It’s even more real than ever now. The FTC has opened an investigation into OpenAI over potential consumer harms and the company’s security practices.

According to The New York Times (F.T.C. Opens Investigation Into ChatGPT Maker Over Technology’s Potential Harms, written by Cecilia Kang and Cade Metz and available here), the FTC has opened an investigation into OpenAI, the artificial intelligence start-up that makes ChatGPT, over whether the chatbot has harmed consumers through its collection of data and its publication of false information on individuals.

In a 20-page letter sent to the San Francisco company this week, the agency said it was also looking into OpenAI’s security practices. The FTC asked OpenAI dozens of questions in its letter, including how the start-up trains its AI models and treats personal data, and said the company should provide the agency with documents and details.

The FTC is examining whether OpenAI “engaged in unfair or deceptive privacy or data security practices or engaged in unfair or deceptive practices relating to risks of harm to consumers,” the letter said.

The investigation was reported earlier by The Washington Post and confirmed by a person familiar with the investigation. OpenAI declined to comment.

The FTC investigation poses the first major US regulatory threat to OpenAI, one of the highest-profile AI companies, and signals that the technology may increasingly come under scrutiny as people, businesses and governments use more AI-powered products. The rapidly evolving technology has raised alarms as chatbots, which can generate answers in response to prompts, have the potential to replace people in their jobs and spread disinformation.

The FTC is acting on AI with notable speed, opening an investigation less than a year after OpenAI introduced ChatGPT. Lina Khan, the FTC chair, who testified at a House committee hearing on Thursday over the agency’s practices, previously said the AI industry needed scrutiny.

“Although these tools are novel, they are not exempt from existing rules, and the FTC will vigorously enforce the laws we are charged with administering, even in this new market,” she wrote in an opinion piece in The New York Times in May. “While the technology is moving swiftly, we already can see several risks.”

The investigation could force OpenAI to reveal its methods around building ChatGPT and what data sources it uses to build its AI systems. While OpenAI had long been fairly open about such information, it more recently has said little about where the data for its AI systems come from and how much is used to build ChatGPT, probably because it is wary of competitors copying it and has concerns about lawsuits over the use of certain data sets.

I’m just now covering this because of a webinar and podcast recording earlier today – both of which dealt with generative AI and ChatGPT. In that ACEDS webinar with UnitedLex & eDiscovery Today earlier today, the FTC investigation was a topic of discussion with Cara Hughes, Senior Vice President Business Development at UnitedLex and Mercedes Kelley Tunstall, Partner, Cadwalader, Wickersham & Taft LLP, who both had interesting perspectives on it. You can check out the webinar on-demand here.

What’s next for OpenAI? In a little over a month, they’ve been hit with a libel suit over hallucinations, a report of over 100K accounts being sold on the dark web, a class action for its use of people’s data, multiple class actions for copyright infringement and now the FTC has opened an investigation into OpenAI! Maybe this is how they replace some of those legal jobs everyone is concerned will be lost because of their AI! 😉

So, what do you think? Are you surprised that the FTC has opened an investigation into OpenAI? Please share any comments you might have or if you’d like to know more about a particular topic.

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