ADventures in Law

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We spend many of our working hours – and far too many of our nonworking hours – talking about Federal Trade Commission (FTC or Commission) issues, and we can confidently state that no one has ever said to us, “I sure do wish the agency would issue yet another policy statement.” With that, we turn to the latest public Commission meeting – where, yes, another policy statement emerged.

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But first, let’s talk about the latest FTC report, this one on the use of artificial intelligence (AI) to combat certain online harms, including scams, fake reviews, disinformation and hate crimes. Sometimes the FTC will do reports on its own initiative (such as the <a href="https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry">recently announced pharmacy benefit managers (PBMs) study</a>), but other times, Congress will, through legislation, require the Commission to prepare a report on a specific topic, and that is often done as part of the agency appropriation process. Today’s report was one of those <a href="https://www.congress.gov/bill/116th-congress/house-bill/133/text">congressionally mandated studies</a>.&nbsp;&nbsp;

As we have seen before, an FTC staffer provided an overview of this report and all five of the commissioners discussed their views, with no interaction between the commissioners and staff. We know we are beating a dead horse, but these meetings would be far more informative (and possibly entertaining, since we assume that is a goal) if there were the slightest bit of extemporaneous discussion. So, what did we hear?

A longtime FTC staffer provided an overview of the report, which raised a number of interesting points. Although the general focus was that some AI tools have provided some positive results in locating online harms, the overall assessment was that the tools are not good enough. Additionally, mistakes in AI can result in bias and discrimination, and there are questions regarding the lack of transparency about how AI is being developed and used. The key conclusion was that Congress should be cautious in either mandating or over-relying on AI tools to reduce online harms and should consider putting guardrails around their use.

The report was voted out 4-1. Commissioner Noah Phillips indicated that although he generally agreed with the conclusion that one should exercise caution with these tools, he had some foundational concerns about the inputs that went into the development of the study. Commissioner Rebecca Slaughter took issue with his concerns and emphasized her concern regarding discriminatory outcomes that can occur from the use of AI. Commissioner Christine Wilson had some concerns about aspects of the report, such as the discussion on misinformation, but emphasized her strong support for the conclusion that Congress should steer clear of laws that require or pressure companies to use AI tools to detect harmful content. And Commissioner Alvaro Bedoya discussed some of the positive uses of machine learning but emphasized the challenges that can occur with the use of natural language processing tools that can misfire at times. The report can be found <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Combatting%20Online%20Harms%20Through%20Innovation%3B%20Federal%20Trade%20Commission%20Report%20to%20Congress.pdf">here</a>.

And as for policy statements, why are we harping on policy statements? Much as <a href="https://www.youtube.com/watch?v=PaHkwE7TaNg">cookies are a sometime food</a>, policy statements are a sometime tool. We are seeing a deluge of policy statements lately, and as Wilson said at the last meeting, when the agency issued a <a href="https://www.ftc.gov/news-events/news/press-releases/2022/05/ftc-crack-down-companies-illegally-surveil-children-learning-online">COPPA-related policy statement</a>, “I’m concerned though that issuing policy statements gives the illusion of taking action, especially when those policy statements break no new ground.” There is a time and place for issuing policy statements, but we aren’t sure this is something that an agency needs to do on a monthly basis.

<a href="https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-ramp-up-enforcement-against-illegal-rebate-schemes">This month’s policy statement</a> addresses an important issue relating to drug pricing. And through the latest statement, the agency stated its intention to “examine rebates and fees paid by drug manufacturers to pharmacy benefit managers and other intermediaries in exchange for disfavoring the lowest cost drug products, including in the case of insulin.” All the commissioners supported the statement and the importance of the issue, but Phillips noted that this is one of seven statements that have been issued in the past 12 months and certainly his preference is to do the much harder work of building cases, taking them to court and getting results. And Wilson doubled down on her concerns that policy statements create the illusion of taking action, but she also voted yes.

And on the consumer front, we had just all sorts of tech issues but also quite a lot of speakers today, raising issues that included drug pricing, theories of appropriate antitrust enforcement, price discrimination, the upcoming PBM study, franchises, video game loot boxes and some challenges faced when shopping for a door.&nbsp;

The 13th Public Commission Meeting – an AI Study About Online Scams and, Yes, Another Policy Statement