U.S. regulators rush to team with foreign governments on AI as Biden prepares exit

Federal regulators are hurriedly working to crack down on the artificial intelligence industry before President Biden leaves office, teaming up with foreign governments and issuing demands to U.S. companies over their AI usage.

Federal Trade Commission Chairwoman Lina Khan and Assistant Attorney General Jonathan Kanter joined regulators from Europe and the U.K. to announce plans on Tuesday to coordinate oversight of the rapidly growing AI industry. Ms. Khan also revealed plans to investigate eight U.S. businesses’ use of AI in pricing strategies, despite no suspicion of any crime.

Mr. Biden’s decision not to seek a second term, and Republican rival Donald Trump’s lead in many polls for November have policymakers scrambling in a number of fields to formulate and lock in regulatory changes before a new administration is sworn in next January.

Precisely who is in charge of the cadre of international regulators is not fully clear, but the officials said their work would be independent. Ms. Khan and Mr. Kanter issued a joint statement with the European Commission Competition Commissioner Margrethe Vestager and Sarah Caldwell, the U.K.’s top competition official, pledging collective action.

“Our legal powers and jurisdictional contexts differ, and ultimately, our decisions will always remain sovereign and independent,” the joint statement said. “However, if the risks described below materialize, they will likely do so in a way that does not respect international boundaries. As a result, we are working to share an understanding of the issues as appropriate and are committed to using our respective powers where appropriate.”

The risks that concern the international regulators include AI firms establishing themselves as dominant market players, firms working to increase barriers to entry for competitors, and AI developed or used in a way that the government officials deem harmful.

R Street Institute senior fellow Adam Thierer warned that the Western regulators’ actions only give an advantage to China.

“FTC & [Justice Department] officials continue to conspire with European regulators to hobble America’s AI innovators using hypothetical worst-case thinking and amorphous threats,” Mr. Thierer, a policy analyst, said on X. “Meanwhile, [Beijing] sits back and laughs as China looks to boost their national AI champions.”

As Ms. Khan prepares an international campaign to write rules for the AI sector, her agency is ordering American businesses to reveal information about their AI usage to the U.S. government despite making no allegations of wrongdoing.

The FTC said Tuesday it sent investigatory demands to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co. The demands say that the companies’ responses will be marked confidential and “not be disclosed without first giving you ten (10) days’ notice” with certain other exceptions.

The agency said the demands are intended to help federal regulators learn about algorithms, AI and other technology used to set a targeted price for a product, where a customer’s behavior or characteristics may determine the cost of the good or service.

Ms. Khan defended the agency’s decision to investigate the companies despite the agency’s acknowledgment that the demands “do not have a specific law enforcement purpose.”

“Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen,” Ms. Khan said in a statement.

Ms. Khan’s desire to regulate AI extends across many sectors of American life. She told the American Federation of Teachers’ convention on Tuesday afternoon that her agency would fight against AI technology that enables the tracking of children, consumers and workers.

AFT President Randi Weingarten praised Ms. Khan’s “absolutely stupendous” actions, especially given her rank as a top government official and not an activist union organizer.

The timeline for action from the FTC and international regulators remains to be determined. The international regulators indicated they intended to move quickly before AI companies implement new systems and technologies that the government believes could be harmful.

“Given the speed and dynamism of AI developments, and learning from our experience with digital markets, we are committed to using our available powers to address any such risks before they become entrenched or irreversible harms,” the officials said in the joint statement.