Legal Risks of Corporate Artificial Intelligence Use

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An Assessment of Data Protection, Confidentiality and Liability for Businesses

Publication Date: October 2026

Introduction

The increasing adoption of artificial intelligence technologies in the business environment is driving a significant transformation in corporate operations. Generative artificial intelligence applications, in particular, are being used in numerous areas, including contract drafting, legal research, data analysis, customer services, human resources management and corporate reporting.

While these technologies offer advantages in terms of efficiency, speed and cost, they also give rise to significant legal risks concerning personal data protection, confidentiality of trade secrets, intellectual property rights and legal liability.

For companies, the fundamental question is no longer whether artificial intelligence technologies should be used, but rather under which legal and corporate safeguards their use should be governed.

1. Personal Data Protection and Risks under the KVKK

One of the principal legal risks associated with the corporate use of artificial intelligence is the transfer and processing of personal data through AI systems.

Entering the personal data of employees, customers or business partners into artificial intelligence tools may constitute personal data processing under Turkish Personal Data Protection Law No. 6698 (the “KVKK”).

In particular, the use of artificial intelligence tools to analyse employee résumés, classify customer requests or review contracts may involve the transfer of personal data to third-party service providers.

In this context, companies should consider the following:

Identifying an appropriate legal basis for personal data processing.
Complying with the principle of data minimisation.
Reviewing the data processing and retention practices of the AI systems being used.
Assessing the requirements of Article 9 of the KVKK where international transfers of personal data are involved.
Implementing appropriate technical and organisational security measures.

The Turkish Personal Data Protection Authority has also addressed the data protection implications and corporate risks associated with generative AI systems in its publications concerning generative artificial intelligence and personal data protection, including guidance on the use of generative AI tools in workplaces.

Accordingly, companies should assess not only the AI software formally adopted within their organisations but also AI applications independently used by employees, taking into consideration broader corporate information security requirements.

2. Trade Secrets and Corporate Confidentiality

Another significant risk associated with the use of artificial intelligence concerns the disclosure of confidential corporate information to third-party systems.

Uploading draft agreements, pricing models, financial statements, customer lists or strategic business plans to AI platforms may compromise the confidentiality of such information.

In particular, the terms of use of third-party AI services may contain provisions concerning the storage of uploaded information or its use for service improvement and model training.

Companies should therefore carefully review the contractual commitments, confidentiality obligations and data usage policies of AI service providers.

Key measures for protecting corporate confidentiality include defining the categories of information that may be entered into AI systems, restricting the disclosure of confidential documents and establishing internal rules governing employee use of AI tools.

It is also important to assess whether existing non-disclosure agreements and information security policies adequately address the risks arising from artificial intelligence.

3. Accuracy of AI-Generated Outputs and Legal Liability

Generative artificial intelligence systems may produce information that appears technically coherent and persuasive but is inaccurate, incomplete or misleading.

This risk is particularly relevant to legal assessments, financial analysis, regulatory research and contract drafting.

For example, a contractual provision generated by an AI system may conflict with applicable legislation, or a commercial decision based on an inaccurate AI-generated legal assessment may expose a company to contractual liability and potential claims for damages.

The use of artificial intelligence does not, in itself, relieve companies or individuals of their obligations and liabilities under applicable laws and contractual arrangements.

Accordingly, AI-generated outputs should be reviewed and verified by appropriately qualified professionals, particularly where they may have legal, financial or operational consequences.

Companies should also establish clear internal procedures specifying the circumstances in which AI-assisted decisions require human review and approval.

4. Artificial Intelligence in Employment Law and Human Resources

Artificial intelligence is increasingly being integrated into human resources processes.

AI-powered systems may be used to evaluate résumés, screen job applicants, analyse employee performance and support workforce planning.

However, such applications may give rise to legal risks concerning personal data protection, non-discrimination, equal treatment obligations and employees’ fundamental rights.

For instance, an AI system used in recruitment that systematically disadvantages certain groups of applicants may lead to discrimination claims under applicable legislation.

Similarly, the continuous monitoring of employee performance through AI-based systems must be assessed in light of the principles of proportionality and personal data protection.

Human resources applications involving artificial intelligence should therefore be transparent, auditable and based on objective criteria.

In particular, decisions that may have significant consequences for employees should not be left exclusively to automated assessments. Appropriate human oversight mechanisms should be established.

5. Intellectual Property Rights and AI-Generated Content

Texts, images, software code and designs generated through artificial intelligence systems raise a number of questions under intellectual property law.

The legal status of AI-generated content, authorship, rights of use and potential infringement of third-party rights are particularly significant considerations.

The extent to which companies may acquire or exercise rights over advertising materials, corporate visuals, software components or other commercial content created using AI must be assessed on a case-by-case basis.

Furthermore, the licensing arrangements and terms of use of the relevant AI tools may impose restrictions on the commercial exploitation of generated content.

Companies should therefore evaluate both the contractual terms of AI service providers and the intellectual property rights of third parties when using artificial intelligence for content creation.

6. The European Union Artificial Intelligence Act and Its Implications for Turkish Companies

The European Union Artificial Intelligence Act (the “EU AI Act”) establishes a risk-based regulatory framework for artificial intelligence systems.

The Regulation prohibits certain AI practices and introduces obligations concerning transparency, risk management, human oversight and technical requirements for specified categories of AI systems.

The EU AI Act has applied generally since 2 August 2026. However, Regulation (EU) 2026/1744 amended its implementation timetable. Subject to specified exceptions, the requirements laid down in Chapter III, Sections 1 to 3, will apply from 2 December 2027 to high-risk AI systems classified under Article 6(2) and Annex III, and from 2 August 2028 to high-risk AI systems classified under Article 6(1) and Annex I.

The EU AI Act is not relevant exclusively to companies established within the European Union.Under certain conditions, companies based in Türkiye may also fall within its scope, particularly where they place AI systems on the European Union market or make AI-generated outputs available for use within the European Union.

Accordingly, companies engaged in international business activities, providing services to EU customers or developing AI-based products should assess the potential application of the EU AI Act to their specific operations.

7. Establishing a Corporate Artificial Intelligence Policy

Managing the legal risks associated with artificial intelligence requires more than implementing technical safeguards.

Companies should consider adopting a practical and enforceable Corporate Artificial Intelligence Use Policy governing the use of AI technologies within their organisations.

Such a policy may address:

Identifying AI tools authorised for use within the organisation.
Defining categories of information that must not be entered into AI systems or may only be shared under specified conditions.
Establishing rules for the protection of personal data and trade secrets.
Setting out review and approval procedures for AI-generated outputs.
Providing employee training and awareness programmes.
Reviewing contracts with AI service providers from a legal risk perspective.
Integrating AI governance into existing information security and KVKK compliance frameworks.

This approach helps transform artificial intelligence from a collection of individual employee practices into a structured and manageable corporate process.

Conclusion and Assessment

The integration of artificial intelligence into corporate operations presents significant opportunities for businesses. At the same time, it requires companies to reassess their existing legal obligations and risk management practices.

Particular attention should be paid to identifying and addressing potential risks relating to personal data protection, trade secrets, intellectual property rights, employment law and contractual liability.

Adopting clear internal rules on artificial intelligence, providing appropriate employee guidance and updating relevant agreements and corporate policies can contribute to reducing legal exposure.

A sustainable approach to corporate AI adoption requires companies to balance the benefits of technological innovation with legal compliance, accountability and information security.

This article has been prepared for general informational purposes only and does not constitute legal advice. Legal assessments relating to specific circumstances should be conducted in accordance with applicable legislation and the particular facts of each case.