GoKawiilOver the last few weeks, a panic over the possibility of dangerous consequences from artificial intelligence has swept through elite media and politics. I haven’t seen anything like this since the Covid moment, and before that the 2008 financial crisis, the pre-Iraq War debate period, and the few months after 9/11. The fear is thick, and real. And the one solid demand, seemingly from every quarter, is that We Must Regulate This Technology.
The most common solution is to impose some form of safety standards, akin to the Food and Drug Administration, but for large language models. That’s something former Congressional candidate Alex Bores believes, and he’s raised $30 million in just a few months to launch a political organization around it. That’s where Bernie Sanders is, and Anthropic, OpenAI, and Google are seeking something similar. Others analogize the problem to large banks, calling for a bank supervisory regime. Some want a total pause on any AI development.
Many of these ideas are vague and sometimes not administrable, with undefined terms. But there’s nothing wrong with having a basket of ideas. That said, there’s something very weird about this whole situation. And that is, we already have a set of regulators at a Federal and state level with a mandate to look at industrial practices. There are private rights of action where individual citizens and companies can bring lawsuits, and they do. There are also numerous laws in place that already prohibit many of the harmful activities engaged in by the large AI firms. But those laws are mostly not being enforced sufficiently to make a meaningful difference, because in America, we simply do not enforce the law against the powerful. And it’s not clear to me why a new law, an FDA for AI, or even a pause on tech development, would wind up any different.
To understand why, let’s start with the attempts to regulate AI and why they haven’t delivered. The short story is that under the Biden administration, enforcers, most notably Lina Khan at the FTC, were actually responding to safety concerns about AI. Both the Antitrust Division and the FTC brought in a host of technical experts to beef up their capacity. You probably didn’t hear about these moves, but that’s because Joe Biden did not promote or publicize them. Biden was personally uninterested, so were Congressional Democrats. Those that were interested sought to curry favor with big tech, and so kept it quiet. And judges, who are politicians in robes and saw the writing on the wall, tended to side with big tech. Then in 2024, Trump won the election, and his administration canceled and rolled back attempts to enforce the law against the powerful.
Let’s get into specifics. By far the most important and successful action the FTC took was in 2021, when the commission blocked the merger between AI chipmaker Nvidia and Arm. That set the stage for the growth of both companies, who could focus on their lines of business instead of a cumbersome set of turf wars that accompany mergers. Today, for better or worse, Nvidia is the biggest company in the world by market capitalization, the engine of the AI revolution.
There was a lot more that bears directly on safety questions. After OpenAI launched ChatGPT in 2022, the Federal Trade Commission enacted a flurry of studies and investigations looking into the deployment of AI. The commission was building on its work on big tech, which it had been investigating for years. Most notably, in 2023, the FTC launched a probe into ChatGPT, asking very specific questions about OpenAI’s safety practices.
There’s a lot more. The FTC did studies on cross-ownership and acquihires. It brought multiple orders against companies using AI in deceptive ways or building technologies designed to commit fraud. It did work on data breaches, on surveillance pricing, on big tech’s ability to launch new products using machine learning, and even held CEOs personally liable for bad cybersecurity practices. The FTC’s sister enforcers at the Antitrust Division brought multiple monopolization cases against Google, both of which came to involve AI. it also filed a complaint against United Health’s acquisition of Change, a case involving data and machine learning, and it did work on the use of algorithms for price-setting in meat-packing and rent-setting.
So what happened? Well, despite these actions, Khan and Kanter had very little support from Congress. Democratic Senate leader Chuck Schumer’s daughters worked at Facebook and Amazon, and in 2022 he personally blocked antitrust legislation from coming to the floor of the Senate so as to raise more campaign money from big tech donors. Pelosi similarly wouldn’t allow big tech legislation to come to the floor in the House.
When Trump got elected in 2024, the Trump-Vance FTC Chair Andrew Ferguson immediately moved to reverse most of what Khan did, and even tried to erase her entire record, scrubbing the FTC’s website of more than 300 blog posts involving AI.
But it was much more than just symbolic, Ferguson took the unusual step of pardoning an AI offender by setting aside the penalty against, Rytr, an AI development firm, for marketing its AI tools as a way to falsify testimonials and reviews. As powerful white collar defense lawyers noted, Ferguson was “signalling a shift in how the Commission will approach AI enforcement.” He quietly closed a public comment docket on surveillance pricing, and he has presumably ended the investigation into ChatGPT.
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