US FTC opens investigation into OpenAI over misleading statements -document

(Reuters) -The U.S. Federal Trade Commission has opened an investigation into OpenAI on claims it has run afoul of consumer protection laws by putting personal reputations and data at risk, the strongest regulatory threat to the Microsoft-backed startup yet.

The FTC this week sent a 20-page demand for records about how OpenAI – the maker of generative artificial intelligence chatbot ChatGPT – addresses risks tied to its AI models.

The agency is probing if OpenAI engaged in unfair practices that resulted in “reputational harm” to consumers.

The investigation marks another high-profile effort to rein in technology companies by the FTC’s progressive chair, Lina Khan, days after the agency suffered a big loss in court in its fight to stop Microsoft (NASDAQ:) from buying Activision Blizzard (NASDAQ:). The FTC has said that it will appeal the court decision.

According to the FTC’s demand for information sent to OpenAI, one of the questions has to do with steps OpenAI has taken to address its products’ potential to “generate statements about real individuals that are false, misleading, or disparaging.”

The Washington Post was the first to report the probe. The FTC declined comment, while OpenAI did not immediately respond to a request for comment.

OpenAI launched ChatGPT in November, enthralling consumers and fuelling one-upmanship at large tech companies to showcase how their AI-imbued products will change the way societies and businesses operate.

The AI race has raised widespread concerns about potential risks and regulatory scrutiny of the technology.

Global regulators are aiming to apply existing rules covering everything from copyright and data privacy to two key issues: the data fed into models and the content they produce, Reuters reported in May.

In the United States, Senate Majority leader Chuck Schumer has called for “comprehensive legislation” to advance and ensure safeguards on AI and will hold a series of forums later this year.

OpenAI in March also ran into trouble in Italy, where the regulator had ChatGPT taken offline over accusations OpenAI violated the European Union’s GDPR – a wide-ranging privacy regime enacted in 2018.

ChatGPT was reinstated later after the U.S. company agreed to install age verification features and let European users block their information from being used to train the AI model.