FTC’s Report on AI: Key Takeaways from the October 2023 Roundtable and What it Means for Creators
The FTC released the Generative Artificial Intelligence and the Creative Economy Staff Report in December 2023, detailing technological developments in Artificial Intelligence (“AI”), jurisdictional interest in AI, and information from a roundtable meeting in October 2023. The report is intended for legal, policy, and academic communities to consider the implications of generative AI.
The FTC, is considering its role in the development and deployment of AI, a technology that poses significant challenges to consumers, workers, and businesses. The agency’s enforcement authority is primarily derived from Section 5 of the FTC Act, which prohibits unfair practices and methods of competition. The Executive Order on AI’s Safe, Secure, and Trustworthy Development encourages the FTC to exercise its existing authorities to ensure competition and protect the public.
The FTC is using its legal authority to enforce against illegal practices involving AI, such as Amazon and Ring using private data to train algorithms without violating customer privacy. The Alexa case highlighted the indefinite retention of children’s data, while a temporary restraining order was secured against a business-opportunity seller that claimed to use AI to make clients profitable. WealthPress was charged with using deceptive claims to sell investment-advising services. The FTC has also emphasized that businesses relying on algorithmic decision-making must ensure it doesn’t result in unlawful bias.
The rapid development and deployment of AI poses potential risks to competition, as it may lock in the market dominance of large incumbent technology firms. These firms control inputs necessary for AI tool development, such as computing power and training data. They may use this control to unlawfully entrench their market positions in AI and related markets, such as digital content. AI tools can also facilitate collusive behavior that unfairly inflates prices or manipulates outputs. The FTC is empowered to protect the public against unfair competition methods.
AI technology’s development in the creative industries raises competition and consumer protection concerns. Millions of Americans pursue creative work as a profession, with many self-employed artists. Generative AI’s economic impacts on illustrators and other creative fields are explored. Uncompensated and unauthorized appropriation of creators’ content may diminish incentives to invest and produce content, affecting quality over time.
AI deployment in creative professions raises competition and consumer protection concerns. Unauthorized AI training or selling AI-generated output may be considered unfair competition or deceptive practices, especially when it deceives consumers, exploits a creator’s reputation, diminishes their work value, or causes substantial harm. Even if consistent with other laws, such conduct may violate Section 5.
The FTC held a virtual roundtable discussion in October 2023 to explore concerns about generative AI’s impact on creative fields. Twelve participants from various creative professions, including visual artists, screenwriters, actors, programmers, editors, musicians, and models, discussed the changes their fields are experiencing and their responses to these changes. The event included a Q&A session, and a recording and transcript are available on the FTC event web page.
Participants at an event acknowledged the potential benefits of generative AI tools but also expressed concerns about potential exploitation. Common themes included concerns about how their work is collected and used, the impact of AI on their industry and livelihoods, issues with AI company solutions, and alternative approaches to protect themselves and their industry, such as union contracts enshrining their right to choose AI use in their work.
The FTC stated they are actively monitoring the latest trends in the generative AI industry, using its law enforcement and policy tools to ensure fair competition, consumer protection, and public benefit from this transformative technology. And they will remain vigilant and ready to use its full range of tools to monitor and monitor developments.
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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.