FTC Chair Lina Khan Discusses the Agency's Approach to AI Regulation and Oversight

The U.S. Federal Trade Commission (FTC) is set to closely examine the rapid growth of artificial intelligence (AI) technology across various sectors, according to FTC Chair Lina Khan, who spoke at the StrictlyVC event in Washington, D.C., on Tuesday. However, Khan reassured the audience that the FTC does not intend to stifle innovation among startups with excessive regulations.

“Our objective is to ensure that the channels of commerce remain open, allowing anyone with a viable idea to compete fairly in the marketplace,” Khan stated. “Your success should hinge on the quality of your ideas and business acumen, not on your ability to compete with larger companies that could overshadow you.”

Despite this, the FTC is not overlooking the potential risks associated with AI technology. Khan noted an increase in consumer complaints, particularly concerning voice-cloning fraud. This technology gained attention when OpenAI introduced and later retracted a voice feature that mimicked actress Scarlett Johansson, who had notably provided the voice for an AI character in the movie “Her.” Johansson claimed that OpenAI cloned her voice after she declined their request to record it, while OpenAI contended that they used a different voice actress.

When asked about specific AI sectors under FTC scrutiny, Khan indicated a broad focus: “We’re examining every layer of the AI landscape—from the hardware and cloud infrastructure to the algorithms and applications—to comprehensively understand the implications at each level.” The agency is also eager to hear from industry insiders about both the opportunities and risks inherent in this technology.

Khan highlighted the complexities of regulating AI, even with the increase in technologists hired by the FTC. She mentioned that more than 600 individuals applied for these positions, though she did not specify how many were hired. Currently, the FTC employs approximately 1,300 people—400 fewer than in the 1980s, despite a 15-fold increase in the economy.

With multiple antitrust investigations and nearly 100 consumer protection cases, the FTC is adopting innovative approaches to combat fraud, particularly in the AI sector. For instance, Khan referred to the agency’s recent voice-cloning challenge designed to engage the public and the marketplace in finding effective methods for real-time detection of fraudulent calls or voice representations.

Another focal point for the FTC is understanding what transparency truly means within AI. “How do we ensure it goes beyond mere branding, ensuring that terms are honestly open?” Khan questioned, emphasizing their commitment to avoiding misleading practices reminiscent of the Web 2.0 era.

“Valuable lessons can be drawn from this moment as we contemplate the use of AI tools,” she added. Furthermore, the agency will be vigilant about the potential for AI product inflation, where marketing might exaggerate the effectiveness of certain tools. “We’ve already initiated several cases regarding deceptive advertising connected to AI hype, and this will remain a key area of our oversight,” Khan concluded.