The Influence of AI Ethics Perception and Privacy Risk on Consumer Trust and Intention to Use AI-Based Recommendation Systems in Indonesian E-Commerce

Abstract

The digital transformation in e-commerce has driven the adoption of AI-based recommendation
systems to enhance personalization and user experience. However, the use of such technologies
also raises concerns regarding algorithmic ethics and consumer data privacy. Few studies have
examined these issues in emerging markets like Indonesia, where digital literacy and data
protection are still developing. This study aims to examine the influence of perceived AI ethics
and privacy risk on consumer trust and their intention to use AI-powered recommendation
systems in the Indonesian e-commerce context. A quantitative approach was employed by
surveying 250 active users of e-commerce platforms. Data was analyzed using Partial Least
Squares Structural Equation Modeling (PLS-SEM). The findings indicate that perceived AI
ethics positively and significantly influences consumer trust, while privacy risk has a significant
negative effect. Furthermore, trust partially mediates the relationship between both independent
variables and usage intention. These findings highlight the importance of transparency and data
security in AI system designed to foster consumer trust and long-term engagement. The study
extends trust theory by confirming its role in AI-driven commerce and applies privacy calculus
to explain user decisions.