FTC Submits Comments on AI, Copyright, Consumer Protection, and Competition
November 30, 2023
Privacy Plus+
Privacy, Technology and Perspective
This week, let’s consider the Federal Trade Commission’s (FTC) recent submission of a comprehensive comment to the U.S. Copyright Office, addressing the myriad of challenges and opportunities presented by Artificial Intelligence (AI) in the context of copyright law, consumer protection, and competition. A link to the comment follows:
https://www.ftc.gov/system/files/ftc_gov/pdf/p241200_ftc_comment_to_copyright_office.pdf
Let’s look at the key points raised by the FTC, and try to shed light on the complex interplay between evolving AI technologies and existing legal frameworks.
The FTC's Stance on AI:
The FTC begins by emphasizing its role in promoting fair competition and protecting consumers in an economy increasingly influenced by AI. Laws that prohibit unfair methods of competition, deception, collusion, or discrimination apply to AI. The FTC acknowledges the rapid deployment of AI across many sectors, including entertainment, healthcare, and finance, highlighting both the transformative potential and the risks associated with AI technologies.
Consumer Protection and Competition Concerns:
The FTC identifies several consumer protection and competition issues related to AI:
Privacy Violations: The use of personal data in AI training, such as voice recordings and video footage, can infringe on consumer privacy rights.
Bias and Discrimination: AI algorithms risk perpetuating discrimination and bias. In effect, AI can “automate” bias, and therefore requires careful oversight.
Deceptive Practices: The FTC is vigilant against deceptive AI claims and the misuse of AI in marketing and other consumer interactions. Its focus is on the risk that AI may “turbocharge” deceptive practices, imposter schemes, and other types of scams.
Market Dominance: The FTC is concerned that large tech firms may use AI to entrench their market positions, raising competition concerns.
Unfair Methods of Competition: AI technologies could facilitate collusive behavior or manipulate market outputs, warranting FTC intervention under Section 5 of the FTC Act.
Copyrights and AI-Generated Content:
The FTC discusses the challenges in delineating human creation from AI-generated content, emphasizing the potential for consumer deception and the undermining of creators' competitive abilities. The agency also explores liability issues arising from AI-generated content, considering factors like the use of pirated training data and the need for transparency in AI model development.
FTC Roundtable: Creative Economy and Generative AI:
A critical component of the FTC's comment is the inclusion of a roundtable discussion transcript, which offers firsthand insights from creative professionals on how generative AI is reshaping various industries. Key themes from the roundtable include:
Unauthorized Use of Creative Work: Concerns about AI models being trained on content without creators' consent, often sourced from pirated materials: “We've already heard significant concern about how these technologies could virtually overnight significantly disempower creators and artists who may watch their life's creation be appropriated to models over which they have no control.”
Inadequate Consent and Control Mechanisms: The need for more effective frameworks to allow creators to control the use of their work in AI training: “Informed consent and compensation addresses a lot of the most important ethical questions attached to how generative AI works.”
Credit and transparency: A call for clearer disclosures about the use of training data and the provenance of AI-generated content: “Create obligations for all AI companies to disclose what data sets and works they use to train the systems.”
Potential Benefits of AI: Acknowledgment that ethically used AI can offer significant opportunities for the creative community.
Power Imbalance: A noted disparity in negotiating power and resources between creators and entities using their data.
A link to the transcript follows: https://www.ftc.gov/system/files/ftc_gov/pdf/creative-economy-and-generative-ai-transcript-october-4-2023.pdf
The FTC’s Conclusion:
The FTC's comment underscores the need for vigilance as AI technologies continue to evolve. While acknowledging the potential of AI to revolutionize industries, the FTC reaffirms its commitment to using its authority to safeguard consumer interests and maintain competitive markets. This ongoing dialogue between regulatory bodies, creators, and the tech industry is crucial in shaping a future where AI is used responsibly and ethically.
Our thoughts:
It seems that a collaborative approach to AI regulation between the EU and other democracies is crucial for setting consistent, ethically grounded, and effective standards. Certainly, the regulation of AI is a global concern that transcends national boundaries.
Additionally, there seems to be a continued fog when it comes to regulating AI technology versus regulating its use or more precisely, its misuse. These two issues are interconnected but distinct. One involves setting standards for the technology itself (addressing data privacy, security, intellectual property and ownership, transparency and explainability, and ethical design and bias prevention), while the other addresses the broader societal and ethical implications of AI’s application in various domains (such as the question of who is responsible when consumers are deceived, surveilled, or otherwise harmed by AI). The FTC seems well-situated to deal with the latter, but we question its authority to address the former.
Further, while the United States needs this rapid technological advancement to remain competitive, and in view of the fact that AI development has already outpaced regulation and is accelerating, we think it would be prudent for the FTC to focus first on regulating the application or misapplication of AI, not least because that directly impacts consumers. But the FTC (and other regulators) should not wait long to focus on dealing with high-risk AI systems and their impact on fundamental rights, our elections, and our very lives.
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Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet, and technology. Open the Future℠.