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FTC's Lina Khan warns Big Tech over AI

Speaking at 成人大片, the Federal Trade Commission chair said antitrust authorities are paying close attention to moves by the private sector to propel artificial intelligence.

Federal Trade Commission Chair Lina Khan delivered a sharp warning to the technology industry in a speech at 成人大片 on Thursday: Antitrust enforcers are watching what you do in the race to profit from artificial intelligence.

鈥淢uch is uncertain about what the future of this technology will look like,鈥 said Khan. 鈥淏ut the FTC has made clear that there is no exemption from the [antitrust] laws on the books.鈥 The agency, she continued, 鈥渨ill be clear-eyed in ensuring that claims of innovation are not used as cover for lawbreaking.鈥

Speaking at the 成人大片 Institute for Economic Policy Research (SIEPR) on Nov. 2, Khan said the agency is seeing signs of market concentration in AI. She said the FTC is examining Big Tech鈥檚 role supplying key tools, like access to cloud infrastructure or data processing units, that AI startups and other developers need. She said the FTC is particularly worried about the prospect of 鈥渆xcessive鈥 prices and 鈥渃oercive鈥 demands on buyers.

FTC Chair Lina Khan speaks at 成人大片 on Nov. 2 at an event co-sponsored by the 成人大片 Institute for Economic Policy Research (SIEPR) and 成人大片 Graduate School of Business. (Photo credit: Ryan Zhang)

鈥淭here鈥檚 a risk that some of the existing incumbents would use control over those inputs to undermine innovation and competition,鈥 Khan said. Another concern: the turbocharging of AI-enabled scams without a clear 鈥渓iability regime鈥 for how to punish fraudsters.

Khan鈥檚 prepared remarks and replies to audience questions at the event 鈥 which was co-sponsored by SIEPR, 成人大片 , and its Business, Government, and Society Initiative 鈥 touched on a range of hot-button issues confronting the FTC, whose mandate is to protect consumers from unfair competition and deceptive practices. Among the topics covered were the agency鈥檚 bid to outlaw non-compete clauses in employment contracts, its efforts to crack down on drug pricing practices, and a proposal released this summer along with the Department of Justice that would toughen guidelines for reviewing the antitrust implications of proposed mergers.

Khan鈥檚 成人大片 visit came at an especially momentous time for the FTC, noted Mark Duggan, The Trione Director at SIEPR, in introducing Khan to the packed room of business leaders, 成人大片 students, researchers, and alumni.

Under Khan鈥檚 leadership, the FTC has boldly taken on some of the country鈥檚 biggest names in business while testing a new approach to antitrust enforcement after what her supporters say has been decades of weak government oversight. Her most high-profile challenge to business practices yet came in September when the commission and 17 states sued Amazon for allegedly abusing its e-commerce power to stifle competition, thereby harming consumers and other online retailers. The lawsuit is the FTC鈥檚 largest antitrust case since taking on Microsoft in the 1990s.

鈥楩iring on all cylinders鈥

While calling 成人大片 a 鈥渒ey catalyst of research and innovation,鈥 Khan focused on a single message throughout the hour-long event: Antitrust enforcement going back to the 1950s and in the decades since has been a crucial driver of the breakthrough innovations that have allowed the U.S. to 鈥渓ead as an economic powerhouse.鈥

Antitrust watchdogs under President Joe Biden are intent on following a playbook that clearly works, she said.

鈥淭he FTC is firing on all cylinders,鈥 she said.

FTC Chair Lina Khan addresses audience questions during a Q&A moderated by Trione Director of SIEPR Mark Duggan. (Photo credit: Ryan Zhang)

Duggan noted that the FTC鈥檚 renewed activism under President Biden has 鈥渄rawn both praise and criticism from many directions鈥 even before Khan鈥檚 appointment in June 2021 (making her the youngest FTC chair in history). Yahoo Finance this summer dubbed her 鈥,鈥 while New York magazine has called Khan 鈥.鈥

Khan herself is under attack by opponents who say the FTC 鈥渉as been overreaching far beyond its own regulatory authority,鈥 said Duggan, who is also The Wayne and Jodi Cooperman Professor of Economics in the School of Humanities and Sciences.

Khan鈥檚 critics and supporters alike point to a seminal paper, titled 鈥溾 that she wrote while a student at Yale Law School in 2017. Her analysis laid the groundwork for her enforcement approach as FTC chair, which, at its core, seeks to broaden antitrust scrutiny to look at how business practices not only affect consumers prices, but also influence other factors like the quality of a product or service or reflect societal values.

The paper, according to The New York Times, 鈥.鈥

A mixed track record

In a follow-up Q&A moderated by Duggan, Khan acknowledged that the FTC has suffered some major setbacks in court. These include a failed effort to block Facebook parent Meta from acquiring a virtual reality app developer and Microsoft鈥檚 purchase of video game developer Activision. The Supreme Court, too, has reined in the FTC鈥檚 power in recent years.

But in defending the FTC鈥檚 work, Khan noted that the commission has also had significant successes, including in important areas like semiconductor chip manufacturing and defense contracting. And she said the court ruling in the Meta case was indirectly a win for the FTC given the judge鈥檚 analysis of how competition rules apply in digital markets.

The court鈥檚 opinion, she said, 鈥渃reated a roadmap for enforcers to succeed going forward.鈥

She did, however, lament the high costs of pursuing antitrust cases in courts and called on Congress to empower the FTC to recover money when consumers are defrauded. In 2021, before she joined the commission, the Supreme Court to penalize companies and make consumers whole.

If scammers are 鈥渕aking money through these illegal tactics, but we鈥檙e not able to get that illegitimately obtained money back for people,鈥 she said, 鈥渢hat can create a real deterrence problem.鈥