It doesn't literally lose information - since the information inputs are sensory, and they can be archived as well as ever.

It loses information about human values, replacing them with noise in regions where a human would need to "think things over" to know what they think... unless, as I said earlier, you simply build the entire human metacognitive architecture into your utility function, at which point you have reduced nothing, solved nothing, accomplished nothing, except to multiply the number of entities in your theory.