FTC chair on regulating AI and “taking on some of the biggest, most powerful companies in our economy”

Kai Ryssdal, Sean McHenry, and Sarah Leeson May 1, 2023
Heard on:
"Companies that are creating these tools [AI] need to be on notice," says FTC Chair Lina Khan. Anna Moneymaker/Getty Images

FTC chair on regulating AI and “taking on some of the biggest, most powerful companies in our economy”

Kai Ryssdal, Sean McHenry, and Sarah Leeson May 1, 2023
Heard on:
"Companies that are creating these tools [AI] need to be on notice," says FTC Chair Lina Khan. Anna Moneymaker/Getty Images

Since taking over the agency in 2021, Federal Trade Commission Chair Lina Khan has tried to advance an ambitious agenda that takes aim at Big Tech mergers. The FTC has also proposed a nationwide ban on noncompete employee contracts, which are used to prevent workers from leaving a company for a rival.

So what’s next for the FTC? “Marketplace” host Kai Ryssdal spoke with Khan at her office in Washington, D.C. The following is an edited transcript of their conversation.

Lina Khan: [The FTC is] charged with enforcing the nation’s antitrust laws as well as the nation’s consumer protection laws. The FTC was actually created more than a century ago, in the era of the robber barons and the industrial trust and Standard Oil, to really take on concentrated economic power and the monopolies that Congress worried were squeezing small business and hurting consumers.

Kai Ryssdal: Do you think that applies today in your running of the FTC? That last little bit that you said there?

Khan: Absolutely. Look, it’s no secret that today across our economy we see markets that are dominated by a very small number of companies. And so it is especially critical that we’re vigorously enforcing the antitrust and anti-monopoly laws.

Ryssdal: Is it fair to characterize the Lina Khan FTC as more robust than it’s been in the past?

Khan: Well, I’ll leave those types of assessments to observers.

Ryssdal: Well, I want your observation. You’re running this place. You get to decide.

Khan: We’re definitely looking to ensure that we are fully activating all of our legal authorities and bringing them to bear where needed. I worry that there has been a perception in the market that businesses can sometimes get a free pass if they’re too big, and we’re wanting to make sure that the law applies equally. And that sometimes includes taking on some of the biggest, most powerful companies in our economy. That really is in the DNA of the FTC, when you have an agency that’s charged with taking on the trusts and the robber barons and the monopolies, that inevitably is going to pit you up against these firms.

Ryssdal: You said, and it stuck with me because I’m not familiar with this word, you’d like to go after cases in their incipiency before they really become damaging or harmful to consumers or small businesses. Explain that a little bit.

Khan: That’s exactly right. And that’s not just my preference, it’s Congress’ preference. So in the statute that Congress charged us with enforcing, lawmakers emphasize that we need to be looking at monopolistic threats in their incipiency, with the idea being that it’s much easier to address concentrations of power in the earlier stages, rather than later when you have these fully fledged monopolies that have captured all these markets and it can become much more difficult to remedy.

Ryssdal: I want to talk about a couple of sort of larger issues in this economy. Consumer privacy is one, obviously, that is an area of concern to you and to this entire building. The case at hand is Twitter. I don’t want to talk about Twitter. What I do want to talk about though, is Scott McNealy in Sun Microsystems, many years ago, as you know since you’re smiling, said, “You got no privacy. Get over it.” I wonder if you’re trying to shut the barn door after the horse is gone.

Khan: Look, it’s certainly a valid concern. The FTC Act prohibits unfair or deceptive practices, and Congress didn’t create a closed list or say that only applies to some technologies and not others. It really applies across the board. And that’s why the FTC has now, for many years, been the frontline enforcer of strong privacy laws. We have taken several actions that just in the last few months that have been making sure we’re protecting people’s sensitive information via geolocation data that people can buy to track with great precision, whether people are going to addiction facilities or places of worship or seeking reproductive health service. So we take that job extremely seriously. And especially as more and more parts of the economy digitize, making sure we’re fully protecting people’s data is critical.

Ryssdal: On that last point, how much of your time is spent on technology and the digital economy? I imagine it’s way out there in percentage.

Khan: It’s an interesting question because more and more of our economy is becoming digitized. So increasingly there isn’t really a clean distinction between digital and nondigital. If we have, say, a merger of grocery stores, oftentimes that will have a digital component. Tractors, farming equipment — more and more equipment is becoming digitized in ways that the insights that we’ve developed in the context of social media or e-commerce are now having to be applied across the board.

Lina Khan, wearing a green blouse and dark jacket, sits at a table with a microphone and piece of folded paper in front of her. Behind her is a conference room with empty chairs and a lectern.
“Making sure we’re fully protecting people’s data is critical,” says Lina Khan. (Nancy Farghalli/Marketplace)

Ryssdal: There’s an area of this economy that is, for you, going to be I think a case of — what is it the lawyers say? A case of first impression, right? Technology you kind of got handed, and Twitter you got handed, and railroad competition and whatever else it is that you’ve been dealing with this at this commission for 100 and something years landed on your desk when you got here. Artificial intelligence is new for you. And you’re starting in this organization, in this building, to start talking about it and thinking about it. And I’m wondering broadly how you’re thinking about artificial intelligence and how it ought to be regulated, and if you’re the person to do it. Or the organization, not just you.

Khan: So it’s important when we’re talking about AI to drill down a little bit more specifically about what we mean, right? Oftentimes, what we’re talking about is automated decision-making, automated decision processes, as well as huge amounts of data that is being fed into these systems. The FTC has already been taking on instances in which some of these automated decision tools are being used in unfair ways or discriminatory ways. There’s no doubt that these technologies are going to present certain questions of first impression. Well, we also need to make sure the market knows that there is no exemption for AI. The existing laws entirely apply. And so we’ve been putting out notices alerting the market to the fact that these tools can be used to turbocharge fraud and scams, right? These tools can be used to create fake reviews, phishing attempts. All types of fraud can really be now engaged in much more cheaply, much more quickly and on a much larger scale. And so companies that are creating these tools need to be on notice that if you’re creating technologies that are effectively designed to deceive people, you can be on the hook even under the existing laws.

Ryssdal: Do you think bureaucracy as large as the FTC, and the federal government for that matter, can move fast enough?

Khan: Look, the FTC is small. We’re somewhere around 1,200 people. We are nimble, we’re agile. There’s no doubt that there are huge asymmetries of resources between us and big business, huge asymmetries of information between us and big business. But we are committed to using all of the tools that we have.

Ryssdal: About your size, you were up on Capitol Hill the other day, I think, for a budget hearing. There were some complaints from Republicans in Congress about what the FTC is doing. And it seems challenging that you’re gonna get more money to do what you want to do. I wonder how concerned you are about backlash against the robust Lina Khan FTC that you envision?

Khan: So we were really thrilled to actually have gotten an increase in our budget this past year. We’re going to be hiring up with that new money.

Ryssdal: It’s new days in Congress.

Khan: Look, I think a lot about the risks of underenforcing. I mean, the harms that we’re talking about are not abstract. These are serious problems that Americans are facing day in, day out, be it in the context of people facing shortages of infant formula, people being squeezed and not being able to afford essential medicines. So these are very real problems. And we’re addressing them with enormous urgency and feel that there’s a big cost in underenforcing and not using our tools.

Ryssdal: You’re not only in charge of consumer welfare in this economy, you are a consumer in this economy. I wonder what you think about when — if — you buy something off Amazon or you search on Google.

Khan: I’m trying to be careful about how I answer this one since it’s specific companies.

Ryssdal: I understand. Well, let’s broaden it to when you’re ordering something online, or search the internet. This is you, Lina Khan, going out and, I don’t know, maybe you’re yelping a new restaurant for lunch.

Khan: One of the key initiatives that we have underway is addressing what we call dark patterns. And so this relates to the ways in which companies online will use deceptive and manipulative design tactics to nudge you in one direction or another, make it more difficult to cancel something, make it easier to inadvertently make a purchase. And so I think those are aspects of the online economy that everybody can relate to, I’ve certainly been able to relate to. And so making sure that we are, in the first instance, understanding how companies are using these dark patterns and then addressing them where they may be illegal is really important.

Kai Ryssdal: Do you think about it, though? All that stuff when you’re looking for a new restaurant on Yelp or whatever?

Khan: I mean, look, you know, the online economy has become essential to how all of us are increasingly navigating day-to-day life. And so ensuring that clear rules of fair competition and consumer protection apply in the online economy is really important.

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