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The Federal Trade Commission (FTC) recently submitted comments to the US Copyright Office as part of the Office’s notice of inquiry examining copyright issues related to artificial intelligence.
The agency’s comments largely focused on two areas: potential threats to competition from AI, and copyright.
Competition: The FTC cautioned that “the rapid development and deployment of AI also poses potential risks to competition” for several reasons:
Copyright: The agency noted its interest around potential unfair practices involving AI:
The agency noted that the evolution of the fair use doctrine “could influence the competitive dynamics of the markets for AI tools and for products with which the outputs of those tools may compete.” For example, “conduct that may violate the copyright laws–such as training an AI tool on protected expression without the creator’s consent or selling output generated from such an AI tool, including by mimicking the creator’s writing style, vocal or instrumental performance, or likeness — may also constitute an unfair method of competition.” Likewise, “conduct that may be consistent with the copyright laws nevertheless may violate Section 5.”
The FTC’s comments highlight how AI intersects with many complex policy and legal issues beyond copyright law. The agency states that it has already been examining risks associated with AI, including around consumer privacy, automation of discrimination and bias, deceptive practices, and imposter schemes.
What does this mean for companies using generative AI tools? Potential FTC scrutiny of AI usage could come in multiple forms:
If the FTC plans to use its authority to regulate AI-related areas that could be deemed unfair, deceptive, or anti-competitive (including by using its expanded interpretation of its Section 5 powers to go after “unfair methods of competition” more broadly), the FTC could profoundly shape the AI landscape. For example, in its pending antitrust complaint against Amazon, the FTC alleged that Amazon’s pricing algorithm “is an unfair method of competition in violation of Section 5” because it allegedly “raised prices by manipulating other online stores’ pricing algorithms into matching Amazon’s increases in the prices offered to shoppers.”
Given the aggressive stance of FTC Chairwoman Lina Khan, companies should take a proactive approach towards using generative AI. Steptoe’s artificial intelligence and antitrust groups can assist with an audit of AI internal practices (including consent, transparency, data handling, and competition issues).
