If a company fails to obtain that express informed consent from consumers prior to AI model training, it would be deemed a deceptive or unfair practice and result in enforcement action from the Federal Trade Commission, under the Artificial Intelligence Consumer Opt-In, Notification Standards, and Ethical Norms for Training (AI CONSENT) Act, introduced Wednesday by Sens. Peter Welch, D-Vt., and Ben Ray Luján, D-N.M.

“The AI CONSENT Act gives a commonsense directive to artificial intelligence innovators: get the express consent of the public before using their private, personal data to train your AI models,” Welch said in a statement. “This legislation will help strengthen consumer protections and give Americans the power to determine how their data is used by online platforms. We cannot allow the public to be caught in the crossfire of a data arms race, which is why these privacy protections are so crucial.”

Added Luján: “Personally identifiable information should not be used to train AI models without consent. The use of personal data by online platforms already pose great risks to our communities, and artificial intelligence increases the potential for misuse.” 

The bill seeks to create standards for disclosures, including a requirement that platforms provide instructions to consumers for how they can affirm or rescind their consent. The option to grant or revoke consent should be made available “at any time through an accessible and easily navigable mechanism,” the bill states; and the selection to withhold or reverse consent must be “at least as prominent as the option to accept” while taking “the same number of steps or fewer as the option to accept.”

The legislation includes various provisions to regulate how the disclosures are presented by platforms, including specifications on visual effects such as font and type size, the placement of a disclosure on a platform, and how to ensure that the “brevity, accessibility and clarity” of disclosures ensure that they can be “understood by a reasonable person.”

Within a year of the proposed legislation’s adoption, the FTC would be required to produce a report for the Senate Commerce, Science and Technology and House Energy and Commerce committees on how technically feasible it would be to “de-identify” data as the pace of AI developments quicken. The agency would also be charged in the report with assessing measures that platforms could pursue to de-identify user data.

The legislation, which has the backing of the National Consumers League and the consumer rights advocacy nonprofit Public Citizen, is one in a series of AI-related bills coming out of the Senate this year, following 2023 efforts in the chamber on everything from labels and disclosures on AI products to certification processes for critical-impact AI systems.   

The Biden administration, meanwhile, has shown a particular interest in open foundation models, while FTC Chair Lina Khan earlier this year announced an agency probe into AI models that unlawfully collect data that jeopardizes fair competition. 

“The drive to refine your algorithm cannot come at the expense of people’s privacy or security, and privileged access to customers’ data cannot be used to undermine competition,” Khan said during the FTC Tech Summit in January. “We similarly recognize the ways that consumer protection and competition enforcement are deeply connected with privacy violations fueling market power, and market power, in turn, enabling firms to violate consumer protection laws.”

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During the FTC Tech Summit, Khan said that the FTC will focus on assessing if agreements between major cloud providers — such as  Amazon, Microsoft and others — are influencing the “competition across layers of the AI stack.” 

Khan said that the FTC will prioritize key principles of “how business models drive incentives” and “crafting remedies that address the underlying business incentives and establish bright line rules on the development use and management of AI inputs.” 

The commission, through its 6(b) authority — part of the FTC Act that empowers the agency to question a business’s “organization, business, conduct, practices, management and relation to other corporations, partnerships and individuals” — will conduct this inquiry into different providers and developers. 

Khan said during the event that the remedies the FTC will focus on include deleting AI models themselves along with unlawfully collected data. 

“The FTC’s work has made clear that these business incentives cannot justify violations of the law,” Khan said. “The drive to refine your algorithm cannot come at the expense of people’s privacy or security, and privileged access to customers’ data cannot be used to undermine competition. We similarly recognize the ways that consumer protection and competition enforcement are deeply connected with privacy violations fueling market power, and market power, in turn, enabling firms to violate consumer protection laws.”

Khan pointed to the commission’s recent order against Rite Aide that placed a five-year ban on the use of facial recognition tools after the AI-based technology incorrectly identified customers as those  who had previously shoplifted or individuals who had been identified previously as a “troublemaker.”

“Much is uncertain about what the precise future of this technology will look like, but the good news is we have the experience and expertise to meet the moment,” Khan said. “By continuing to sharpen our thinking and faithfully enforce the law, we can unleash AI’s potential benefits while safeguarding Americans from the potential harms.”

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The new investments, announced Friday, will provide $8 million to the DOT for the modernization of an outdated consumer complaint system for air travelers and $1.1 million to the FTC to retire and replace an old system that tracks information about textile products.

“Our newest investment in the FTC represents the kind of speed of delivery we aim to achieve, because the problem and solution are well understood and the FTC team is ready to make changes within the next 12 months. Additionally, our investment in DOT will help improve a system accessed by thousands of air travelers each year,” TMF Executive Director Raylene Yung said in a Friday statement.

The TMF, housed within GSA, is focused on improving technology across the government and currently manages 47 investments in 27 federal agencies. It received a $1 billion infusion through the American Rescue Plan and $255 million through the annual budget process. Previous investments included a $50.5 million round of funding for cybersecurity and customer experience investments at five agencies in July and $20.8 million for similar projects at three agencies in October 2022.

The House Oversight Committee recently advanced a bipartisan bill that would extend the TMF’s authorization through 2030 and would require agencies to refund or reimburse investments to maintain the solvency of the fund.

The DOT investment will specifically go to the Office of Aviation Consumer Protection (OACP), which will use the funds to enhance a system that tracks consumer complaints and tracks cases for “thousands of consumers each year,” according to a release.

Blane Workies, OACP’s assistant general counsel, said in a release that the modernized system will “make it easier for consumers to know their rights and file air travel service complaints should problems occur, while enhancing OACP’s ability to analyze these complaints and enforce aviation civil rights and consumer protection laws.”

Meanwhile, FTC’s project is focused on its system that issues “registration numbers to U.S. based businesses to identify who manufactured, imported, distributed, or sold a covered textile, fur, or wool product.” The TMF funds will be used to “modernize the Registration Number System by developing a user-friendly cloud application.”

Mark Gray, FTC’s chief information officer, said in a release that completion of the project would “mark a critical milestone – all FTC applications accepting incoming traffic will have been migrated to the cloud.” Gray said the funding will improve the agency’s security and move it closer to its “zero trust” goals, which has been a focus of the Biden administration.

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The FTC earlier this week sent a 20-page request for records about how OpenAI addresses risks related to its AI models. The agency is investigating whether the company engaged in unfair or deceptive practices that resulted in “reputational harm” to consumers, according to the letter, which was reported by the Washington Post. 

The FTC called on OpenAI to provide detailed accounts of all consumer complaints it had received regarding ChatGPT making “false, misleading, disparaging or harmful” statements about individuals.

Since OpenAI released it, ChatGPT has astounded users, writing short college essays, cover letters, and a weirdly passable Seinfeld scene in which Jerry needs to learn the bubble sort algorithm.

If the FTC finds that a company has violated consumer protection laws, it can fine the company or require it to follow a consent decree dictating how the company handles data. In the past few years, the FTC has emerged as the federal government’s top cop of Big Tech companies like Meta, Amazon and Twitter, levying large fines against the tech giants for alleged violations of consumer protection laws related to their respective platforms.

The investigation comes at a time when demand for ChatGPT is exploding within Congressional offices and generative AI pilot programs similar to ChatGPT are popping up in all corners of the federal government and many industries across the private sector. 

The State Department, the National Science Foundation, the Justice Department and the Department of Veterans Affairs have all announced generative AI related pilot projects or research initiatives in the past few months.

OpenAI and the FTC didn’t immediately respond to requests for comment.

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The Biden administration will use existing civil rights and consumer rights laws to take enforcement action against AI systems and automated systems that allow discrimination, top leaders within ​​the Justice Department, the Federal Trade Commission, the Consumer Financial Protection Bureau, and the Equal Employment Opportunity Commission pledged on Tuesday.

With AI tools increasingly central to private industry and soon potential government decisions about hiring, credit, housing and other services, top leaders from the four federal agencies warned about the risk of “digital redlining.” 

The officials said they were worried that inaccurate data sets and faulty design choices could perpetuate racial disparities and they pledged to use existing law to combat such risks.

“We’re going to hold companies responsible for deploying these technologies, and making sure that it is all in compliance with existing law. I think we are starting the process of figuring out where we’re identifying potentially illegal activity,” said Rohit Chopra, Director of the Consumer Financial Protection Bureau.

“And we’ve already started some work to continue to muscle up internally, when it comes to bringing on board data scientists, technologists and others, to make sure we can confront these challenges,” Chopra added.

The four federal agencies are taking the lead on holding AI companies and vendors responsible for any harmful behaviour because they are the key agencies in charge of enforcing civil rights, non-discrimination, fair competition, consumer protection, and other legal protections to citizens.

Each agency has previously expressed concern about potentially harmful uses of automated systems.

“There is no AI exemption to the laws on the books,” said trade commission Chair Lina Khan, one of several regulators who spoke during a news conference to signal a “whole of government” approach to enforcement efforts against discrimination and bias in automated systems.

Khan said the FTC recently launched a new Office of Technology, which is focused on hiring more technologists with expertise to fully grasp how AI technologies are functioning and potentially causing harm and have the capacity in-house to deal with such issues. 

AI and automated system companies that are government vendors or contractors could also be targeted by the federal government enforcement crackdown.

“So with respect to vendors and employers, obviously, we have very clear enforcement with respect to employers, depending on the facts, and this is true of pretty much every issue that we might look at is very fact intensive. 

“I want to emphasize that there may be liability for vendors as well. And it really depends on how they’re constructed,” said Charlotte Burrows, Chair of the Equal Employment Opportunity Commission (EEOC). 

“There are various legal authorities with respect to vendors and other actors that may be involved in the employment process and developing these tools. So it really just depends on what that relationship is with and what the role that the AI developer or the vendor may have with respect to the employee and processes, both for our authority with respect to interference under, for instance, Title Seven of the Civil Rights Act, or the ADA, which is actually quite a broad interference provision,” Burrows added.

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In a statement, the commission said it was concerned the transaction could allow the chipmaker to restrict competition for certain hardware components that interoperate with VMware’s software.

In particular, the European Commission (EC) will examine whether the deal could result in Broadcom restricting the market for the supply of Network Interface Cards (NICs), Fibre Channel Host-Bus Adapters and storage adapters.

It will also probe whether the transaction could affect development of smart NICs and whether Broadcom may start bundling its own software with VMware’s virtualization software following the deal.

The full antitrust investigation comes after the United Kingdom’s competition regulator in late November opened an initial probe of the transaction.

Meanwhile, in the United States, the Federal Trade Commission (FTC) has also moved ahead with a more stringent “second request” review of the deal.

If they progress, the regulatory probes have the potential to prevent Broadcom from closing its acquisition of the cloud computing company.

Broadcom, however, has argued that VMware’s multi-cloud management tools combined with Broadcom’s semiconductor and infrastructure software products could increase choice and innovation within the cloud computing market.

The European Commission was notified of the transaction on Nov. 15, and it now has 90 working days – until May 11 next year – to make a decision.

News of the EU’s decision to launch an in-depth antitrust probe was first reported by Reuters.

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The U.K.’s Competition and Markets Authority (CMA) has opened a preliminary inquiry into the transaction. It follows a decision by the European Commission (EC) earlier this month to investigate with the transaction.

In the United States, the Federal Trade Commission (FTC) last month also moved ahead with a more stringent “second request” review of the deal.

If they progress, the regulatory probes have the potential to prevent Broadcom from closing its acquisition of the cloud computing company.

Broadcom, however, has argued that VMware’s multi-cloud management tools combined with Broadcom’s semiconductor and infrastructure software products could increase choice and innovation within the cloud computing market.

“We look forward to working with the Competition and Markets Authority throughout its process. We are confident that this deal does not present any competition issues,” Broadcom said in a statement to TechCrunch. “We are making progress with our various regulatory filings around the world and expect the transaction to be completed in Broadcom’s fiscal year 2023.”

Broadcom previously had another major deal scuttled in 2018, when its plan to acquire rival Qualcomm for $130 billion was ultimately blocked by the Trump administration, which cited national security concerns. 

The U.K.’s CMA is inviting comments from the public by Dec. 6 to help it with an assessment on whether to formally launch an investigation into the Broadcom-VMware deal.

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Speaking with FedScoop, senior members of the federal tech policy community explained what this could mean for day-to-day operations at the IT departments of government agencies, and outlined key issues C-suite leaders will have to face during the 118th Congress:

• Increased oversight of IT and cybersecurity spending at federal agencies including the IRS, DHS and FTC
• The departure of lawmakers and federal C-suite executives with IT expertise
• Strong resistance to spending on disinformation programs that Republican lawmakers view as potentially curtailing free speech
• Heightened focus on agency record-keeping  

Increased oversight

Federal agency leaders can expect increased oversight from Republican lawmakers as they ramp up opposition to the  administration’s agenda. In particular, chief information officers and other senior officials with direct responsibility for IT project management should expect more frequent calls to attend congressional hearings and respond to questioning from lawmakers.

Scrutiny of the federal agencies that have substantial funding increases including the Internal Revenue Service, Department of Homeland Security, Federal Trade Commission and Federal Communications Commission is likely to be especially in-depth and potentially hostile.

As one federal IT policy expert told FedScoop: “The Republicans in the House are super-focused on oversight, and of the federal agencies, IRS is likely at the top of the list. They are not thrilled with the $80 billion allocated to the agency as part of the [Inflation Reduction Act].” 

Another IT policy expert agreed with this characterization and said the IRS would need to be ready “to make the case that investment in IT services is going to streamline and improve services for citizens.”

Republicans in both the House and Senate have expressed staunch opposition to the $80 billion the IRS received from the Inflation Reduction Act, of which $4.8 billion is allocated for revamping the agency’s antiquated IT and cybersecurity systems.

A September letter from Republican senators to outgoing IRS Commissioner Chuck Rettig sounded the alarm over “speculative return-on-investment” estimates from the IRS and Treasury Department over IT spending, including $347 million relating to a Foreign Account Tax Compliance Act compliance program.

Sens. Chuck Grassley, R-Iowa, and John Thune, R-S.D., last week announced their intention to introduce legislation that would give Congress a direct say in how the $80 billion in fresh funding for IRS is spent.

Carl Szabo, vice president of the tech industry group NetChoice, told FedScoop that Reps. James Comer, Cathy McMorris Rodgers and Jim Jordan — all of whom are slated to lead major committees in a GOP-led house — are sponsors of a bill to protect speech from government interference, and that they’re likely to use their new power to pursue deep-dive investigations into the tools being used by agencies, including DHS, to tackle misinformation.

Departure of expertise

A changing of the guard among lawmakers is likely to reduce focus on certain cybersecurity policy proposals including FISMA and FITARA reform. If the Republicans take the House, Rep. Gerry Connolly, D-Va., will lose his position as chairman of the House Oversight Subcommittee on Government Operations.

“No longer having Connolly setting the agenda will be a major setback for the federal IT community,” said one federal IT policy source. A potential Republican successor for Connolly remains uncertain, with lawmakers such as Rep. Nancy Mace, R-S.C., being floated as a candidate.

IT policy sources also emphasized that it will take several months for the Republican Party to hire sufficient staff to reshape the House committees, and that the likely structure of subcommittees remains uncertain. The House Oversight steering committee could, for example, establish a subcommittee focused specifically on federal IT operations.

In addition, heightened scrutiny from lawmakers raises the specter of further government agency IT leadership departures, even as government departments struggle to hire and retain cybersecurity talent. As one IT policy source: “If you’re going to get the s*** kicked out of you, are you going to stick around?”

Federal IT policy leaders speaking with FedScoop warned of a pressure-cooker environment on the Hill arising from the increased pace of oversight, but added that agency leaders have been preparing for this outcome and should have the support mechanisms in place to rebuff partisan attacks.

“Don’t forget that agencies and the White House are expecting this and have staffed up with lawyers and senior advisers,” said one policy expert.

Disinformation focus

House Republicans have expressed their intent to interrogate DHS’s attempts to tackle misinformation and disinformation. 

“All the key House Republicans that will lead tech-related committees are sponsors of legislation to protect speech from government interference, which would affect DHS activity significantly,” added Szabo. “They’ve openly said they’ll do a deep-dive investigation into misinformation and disinformation reduction efforts by the Biden administration and the tools and technologies the federal government is using to push social media platforms and the tech industry to moderate content or censor.” 

Democrats say disinformation — false information spread deliberately — is a threat to democracy and national security. However, an increasing number of Republicans regard attempts to counter disinformation as a threat to First Amendment rights.

In particular, Republicans have expressed concerns about a February bulletin from DHS saying the federal government plans to work with public and private sector partners, including major social media companies, to reduce the “proliferation of false or misleading narratives, which sow discord or undermine public trust in U.S. government institutions.” 

 CISA also published a report in June setting out plans to tackle misinformation and disinformation that some Republicans have warned could result in censorship under the guise of national security or election security. 

DHS provoked the ire of Republicans and stirred national controversy in April with its launch of a Disinformation Governance Board. The agency was pressured to backtrack and shut down the committee after it received criticism from both sides of the political aisle.

Digital record-keeping

Another key area where technology leaders can expect further attention from a Republican-led House of Representatives is in the area of digital record-keeping.

Top House Republicans earlier this month called out Securities and Exchange Commission Chairman Gary Gensler for inconsistencies and hypocrisy with digital record-keeping laws. Such criticism is likely to become more vocal, and it could result in fresh investigations being launched.

The controversial deletion of Secret Service phone data around the time of the Jan. 6 attack on the U.S. Capitol revealed wider systemic problems with federal digital records preservation. Republicans have already sent Biden administration officials hundreds of record preservation letters indicating their intent to probe the administration for illegal behavior, including regarding federal transparency laws.

“Republicans took aim at the SEC and Gary Gensler recently, so we expect that to continue in the majority because they’re mad at him for his ideological agenda and his record-keeping stuff,” said James Czerniawski, senior tech policy analyst at the conservative advocacy group Americans for Prosperity. “The Federal Trade Commission, which regulates tech companies, will also face scrutiny from Republicans for their policies and spending, including through records preservation.”

House Republicans that are likely to control key committees, including Jordan, Comer and Tom Emmer, sent the SEC a letter Nov. 2 pointing to reports that the agency was “failing to comply with federal record-keeping statutes.” 

The GOP letter also referred to recent litigation showing that the “SEC is failing to identify and produce records of official business conducted on non-email or ‘off-channel’ platforms, such as Signal, WhatsApp, Teams, and Zoom.” 

In addition, Republicans have criticized SEC officials for using the private communications platforms for official business, without producing these records in response to open-record requests, while at the same time aggressively enforcing record-keeping laws on Wall Street banks. The SEC in September fined Goldman Sachs, Morgan Stanley and other financial firms over $1.1 billion after bankers discussed deals and trades on their personal devices and apps.

Republicans on the House Judiciary Committee in August also sent the Federal Trade Commission a letter outlining their intent to investigate recent watchdog findings of the agency’s use of unpaid consultants and experts, and instructed the agency to preserve all relevant digital records.

Benjamin Freed contributed to this article.

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Currently, the FTC uses a simple and less secure email process for antitrust whistleblower complaints, which four tech scholars at the Aspen Institute want to revolutionize with a new proposed user interface. The researchers say the tool could improve the collection of whistleblower reports of anti-competitive corporate behavior.

Collecting evidence of competition law violations from employees is a key part of the FTC’s enforcement action. Such evidence is crucial as increasingly complex algorithms and code within commercial products make anticompetitive behavior harder to detect.

The Aspen scholars—Arjun Hassard, Justino Mora, Julia Uhr, and Ritvik Vasudevan—are pushing the FTC to deploy their “smart and secure reporting channel,” according to their policy brief, to allow better communication between FTC staff and whistleblower informants using an open source code platform.

“When we showed it to them the FTC was very impressed with what we built,” said Arjun Hassard, the lead author of the Aspen policy brief and a creator of the proposed FTC whistleblower tool. 

“They said the prototype made a lot of sense so we hope that it will be used in FTC cases in the future especially since the FTC is underfunded and this tool is pretty cheap to maintain given that it’s built on open source software that can easily be run internally instead of a multi million dollar contract,” Hassard said.

The FTC approved the four Aspen scholars’ creation of the tool, an offered broad advice about what the agency would need from such a tool before the tech scholars created the prototype. The Aspen scholars are optimistic that the trade commission will consider using the prototype as a guiding design and proof-of-concept for future whistleblower channels.

The prototyped tool is built upon GlobaLeaks, a well known and trusted open-source, free software intended to enable secure and anonymous whistleblowing initiatives that was launched in 2011.

According to Hassard, the focus of the whistleblower tool is to educate and reduce the risk to civil participants, mostly tech workers and employees, from voluntary reporting of anti-competitive behavior.

“Since it’s open source we’ll get feedback from white hat hackers, privacy groups and others to create stronger security and a much better sense of trust which we think is innovative in the government space,” Hassard said. “It would be one of the first major foundational frameworks for informants that is open source.”

Whistleblowers and evidence from long multi-year investigations play a key role in the FTC’s ability to successfully prosecute and regulate tech companies for anticompetitive practices and force behavior change.

The trade commission has been vocal in the past two years under Chair Lina Khan about getting creative about going after Big Tech companies’ monopolistic practices by filing more antitrust lawsuits, blocking more mergers, revisiting previous deals, and being open to more whistleblower complaints.

Antitrust violations or anticompetitive behavior is harder to realize, detect, and communicate when it is hidden within vast amounts of software code or complicated algorithms, Hassard said, and this is increasingly an issue the FTC wants to tackle and be more aggressive about. 

“There are not many examples of open source and incentive design of this type working well within the government right now and we want good ideas in this space not just to be held unnaturally in the private space for personal enrichment but rather for societal public good as well,” said Hassard.

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In a letter sent Thursday to FTC Chair Lina Khan and the agency’s other commissioners, Rep. Jim Jordan, R-OH., said the committee will probe allegations that the FTC may have relied on “unpaid and unaccountable” consultants to perform core functions, and requested the agency stop the destruction or alteration of any electronic information relevant to the inquiry.

“Based on a recent report from the Federal Trade Commission (FTC) Office of Inspector General (OIG), the FTC seems to be flouting federal law to rely on unpaid and unaccountable consultants … [I]nternal documents show that these officials are likely performing work that should be done by FTC staff,” he said in the missive, which was exclusively obtained by FedScoop.

The senior lawmaker emphasized that the House committee will scrutinize the OIG’s audit and the use of non-FTC employees to perform agency functions.

Federal regulations, including from the Office of Management and Budget permit the use of consultants by federal agencies but impose restrictions on the type of work such contractors may undertake.

“You should construe this preservation notice as an instruction to take all reasonable steps to prevent the destruction or alteration, whether intentionally or negligently, of all documents, communications, and other information, including electronic information and metadata, that are or may be responsive to this congressional inquiry. This instruction includes all electronic messages sent using your official and personal accounts or devices, including records created using text messages, phone-based message applications, or encryption software,” Jordan wrote in the letter.

The inquiry marks one of the first instances since a recent Secret Service text message deletion scandal related to the Jan.6th Capitol attack in which the GOP has called on a federal agency and its leadership to preserve all digital records.

The Republican lawmaker’s questions focus on on whether the FTC may have improperly used consultants and experts to drive a Democratic agenda. Jordan has requested that the agency respond to the missive with requested information by Sept. 8.

The letter from House Republicans follows a report from the FTC’s Inspector General earlier this month that highlighted the use of consultants and unpaid experts by the regulator.

The watchdog at the time found the agency had no clear process for recruiting or integrating unpaid consultants and experts and recommended the agency adopt policies within 60 days for when it will make use of unpaid workers.

“The agency has leveraged unpaid consultants and experts during previous administrations; however, current FTC leadership has expanded their use,” the FTC OIG said in its audit. The report does not say whether the FTC had violated federal laws, but points out that the agency’s handbook and Office of Management and Budget regulations prevent government departments from using consultants to replace full-time employees.

Rep. Jordan’s strongly worded request for the FTC to preserve all electronic records, including from cell phones and personal devices comes amid intense scrutiny on federal government agencies regarding digital record archiving in recent weeks.

Earlier this month, FedScoop reported on concerns raised by former senior agency officials over the collection and preservation of such records following the deletion of text messages relating to the Jan. 6 Capitol riot by the Secret Service.

The FTC did not immediately respond to a request for comment.

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