherein this effect holds in a private setting but not in a public setting. Study 2 further indicates that when there is a built-in camera, the “physical eye” in an AI device matters; humanoid AI devices trigger stronger privacy concerns than nonhumanoid AI devices and tablets, leading to greater uneasiness. This impact affects both genders but is more pronounced among women. This research extends the AI literature in service and business ethics and offers insight into managing personal information and privacy issues effectively.