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The United States Federal Trade Commission (FTC) announced on September 11 an inquiry into artificial intelligence-powered chatbots, seeking information from seven companies, including Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), and OpenAI, on how they measure, test, and monitor potentially negative impacts of the technology on children and teens.
- AI chatbots mimicking humans
- AI’s impact on children
- Trump’s influence on U.S. agencies
- Trump fired FTC Commissioner Slaughter
As explained by the FTC—the federal agency responsible for enforcing civil antitrust law and promoting consumer protection—AI chatbots “may use generative artificial intelligence technology to simulate human-like communication and interpersonal relationships with users.”
It added that “AI chatbots can effectively mimic human characteristics, emotions, and intentions, and generally are designed to communicate like a friend or confidant, which may prompt some users, especially children and teens, to trust and form relationships with chatbots.”
For this reason, the agency said it wants to understand what steps, if any, companies have taken to evaluate the safety of their chatbots when acting as “companions,” to limit the potential adverse effects on children and teens, and to inform the users and their parents of the risks associated with the products.
The agency said it was particularly interested in the impact of chatbots on children, and what actions companies were taking to mitigate potential negative impacts, limit or restrict children’s or teens’ use of these platforms, or comply with the Children’s Online Privacy Protection Act (COPPA) Rule.
The companies in question were Alphabet, Character Technologies, Instagram, Meta Platforms, OpenAI, Snap, and xAI, all of which received orders from the FTC for a range of information on their generative AI companion products and services.
In terms of the specific information, the FTC wants to know how the companies, amongst other things, monetize user engagement; process user inputs and generate outputs; share user data with third parties; monitor for negative impacts; inform users on capabilities, the intended audience, potential negative impacts, and data practices; and enforce compliance with rules governing use of the product or service.
“As AI technologies evolve, it is important to consider the effects chatbots can have on children, while also ensuring that the United States maintains its role as a global leader in this new and exciting industry,” said FTC Chairman Andrew Ferguson. “The study we’re launching today will help us better understand how AI firms are developing their products and the steps they are taking to protect children.”
Ferguson added that “protecting kids online is a top priority for the Trump-Vance FTC, and so is fostering innovation in critical sectors of our economy”— a likely nod to the delicate tightrope every U.S. regulator must now walk, in the Trump 2.0 era, between carrying out its duties of protection and towing the ‘foster innovation’ party line.
FTC on thin ice
Like most U.S. regulators, the FTC has not escaped President Trump’s influence. Since taking office for his second term in January, Trump has made a point of reshaping the regulatory landscape in the U.S. into a more digital asset-friendly environment.
The Securities and Exchange Commission (SEC), formerly the bane of the crypto wild west, has seen its firebrand chairman, Gary Gensler—known for his regulation-by-enforcement approach to the digital asset space—jump before he was pushed in January, and a new pro-crypto face installed by Trump in the form of Paul Atkins. According to the President, Atkins “recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
The Commodity Futures Trading Commission (CFTC), Office of the Comptroller of the Currency (OCC), and Consumer Financial Protection Bureau (CFPB) have all also been reshaped in Trump’s image to greater and lesser extents, with either favorable appointments, new directives, or a slashing of their budget (in the case of the CFPB).
With almost all federal agencies feeling the impact of Trump’s presidency, the FTC was no exception, and the latest episode in its own upheaval came last week.
On September 8, the Supreme Court issued an unexplained order allowing Trump to remove, for the immediate future, the last Democratic commissioner on the FTC, Rebecca Slaughter.
Trump fired Commissioner Slaughter on March 18, without cause, along with fellow Democratic Commissioner Alvaro Bedoya.
At the time, both Commissioners voiced their intention to challenge their removal in the courts. Slaughter said in a statement: “The President illegally fired me from my position as a Federal Trade Commissioner, violating the plain language of a statute and clear Supreme Court precedent.”
In July, the U.S. District Court for the District of Columbia ordered Slaughter’s reinstatement, a decision that the Trump administration appealed. However, on September 2, the Court of Appeals declined to overturn the ruling, which led the Trump administration to escalate the case to the Republican-leaning Supreme Court.
The decision, handed down by U.S. Chief Justice John Roberts, allowed Trump to disregard Slaughter’s reinstatement while the Supreme Court decides whether to formally overturn the lower court rulings that found her dismissal unlawful.
While this represented a win for the Trump administration in the short term, the Supreme Court order does not signal whether the President will ultimately successfully appeal Slaughter’s reinstatement.
Roberts also ordered Slaughter’s legal team to respond to Trump’s emergency appeal by September 15.
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