FTC launches investigation into OpenAI over potential regulatory violations

July 14, 2023


The US Federal Trade Commission (FTC) has initiated an investigation into OpenAI, probing whether the company breached consumer protection laws by scraping public data and disseminating false information via ChatGPT.

In a 20-page letter, the FTC requested OpenAI to provide comprehensive information about its AI technology, products, clients, privacy safeguards, and data security measures. The investigation was first reported by the Washington Post, but an FTC spokesperson declined to comment.

The FTC document indicated that the agency is exploring whether OpenAI “engaged in unfair or deceptive privacy or data security practices” or any practices harmful to consumers.

OpenAI founder Sam Altman voiced his disappointment on Twitter regarding the investigation’s disclosure in a “leak,” arguing that it would “not help build trust.”

However, he affirmed the company’s commitment to cooperating with the FTC, adding, “It’s super important to us that our technology is safe and pro-consumer, and we are confident we follow the law. We protect user privacy and design our systems to learn about the world, not private individuals.”

This FTC investigation marks a new regulatory challenge to the AI industry.

Other issues facing the sector include a lawsuit by comedian Sarah Silverman and two other authors against OpenAI and Meta, alleging copyright infringement. OpenAI also faces libel cases regarding outputs that have implicated some in crimes they didn’t commit. 

Suresh Venkatasubramanian, a computer scientist at Brown University and former assistant director for science and justice at the White House Office of Science and Technology Policy, commented, “It’s the fear of these systems and our lack of understanding of them that is making everyone have a collective freak-out. This fear, which is very unfounded, is a distraction from all the concerns we’re dealing with right now.”

AI in the spotlight

AI’s impacts are being felt right now – both positively and negatively. This is a technology perched on a knife edge. 

The FTC’s investigation into OpenAI was announced shortly after a tense House Judiciary Committee hearing. FTC Chair Lina Khan was confronted by Republican lawmakers who accused her of being too aggressive in pursuing technology companies for alleged misconduct. 

The FTC has been labeled as a ‘rogue agency,’ and Khan herself has been the center of an abuse of power probe following actions over Meta’s acquisition of VR company Within. 

Khan has also been criticized for “harassing” Twitter since its acquisition by Elon Musk and indiscriminately suing large tech firms. 

In response, Khan argued that this is a just cause, and critics of big tech’s antics will agree. 

Governments and regulatory bodies are sending out mixed messages on AI. They want to use it to innovate and fuel growth but control it to prevent harm.

Are the two compatible? Time will tell.

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Sam Jeans

Sam is a science and technology writer who has worked in various AI startups. When he’s not writing, he can be found reading medical journals or digging through boxes of vinyl records.


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