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FTC probes AI industry's investments and partnerships

FTC probes AI industry's investments and partnerships

On January 25, 2024, the Federal Trade Commission (FTC) launched an investigation into generative AI. As a result, major organizations, including the owners of ChatGPT and OpenAI, have received orders to disclose information relating to recent partnerships and other investment decisions.


What happened?

The agency issued orders under Section 6(b) of the FTC Act to five major companies: Alphabet, Inc.,, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc. This action scrutinizes recent investments and partnerships between these large corporations and generative AI companies. FTC Chair Lina M. Khan stressed the need for this inquiry to ensure fair competition and innovation in the AI industry. 

The orders specifically demand detailed information about the companies' investments or partnerships, their strategic rationale, the practical implications of these relationships, and their competitive impact. This investigation is a significant move by the FTC to gain a deeper understanding of how these partnerships and investments might influence the competitive landscape in AI, potentially shaping future regulatory actions and policies.


In the know

Section 6(b) of the FTC Act authorizes the FTC to conduct in-depth studies and gather information on business practices across various industries. This provision allows the FTC to issue orders to companies, compelling them to provide detailed reports and data about their operations. 

Section 6(b) aims to assist the FTC in thoroughly understanding the market dynamics, trends, and practices that could impact competition and consumer rights. When the FTC exercises this authority, it investigates how businesses conduct themselves in the marketplace, assesses whether their practices are fair and competitive, and determines if any regulatory or enforcement actions are necessary.

See also: HIPAA and the FTC Act


What was said

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity,” FTC Chair Lina M. Khan said in the press release. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

See also: OCR and FTC publicly release warning letter regarding pixels


Why it matters

The WHO's recent report discusses regulating AI in healthcare. It brings to attention the broader challenges and potential risks associated with AI in various sectors, including ethical concerns, data privacy, and the amplification of biases. As the WHO identifies key focus areas like transparency, risk management, data quality, and privacy protection in healthcare AI, it brings to attention the need for oversight in all AI applications. The involved companies are required to respond within 45 days of receiving the order, marking an important moment in the regulation and oversight of the AI sector.

See also: WHO releases publication outlining considerations for AI in healthcare

See also: HIPAA Compliant Email: The Definitive Guide



What implications could this investigation have on the AI industry?

The outcome of this investigation could lead to regulatory actions or policy changes, influencing how AI technologies are developed and commercialized in the future.


Has the FTC taken similar actions in the past?

The FTC has a history of scrutinizing big tech companies for anti-competitive behaviors and privacy violations, but this investigation significantly focuses on the AI sector specifically.


What does this mean for consumers and the tech industry?

This investigation could lead to more ethical and secure AI technologies for consumers. For the tech industry, it could result in increased oversight and potential changes in how AI partnerships and investments are handled.







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