Shadow AI is the AI-era version of shadow IT, with one difference that matters: the tools handle company data by default, and several of them retain it.
Where it actually shows up
Most teams look for chatbot traffic and stop there. In practice the model-download channel is often larger by volume, with traffic to model hosting and experiment-tracking services outweighing consumer chatbots. Applications holding their own provider API keys are the quietest category, because they never pass through a gateway and never appear in a proxy log.
How to find it
Compare network egress to model providers against your gateway's own logs. The delta is your ungoverned traffic
List every place a raw provider API key can be issued, and who can issue one
Check cloud posture tooling for agent workloads nobody registered
Blocking is rarely the answer on its own. Shadow AI appears because the sanctioned path is slower than the unsanctioned one, so the durable fix is making the approved route the easiest route.