The Federal Trade Commission (FTC) has taken a significant step in regulating the burgeoning field of artificial intelligence (AI). On November 21, 2023, the Commission approved an omnibus resolution empowering the use of compulsory process, akin to subpoenas, in nonpublic investigations of products and services utilizing or claiming to employ AI, including generative AI.
This resolution enables FTC staff to issue civil investigative demands (CIDs) for documents, information, and testimony that FTC staff can then use for consumer protection and competition investigations involving AI. The scope of AI under this resolution is broad, covering machine-based systems capable of making influential predictions, recommendations, or decisions, and includes generative AI that can autonomously generate synthetic content in the form of images, videos, audio, and text seemingly created by humans.
The FTC describes its initiative as a response to AI's potential misuse in fraud, deception, privacy infringements, and unfair practices. The FTC believes these potential uses pose significant risks to consumers, potentially violating the FTC Act and other laws. Additionally, in its explanation for why these new powers are justified, the FTC noted AI's impact on competitive landscapes, especially when key technologies or inputs are monopolized.
This decisive move by the FTC, effective for the next decade, underscores the government's perception of a need for vigilant oversight in the rapidly evolving AI sector, particularly in aspects of consumer protection and fair competition.
In light of the FTC's enhanced scrutiny of products and services utilizing AI, companies employing AI technologies should proactively engage with legal counsel. Understanding the intricacies of the FTC's regulatory policies on AI and aligning AI practices with regulatory expectations is critical. Counsel can provide invaluable guidance in ensuring compliance, thereby mitigating the risks of FTC investigations. By working with legal counsel experienced in dealing with FTC regulations, companies can navigate this new terrain with confidence, ensuring their innovative use of AI aligns with legal standards and ethical norms.
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