This research aims to examine the ethical and social impacts of digital innovation through a critical literature review. Digital innovations, including the use of artificial intelligence, complex algorithms, and data-based technologies, have brought significant changes to various aspects of human life. However, a thorough understanding of several ethical and social challenges lies behind its benefits. This research identifies key issues related to privacy, data security, transparency, and accountability in digital technology, as well as social impacts, including the digital divide, changes in job structure, and implications for individual morality. Through a systematic approach to collecting and analyzing the literature, this study discovered that most existing research tends to prioritize technical aspects, often neglecting the long-term impact on society. Based on critical analysis, this research also highlights the need for a multidisciplinary approach and further studies that encompass social, ethical, and legal perspectives. We anticipate that the implications of this research will aid in the creation of more responsive policies and enhance the community's comprehension of the changes brought about by digital innovation.