FTC slams OpenAI with an investigation of its AI practices

13 Jul 2023

Sam Altman in 2022. Image: Village Global/Flickr (CC BY 2.0)

OpenAI is facing growing pressure from all sides: copyright lawsuits, increased competition and regulatory scrutiny on both sides of the Atlantic.

Even as ChatGPT becomes one of the fastest-growing apps in history, it not been a great week for OpenAI.

Just days ago, the San Francisco start-up faced lawsuits from several authors due to copyright infringement allegations. The company also faces stiff competition from the likes of Anthropic’s Claude 2, Google’s Bard and, most recently, Elon Musk’s xAI.

Now, in perhaps the biggest blow to OpenAI since it took the world by storm with ChatGPT last year, the US Federal Trade Commission (FTC) has opened an in-depth investigation into the Sam Altman-led company to determine how it addresses risks to consumers through AI.

In a document first reviewed by The Washington Post, the FTC calls on OpenAI to provide detailed descriptions of all complaints it has received about ChatGPT and other AI products making “false, misleading, disparaging or harmful” statements about individuals.

The US watchdog wants to determine whether the start-up engaged in unfair or deceptive practices that resulted in “reputational harm” to consumers, according to the document. The FTC also wants to know if “obtaining monetary relief would be in the public interest”.

Earlier in the year, US policy think tank Center for AI and Digital Policy called on the FTC to open an investigation into OpenAI and “halt the release of GPT models until necessary safeguards are established”.

“These safeguards should be based on the guidance for AI products the FTC has previously established and the emerging norms for the governance of AI,” the statement read.

The latest FTC filing comes as a blow to Altman as he attempts to assuage governments’ concerns around the rise of artificial intelligence by calling for more regulation. The filing contains scores of questions asking OpenAI to detail various aspects of how it manages its AI.

Last month, it was revealed that OpenAI is facing a major class-action lawsuit from a US law firm for allegedly scraping the internet to train ChatGPT, potentially violating the rights of millions. The complaint also targets Microsoft, which has invested billions in OpenAI.

Despite regulatory scrutiny on both sides of the Atlantic, demand for OpenAI’s services has been growing substantially as businesses and consumers look to make the most of the emerging technology. Just last month, OpenAI chose London as its first corporate office outside the US.

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Sam Altman in 2022. Image: Village Global/Flickr (CC BY 2.0)

Vish Gain is a journalist with Silicon Republic