The Federal Trade Commission is taking aim at ChatGPT at a time when the agency has been slapped down by the courts on multiple occasions, and chair Lina Khan is under heavy fire from Republicans.
The Federal Trade Commission has opened an expansive investigation into OpenAI, probing whether the maker of the popular ChatGPT bot has run afoul of consumer protection laws by putting personal reputations and data at risk.
The agency this week sent the San Francisco company a 20-page demand for records about how it addresses risks related to its AI models, according to a document reviewed by The Washington Post. The salvo represents the most potent regulatory threat to date to OpenAI’s business in the United States, as the company goes on a global charm offensive to shape the future of artificial intelligence policy.
Analysts have called OpenAI’s ChatGPT the fastest-growing consumer app in history, and its early success set off an arms race among Silicon Valley companies to roll out competing chatbots. The company’s chief executive, Sam Altman, has emerged as an influential figure in the debate over AI regulation, testifying on Capitol Hill, dining with lawmakers and meeting with President Biden and Vice President Harris.
But now the company faces a new test in Washington, where the FTC has issued multiple warnings that existing consumer protection laws apply to AI, even as the administration and Congress struggle to outline new regulations. Senate Majority Leader Charles E. Schumer (D-N.Y.) has predicted that new AI legislation is months away.
The FTC’s demands of OpenAI are the first indication of how it intends to enforce those warnings. If the FTC finds that a company violates consumer protection laws, it can levy fines or put a business under a consent decree, which can dictate how the company handles data. The FTC has emerged as the federal government’s top Silicon Valley cop, bringing large fines against Meta, Amazon and Twitter for alleged violations of consumer protection laws.
The FTC called on OpenAI to provide detailed descriptions of all complaints it had received of its products making “false, misleading, disparaging or harmful” statements about people. The FTC is investigating whether the company engaged in unfair or deceptive practices that resulted in “reputational harm” to consumers, according to the document.
The FTC also asked the company to provide records related to a security incident that the company disclosed in March when a bug in its systems allowed some users to see payment-related information, as well as some data from other users’ chat history. The FTC is probing whether the company’s data security practices violate consumer protection laws. OpenAI said in a blog post that the number of users whose data was revealed to someone else was “extremely low.”
OpenAI and the FTC did not immediately respond to requests for comment sent on Thursday morning.
News of the probe comes as FTC Chair Lina Khan is likely to face a combative hearing Thursday before the House Judiciary Committee, where Republican lawmakers are expected to analyze her enforcement record and accuse her of mismanaging the agency. Khan’s ambitious plans to rein in Silicon Valley have suffered key losses in court. On Tuesday, a federal judge rejected the FTC’s attempt to block Microsoft’s $69 billion deal to buy the video game company Activision.
The agency has repeatedly warned that action is coming on AI, in speeches, blog posts, op-eds and news conferences. In a speech at Harvard Law School in April, Samuel Levine, the director of the agency’s Bureau of Consumer Protection, said the agency was prepared to be “nimble” in getting ahead of emerging threats.
“The FTC welcomes innovation, but being innovative is not a license to be reckless,” Levine said. “We are prepared to use all our tools, including enforcement, to challenge harmful practices in this area.”
Khan, quite frankly, has been less than effective in battling Big Business so far, having lost on a number of antitrust court battles involving everything from Facebook to Altria to this week's loss to stop Microsoft from buying gaming giant Activision Blizzard.
I don't exactly have a lot of faith in her or the agency to stop ChatGPT from running rampant.
Still, she's the FTC chair we have, and I just hope the agency is able to rein in ChatGPT and its competitors before the thousands of layoffs becomes, say, millions.
With the Hollywood writers' strike now turning into a full blown actors' strike, you'd better believe entertainment companies are going to be moving quickly on using AI to replace as much creative talent as possible and as soon as they can, and that's only going to be the start.
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