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▶ 0:14:22we being here the subcommittee will come to order without objection the chair is authorized to declare recess and any time we welcome everyone to today's hearing on artificial intelligence and Trends in Innovation and competition I will now recognize myself for an opening statement artificial intelligence AI is a powerful new technology and it's moving fast it already
▶ 0:14:52is changing the Way businesses operate how people work and how we solve problems throughout our society from agriculture culture to manufacturing to customer service AI is showing up in more places every day and it's helping Americans get more done faster and more efficiently there's no doubt this is a big moment for both America and the rest of the world but the question before us today is this will we we respond to it with more freedom or with more government
▶ 0:15:22control America has always led the way in Innovation not because we have the biggest government but because we have trust at our people we believe in free markets competition and limited government that's what built our economy and that's how we create new technologies from the light bulb to the smartphone and that's why the United States not China or Europe has been the global leader in Innovation for over a century and that same model is working in AI the story we hear sometimes is that a
▶ 0:15:52few big companies are dominating the AI sector but when you look closer the story unravels throughout this industry there is real competition happening at every layer of the AI sector in Cloud infrastructure in AI models and in tools and applications it's true that big Tech plays a role in this sector but you also have startups open- Source developers University labs and solo Engineers pushing the boundaries
▶ 0:16:23of this exciting new technology small businesses are using AI to do things they never could for before automate routine tasks improve customer service analyze data write content design products and more AI is helping the little guy compete with the big guys it's lowering barriers to entry across the board this isn't a monopoly story it's a success story it's the free market doing what it does Best But unfortunately some
▶ 0:16:53in government want to step in and start regulating before they even understand what they are regulating they want to create sweeping new rules or even whole new agencies to oversee AI under the claim of safety and of fairness they want to decide which models are quote unquote responsible which tools are quote unquote approved and which approaches are fair and who gets to build what that's very dangerous we see this same Saga playing out time and
▶ 0:17:23time again overregulation can kill Innovation When government inserts itself too early it locks in incumbents drives up costs and freezes the market startups get squeezed the rules benefit the Insiders and Innovation slows to a crawl meanwhile our competitors especially in China aren't waiting around they're pouring billions into AI development they're using it to monopolize their military monitor their citizens
▶ 0:17:53and try to LeapFrog the US on the global stage to the detriment of democrat principle s and values and over in Europe the EU is rolling out a top- down AI regulatory regime that already is causing problems for American companies trying to do business overseas the rules are vague burdensome and constantly shifting and they've been written by bureaucrats who aren't accountable certainly to the American people
▶ 0:18:24we should not copy China's model of control and we should not copy Europe's model of over regulation we need to stay true to what works and that is free enterprise open competition and light touch regulatory approach that allows Innovation to flourish that doesn't mean we ignore real problems we should enforce our existing antitrust laws if companies are abusing their Market power we should be on guard against fraud abuse and National Security threats but we don't need a
▶ 0:18:54heavy-handed new regulatory regime to do that what we need is to keep the US the best place in the world to build test and deploy AI that means making room for new entrance it means protecting free speech in the digital age and it means making sure American entrepreneurs not unelected Regulators Regulators excuse me are the ones shaping the future of this technology AI is a tool whether it helps or harms depends on how we
▶ 0:19:24use it and whether we keep the freedom to innovate adapt and compete the worst thing we can do is let fear drive us into giving up control to Washington to Brussels or to Beijing the American model has always been the best model let's stick to it I want to thank the witnesses for appearing before us today and I look forward to hearing what each of you has say I now recognize the ranking member Mr Nadler for his opening
▶ 0:19:55statement thank you Mr chairman and thank you to our Witnesses particularly to commissioner bedya for joining us today as we examine Innovation and competition with respect to artificial intelligence we we must keep in mind three simple truths first there is no artificial intelligence exception to the antitrust and consumer protection laws second there is no Doge exception to Federal privacy protections and finally there is no presidential
▶ 0:20:26exception to following federal laws it is a sad comment on the time we find ourselves in that these undeniable and basic propositions must be continually affirmed AI technology is rapidly advancing and Promises to transform our society in ways we cannot even imagin today but while AI will deliver many economic and social benefits it also poses tremendous risks that we are just beginning to Grapple with and with control of AI technology
▶ 0:20:56in the hands of just a few entrenched companies it is important that we keep a watchful eye on the industry with thoughtful regulation that will Foster growth and Innovation while protecting consumers one of the most critical Tools in this effort is antitrust and consumer protection enforcement led by the Federal Trade Commission an independent administrative agency that was created more than 110 years ago by Congress as the nation was beset by powerful monopolies that dominated core
▶ 0:21:26Industries in society its specific mission is to protecting the public from deceptive or unfair business practices and from unfair methods of competition it structur is deliberately bipartisan with no more than three members of of the five person commission able to be from a single party this makeup along with the fact that the Commissioners are meant to serve staggered seven-year terms and are removable only for very specific causes is designed to increase the independence and
▶ 0:21:56thereby The Prestige of the commission we need the FTC now more than ever as we confront an AI induced wave of competition consumer protection and privacy related issues and yet the Trump Administration is undermining the single agency best positioned to address them years before chat gbt burst onto the scene the FTC was already working to protect consumers by stopping the largest semiconductor chip merger in
▶ 0:22:26history chips are in a essential input to Ai and blocking this merger helped protect Innovation by preserving competition for this vital tool using their unique power as part of the commission's study function the FTC also produced a report examining AI Investments and Partnerships that would best enable the agency to ensure that when dominant companies pursued these practices they did not undermine competition and Innovation with
▶ 0:22:56more and more companies relying on a I to make fundamental decisions that affect consumers the FTC has also carefully examined the algorithms that power these systems in particular the commissioner tackled algorithmic bias and algorithmic collusion which is when a computer system systematically produces unfair outcomes or is used to engage in anti-competitive pricing respectively this work is essential to ensure that as AI develops it serves
▶ 0:23:27the American people if we are serious about promoting competition and innovation in AI we need a strong FTC to enforce the law but instead the Trump Administration has done all it can to hble the agency and to weaken enforcement of antitrust and consumer protection laws even more troubling while with one hand the administration is undermining regulation of AI with the other hand it is handing massive troves of sensitive data on millions of Americans
▶ 0:23:57to Elon Musk and his doge team that could be used to deploy AI throughout the government governmental processes its workflows and the use and interpretation of government data are highly complex there is scant evidence however that AI can be successfully deployed in government on such a far-reaching scale but musk and Doge seem intent on forcing the American people to embark on a grand experiment based on little more than their faith in AI technology an
▶ 0:24:27experiment that placed es all of our privacy and security at Great risk and while all this unfolds commissioner bedya should be participating in any number of matters protecting consumers even as a minority commissioner he and his fellow Democratic commissioner Rebecca Slaughter occupy an important and congressionally mandated role they are fundamental to infusing commission deliberations and decisions with a bipartisan Dimension often times minority Commissioners influence
▶ 0:24:57the outcome or logic of the decision but even when they do not they perform the essential function of providing transparency into the process including by highlighting key concerns in their descents but instead of working to enhance competition in the AI industry and ensuring that that proper safeguards are in place they're forced to contest their blatantly un unlawful termination by President Trump this unprecedented power grab followed
▶ 0:25:28similar efforts to remove Democratic members of other independent agencies without cause as one Court noted these efforts quote threaten to upend fundamental Protections in our constitution but ours is not an autocracy it is a system of checks and balances close quote just as unchecked Power by monopolies in the marketplace does not secure the best outcomes for consumers unchecked government power does not secure the best outcomes for our democracy
▶ 0:25:58we should be mindful of both points as we begin today's hearings I look forward to hearing from our Witnesses and I yield back gentleman yields back I now recognize chairman of the full committee Mr Jordan for his opening statement thank you Mr chairman American innovators have always led the world because we've always protected free markets limited government and individual liberty but when it comes to AI the Biden Administration turned its back on innovators and entrepreneurs rather than trusting
▶ 0:26:28American Ingenuity the Biden Administration tried to put Washington in charge empowering unelected and unaccountable bureaucrats and who paid the price very people we should be empowering the startups trying to challenge big Tech the researchers Building open models the platforms that actually support Free Speech meanwhile around the world we see the dangers of pursuing the wrong approach on AI Innovation we see China pouring billions of dollars into AI development to weaponize the technology we see Europe smothering
▶ 0:26:58Innovation with overregulation and impossible compliance burdens we should be clear America must lead on AI but to do that we need to protect Free Speech preserve real competition and get the government out of the way that means number one no backdoor censorship number two no weaponizing antitrust law to reward political allies and punished descent and number three letting no International no International bodies or unelected regulators set the
▶ 0:27:28rules for American Technology thankfully president Trump we have a president focused on unleashing American innovation on cutting red tape and on protecting free expression and on making sure AI development happens here not in China not in Europe under President Trump's leadership to focus is right where it should be keeping America competitive preserving free speech and getting the government out of the way today's hearing is about how we protect innovation protect Liberty ensure
▶ 0:27:59that AI remains a force for Freedom not for control so I want to thank our chairman for calling this hearing and I look forward to hearing from our Witnesses I yield back gentleman yields back uh without objection all other opening statements will be included in the record we will now introduce today's Witnesses Mr Neil Chilson Mr chillson is the head of AI policy at the abundance Institute a nonprofit organization focused on emerging
▶ 0:28:29technology he previously served as the chief technologist at the Federal Trade Commission and as an attorney advisor to then FTC acting chair maren alhusen Mr Joe Coniglio Mr Coniglio is a director of antitrust and Innovation at the information technology and Innovation Foundation where he leads the shet project on competition policy he focuses on digital platform form monopolization
▶ 0:28:59policy and Dynamic competition Miss Jessica maluan Miss maluan is a director of the center for technology and Innovation at the competitive Enterprise Institute her research focuses on technology issues including antitrust online privacy artificial intelligence telecommunications and other issues Mr Alo badya Mr badya is a former commissioner at the Federal Trade Commission prior his appointment to the FTC founded
▶ 0:29:30the center on privacy and Technology at the Georgetown University law school we welcome our Witnesses and thank them for appearing today uh we will Begin by swearing you in would you please rise and raise your right hand do you swear or affirm under penalty of perjury that the testimony you're about to give is true and correct to the best of your knowledge information and belief so help you got let
▶ 0:30:00the record reflect that the witnesses have answered in the affirmative thank you please be seated uh please know that your written testimony will be entered into the record it's an entirety uh accordingly we ask that you summarize your testimony in five minutes um without objection uh Mr Kylie will be permitted to participate in today's hearing for the purpose of questioning the witnesses if a member of the subcommittee yields him time uh
▶ 0:30:31please know that your written testimony will be entered in the record it's an entirety Mr Chilson you may begin thank you chairman Fitzgerald thank you to the chairs and ranking members of the full committee uh and to um ranking member Korea uh and distinguished members of the subcommittee thank you for inviting me to testify today I'm Neil schulson I'm the head of AI policy at the abundance Institute we are a nonprofit dedicated to creating policy and cultural environments that allow emerging
▶ 0:31:01Technologies to thrive and expand human Prosperity last year American AI startups raised more than 997 billion or uh approximately half of the entire program um at least 49 different us AI startups raised more than aund million just last year these are record numbers and they're just getting started I'm here to make a simple but important Point economically AI isn't an industry or a market it's an
▶ 0:31:31ecosystem of thousands of companies and the US AI ecosystem is vibrant and remarkably competitive at every level from chips to Cloud infrastructure from Foundation models to Applications we're seeing intense competition driving rapid Innovation and democratizing access to powerful AI capabilities consider that 11 different developers last year globally uh across the globe achieved a gp4 level model um one
▶ 0:32:02of the most advanced types of AI models or that market shares in cloud computing continue to shift with established players and startups pressuring each other the AI Enterprise service Market is is highly fragmented with the leading firm holding a mere 7% these are not signs of concentrated power they're evidence of healthy competition this competitive environment is spreading the benefits of AI while Ely AI capabilities that were cutting edge or even unimagined
▶ 0:32:32just a few years ago are now widely accessible or even free for example many of you may have seen the the most recent uh generation of uh studio gibli uh themes online um this type of use of powerful image generation which once required specialized knowledge in powerful computers is now available for anyone for free or maybe pennies per in image AI Services keep getting better and cheaper with AI API
▶ 0:33:03access for the leading models dropping in price by 80 or 90% last year lower prices open up new use cases Empower small businesses and New Market entrance open- Source AI models are a particularly powerful Vector of competition open models level the playing field reduce barriers to entry and give smaller players access to cuttingedge AI technology without needing Mass resources to train their own models and this sector is growing fast aggregator
▶ 0:33:33uh hugging face which hosts more than a million different open source models for different purposes and for the most advanced models open AI just this week just yesterday uh announced that they will soon release an open weights model joining major players like meta and deep seek the vibrant AI ecosystem in America does face a threat however miscalibrated regulation regulation often entrenches incumbent firms by creating barriers that
▶ 0:34:03new competitors cannot overcome and compliance costs are disproportionately burdened smaller newer firms giving established players a competitive Advantage the Trump ADM Administration recognizes this threat of Regulation and has shifted the federal conversation in AI from one that's based on fear to one that's focused on opportunity and this is a welcome change at the state level however there are more than 9900 bills proposing to regulate Ai and they've
▶ 0:34:33been just introduced since January while often well-intentioned this emerging Patchwork of Regulation threatens to undermine both domestic competition and our national competitiveness Congress should meet this challenge by creating a consistent National regulatory approach to AI that maximizes freedom for general purpose AI technology while clarifying obligations in specific applications such as health care or Transportation there are more detailed ideas in my written
▶ 0:35:04testimony in conclusion the US AI ecosystem is remarkably competitive and Innovative spreading access to powerful tools to sustain this vibrant competition and to maintain American leadership policy makers should clear regulatory barriers and resist raising new ones by doing so we can preserve the dynamic nature of AI and continue reaping it enormous economic and social benefits in the years to come thank you for your attention and I welcome your questions thank you Mr
▶ 0:35:34chillson Mr Coniglio you may begin chairman Fitzgerald ranking member Nadler and chairman Jordan and esteemed members of the subcommittee um I'm honored to be here today uh in my remarks I'm going to highlight three key areas where I believe Ai and antitrust overlap and critique three policy Frameworks for dealing with AI uh in myew view AI provides no reason at this time for either heavy-handed antitrust enforcement uh or uh changing fundamentally
▶ 0:36:05our antitrust laws first the AI industry is highly competitive and developing in a way that is consistent with the healthy Innovation competition that typifies high-tech markets firms like Nvidia reinvented themselves with huge success to lead and recoup their investments in chips while a number of newer players like open Ai and anthropic are flourishing at the model level in due to Partnerships with large digital incumbents indeed not only is competition robust among Cloud providers
▶ 0:36:35uh it is a testament to Big Tech firms not resting on their Laurels but aggressively also competing at many levels of the AI stack second AI is already being heralded as the next general purpose technology that like the internet will transform our economy and as the past 40 years make clear the stakes for getting competition policy right are high whereas the US pursued deregulation and a consumer welfare antitrust model that was conducive to The Innovation and growth that helped preserve its share of global wealth
▶ 0:37:05amidst China's rise Europe continued within anti trust framework more suited to protected competitors missed the digital Revolution and saw a share of global wealth Fall by almost half importing a European style competition policy to America risks repeating this mistake with AI and ultimately benefiting China in its own quest for AI dominance third is the question of how AI will affect the antitrust Enterprise itself for example when it comes to combating collusion some have suggested that AI algorithms may make it easier
▶ 0:37:35for fir firms to form and police cartel agreements as well as facilitate oligopoly outcomes without any agreement and thus avoid any trust scrutiny on the other hand not only has the Department of Justice already brought AI related algorithmic collusion cases using its existing tools uh which in the future could even be enhanced by AI technologies that make it easier to detect cartels but AI may also increase firms incentives to disrupt cartel Behavior resulting in less collusion throughout the economy in the face of these complex issues I
▶ 0:38:06want to now discuss three flawed antitrust enforcement approaches policy makers may be tempted to adopt first is the idea that antitrust is more important than ever before some worry that AI will increase concentration throughout the economy by virtue of network effects and increasing returns to scale in ways that make it hard for markets to self-correct these concerns which are as old as the antitrust laws El Overlook the cost reducing potential of AI which also May lower barriers to entry for small and mediumsized businesses and create competition
▶ 0:38:36moreover increased comp concentration not only isn't bad when it's driven by lower costs that reduce prices for consumers but it often empowers the incentives and abilities that spur Innovation second there is the contrary view that because AI is so disruptive there's little need to enforce the antitrust laws at all indeed a similar debate was had during the internet Revolution and noted in the seminal Microsoft case where the court discussed how in technologically Dynamic markets Monopoly power may only be temporary while like
▶ 0:39:06the internet AI is poised to bring tremendous benefits and disruption the past 40 years have taught us to be wary of formalizing theoretical assumptions of Market self-correction anti trust still matters and we should continue to carefully examine Market realities for any competitive conduct in the age of AI third there is the notion that AI May undermine the very Market competition upon which anti trust law is pre premised some commentators have claimed that AI may even render markets obsolete through more sophisticated calculation techniques that could make regulation
▶ 0:39:37Superior the central problem with this perspective is that it's based on a static understanding of how Market competition Works more Dynamic competitive processes will undercut the justification for State Central planning and regulation in a way that reaffirms the importance of healthy markets in conclusion I think the right approach is to maintain anti trust Law's traditional focus on promoting competition and Innovation by prescribing collusive and exclusionary anti competitive conduct this has since the passage of the Sherman Act
▶ 0:40:07withstood and helped manage the creative destruction that worked to make America the world leader that it is today ensuring that competition policy remains Tethered to these principles is essential for preserving American leadership into the 21st century amidst the new wave of general purpose technical change that is AI thank you and I look forward to your questions thank you Mr kigo uh miss maluan you may begin chair Fitzgerald ranking member Nadler and distinguished members of
▶ 0:40:38the committee thank you for holding this hearing today and inviting me to participate my work focus is on technology and antitrust at the competitive Enterprise Institute a nonpartisan public policy organization that concentrates on regulatory issues from a free market perspective I'm also an antitrust and competition fellow at the innovators Network Foundation I am pleased to have the rare opportunity to speak to you today about a bipartisan goal that of ensuring the United States Remains the leader on in artificial intelligence Technologies
▶ 0:41:08while reasonable people can disagree about the challenges AI might bring almost everyone recognizes the Technology's vast potential for economic efficiency gains life-saving medical breakthroughs environmental benefits and more there is similar consensus around the importance of our country winning the global race for AI dominance head of various authoritarian regimes around the world including China this broad political agreement can be found in last year's bipartisan house task force report on artificial intelligence that emphasizes the
▶ 0:41:38economic and National Security importance of AI success for the United States if all agree that a flourishing domestic AI industry is critical we should next identify the biggest threat to continued us dominance in the field namely government overreach alongside the growing Patchwork of state level AI regulation s that I would encourage this Congress to consider preempting but that's a whole another hearing the threat of overzealous antitrust regulation looms large the default antitrust approach to AI in the US
▶ 0:42:09should be one of humility humility by Regulators however well-intentioned anti-rust enforcers are no better than anyone else in foretelling the future and certainly not Clairvoyance capable of accurate exante regulation of a quickly evolving technology antitrust enforcement in the tech sector has been and particularly poor from an abandoned IBM suit that lasted 13 years to a Microsoft case where innovation in the market largely rendered the charges moot litigating antitrust and Tech is especially challenging
▶ 0:42:40we can look across the pond to the European Union for an even more cautionary Tale in overregulation and excessive antitrust enforcement the result is that in the US with its relatively light touch regulatory regime and consumer welfare driven Anti-Trust approach we boast eight of thep top 10 Global Tech firms by market cap with Europe unable to claim even one currently the EU has an AI regulatory framework much larger than its AI industry putting them on the now familiar
▶ 0:43:10path to diminished Prosperity we needn't make the same mistake here we know what regulatory framework leads to success and can course correct for the harmful antitrust trends of the last four years the Embrace of a big is bad approach to antitrust enforcement at the prior administration's Federal Trade Commission and Department of Justice must be reversed it's critical that America's AI ecosystem has both large established firms with their vast resources for research and development and vibrant small startups
▶ 0:43:40with their nimbleness and innovation in many cases startups rely on the expectation of eventually being profitably acquired by large firms to secure early funding this is why continued regulatory hostility to mergers and Acquisitions is a recipe for stifled AI growth we must also return to an economics based approach to identifying competitive problems should they arise whatever challenges outside of measurable economic concerns AI might bring antitrust law will be the wrong tool
▶ 0:44:10for correcting them refocusing enforcement on consumer welfare and away from ambiguous vague social goals will be a productive improvement over the last several years but what are the current facts on the ground for AI competition landscape right now so far competition seems to be thriving in what is a non-unitary market from Hardware to the data layer to algorithms and applications the then newcomer open AI had a meteoric rise to popularity with its debut of chat GPT in November
▶ 0:44:40of 2022 and is holding its lead over even the biggest established Tech competitors as the most used large language model those Tech Giants plan to spend more than 300 billion this year investing in AI Technologies which is not the behavior one would expect from entrenched monopolis insulated from competitive pressures and the presence of multiple open- Source models that allow the little guys to build on those already established models ensures beneficial competitive pressure and leaves space for Innovation
▶ 0:45:11the current state of competition in AI is strong the threat of premature and unwarranted antitrust intervention poses one of the greatest threats to Global us competitiveness thank you for this opportunity to testify and I look forward to your questions thank you miss maluan m Mr bedya you may begin thank you chairman Fitzgerald ranking me member Nadler chairman Jordan members of the subcommittee thank you for having me here um right now people think that a successful AI startup needs four things chips cloud
▶ 0:45:41training data and the people to train those models uh and deploy them and so right now there are races being run to secure access to those four key inputs um in the time I have with you today I want to issue three warnings about those races first I want to warn that certain agreements between major AI developers and two of the biggest cloud service providers may be limiting the availability of those Cloud providers to those smaller Innovative startups uh just this January FTC
▶ 0:46:11issued a staff report uh we looked at three Partnerships between the major Cloud providers and the major AI developers out there report showed that cloud providers typically got things you'd expect Equity a share and revenue uh from those AI developers um the the agreements also requir the AI developers to spend a lot of the investment from the cloud provider on cloud services from uh uh from the cloud provider now unfortunately these kinds of terms may be incentivizing
▶ 0:46:41those Cloud providers to limit access uh to their platforms away from AI startups who they're not partnered with uh and unfortunately this is not hypothetical there were actually uh there was actually an internal document from one of those Cloud providers that said quote we are unable to serve a growing number of startups who need bursts of Graphics Processing Unit capacity to train and release their models so uh I agree you know we want a world where a scrappy startup can eat a
▶ 0:47:12powerful incumbent but we have to ask if these kinds of agreements this kind of vertical integration is leading us away from that kind of innovation that's the first warning I also want to address the race to collect and retain uh data because in the race to scrape buy access all kinds of human generated data I'm afraid that a lot of AI developers are collecting and keeping data that a lot of us would consider deeply private so here's an example in 2023 the FTC alleged that by default
▶ 0:47:42uh Alexa was keeping recordings of kids voices forever and it wasn't just that even when parents said hey Alexa I want you to delete that Alexa wasn't doing that it was actually keeping the transcripts of that information now anyone who's a parent should stop and ask themselves you know what on Earth does my kid need to say to a Smart speaker for me to stop everything and say oh no we need to delete that data but that's not what happened um here's the key thing though the FTC alleged that one of the reasons Alexa
▶ 0:48:13uh Amazon gave for retaining that data was their need to train their voice recognition algorithms and so that's my second warning we have to remind companies that the need to train your doesn't override the need to follow the law including Privacy Law and kids Privacy Law here's the third and last flag you know there's been a lot of attention and I think for good reason paid to the apparent collection and use of copyrighted Works to train models
▶ 0:48:43uh my my colleague uh uh Mr Chelson mentioned the studio gibli algorithm that's out um I'm afraid we aren't paying enough attention to the collection and training uh and of training data about people who are in no way famous working people let me give you a quick example during the actor strike uh a prominent director Justine baitman posted online asking if any extras these are folks known as background actors if any of them had ever been asked to submit to body scans on set
▶ 0:49:14and suddenly these stories started pouring in people saying yeah I got tapped on the shoulder I was told to go to this tent and I stepped in there and I was scanned 360 Degrees head to toe and I asked why they didn't tell me I asked if I was going to get paid they didn't give me anything but the few people who found out were told oh yeah this is to add you in later if we want to of course at no additional pay I'm talking about this because scanning people at their jobs to replace them at those jobs is becoming common outside
▶ 0:49:45of Hollywood so this is starting to happen in customer service call centers these are jobs that used to provide high school graduates a path to the middle class but now they're rif with surveillance and and a lot of that surveillance appears to be aimed at recording the best performers to create algorithms that are marketed as replacements for the workers at those call centers so in closing I'd respectfully urge the subcommittee to not just look at competition between AIS but competition between AIS and workers because
▶ 0:50:15it raises some pretty fundamental questions like you know how do you compete with a digital version of yourself who can work 24 hours a day seven days a week with no break no vacation no benefits is it fair uh to to force you to train your AI replacement is it fair to force you to do it without your knowledge um and as I explained in my testimony I think this is a great reason to pass a workplace Privacy Law thank you again Mr chairman ranking member Nader for the opportunity to testify I'm glad to answer any questions you may have thank you very much Mr badya now proceed under the five minute rule with questions
▶ 0:50:45I'm going to recognize myself in recent remarks at the AI Summit in Paris vice president JD Vance stated that AI presents the extraordinary Prospect of a new Industrial Revolution but it will never come to pass if overregulation deters innovators from taking the risks necessary to advance the ball uh he was referring to the European Union's digital markets act and AI act uh Miss maluan uh why would replicating
▶ 0:51:16Europe's heavy-handed regulation of AI in the US uh certainly be maybe unwarranted or premature yes it's kind of the European Union to have run this experiment for us uh it has not gone well um their first big attempt at digital regulation the gdpr ended up hurting the entire industry but mostly hurting the little guy disproportionately which we would see the same up here um with a lot of the regulatory moves the big entrenched
▶ 0:51:46um accused monopolists or just Market leaders depending on your perspective might have the resources to comply with a lot of those regulations but the runway is not clear for the next big success story um and that's what you have to keep in mind that a lot of times the companies that have a seat at the table might be able to make this work but we don't know what's being developed in someone's garage right now that could be the next big thing I think that goes to the general approach in Europe which has been that if you're chilled in your Innovation by worrying
▶ 0:52:16that everything you do every new business Arrangement every new idea could be running a foul of one of the many the the dma the DSA the gdpr it it just hasn't overall chilling effect on that industry and of course relatedly on investment in that industry and frankly the US really doesn't have that time um if China I think I don't think it's an overstatement to say they're nipping at our heels in terms of the IIA AI race and you know what those companies and
▶ 0:52:46those Industries are doing in China is not the regulatory framework you see in the US but it's also very much not the one you see in the EU and it's no coincidence that you find all three of those segments in in a different order of success and we want to make sure we keep ourselves out front um as I said in my testimony the European union doesn't have one of the top 10 Global businesses and and again that's not to say that the small companies aren't important to to develop here in the US but you certainly need the scaling abilities of large
▶ 0:53:17companies the research and development resources of these large companies you want a healthy ecosystem with the big guys and the small guys um and adopting a European approach won't allow that to happen at either level here in the US so the Netherlands based software firm bird um which has been recognized kind of globally at this point is moving out of the EU as a direct result of the AI act um what they said was that Europe uh Regulators are just killing Innovation within the EU
▶ 0:53:47so you think there's lessons already that can be learned here in the States from what we've witnessed on some of these uh some of these examples of what's transpiring iring overseas yeah I don't even think you have to abstract very much I mean the uh EU AI act that those Regulators bragged about being the first to regulate AI which to some of our ears doesn't sound like something to brag about uh means that a lot of the US companies that rolled out AI products that consumers have found incredibly useful have been
▶ 0:54:17very Pro popular here in the US they were delayed in Europe because they weren't sure that they could comply with all the rules and regulations so at the worst case scenario you don't get those Innovations your constituents don't get those services and those tools the best case scenario is that they're delayed because of regulatory overview and again that's an example where the little guy who's innovating something new maybe doesn't have the team of lawyers that the big guys do so I I don't think we want to set up that Dynamic here in the US very good Mr uh Coniglio
▶ 0:54:47uh you just cautioned against overregulation or testimony you note that uh robust anti antitrust enforcement to promote customer welfare and Innovation to remain a policy Focus can you just elaborate kind of further on that point absolutely thank you for the question um so miss maluan pointed out the lessons we've learned from regulation and I would note the US also has some lessons that it learned from deregulation about how deregulation can spur economic growth and Innovation but there's also a very important story to tell regarding
▶ 0:55:18competition policy and specifically two different approaches that were taken over the past 40 years between America and Europe on competition policy and uh at a high level Europe's approach was very much focused on protecting competitors so it wanted to see markets where there were a lot of small firms America's approach was focused on not condemning siiz in and of itself but focusing on consumer welfare and Innovation and um I think if you look most recently at the Drogi report that was issued in Europe it was very clear that the
▶ 0:55:48digital Revolution that happened in America has really driven the productivity gap between the United States and Europe that's occurred and I think anti trust is not the sole reason for that but I think it's part of the reason because if you have an antitrust policy that's not conducive to Innovation and consumer welfare and instead focusing on protecting small competitors you're not going to see the sort of dynamic Innovation competition that's really driven the digital industry in America and which in part can can uh large firms can also play a big role in driving that Innovation
▶ 0:56:18thank you very much my time is expired I'm going to recognize the ranking member Mr Nadler for five minutes thank you Mr chairman commissioner bedya one of the many areas in which the Federal Trade Commission has distinguished itself is in its groundbreaking activity to combat anti-competitive practices in the pharmaceutical industry whether it's the pay for for delay cases or efforts to fight misuse of the FDA publication called the Orange book the FTC has been at The Cutting Edge that's why I was so Disturbed
▶ 0:56:49to see that yesterday the ftc's general Council stayed the administrative judication of the commissioner's case against a three largest Pharmacy benefit managers over the price of insulin the effort to bring down prices for consumers is just one example of the work you were doing before President Trump attempted to remove you from Office can you explain the costs cost to be born by consumers associated with the president's unlawful attempt to fire you and commissioner Slaughter thank you ranking member nler
▶ 0:57:19maybe I can just talk about this case so I'm pretty sure everyone in the room cares about the cost of insulin and this is a case where um FTC staff is alleging that these Pharmacy middlemen they're called pbms Pharmacy benefit managers are competing not to lower the price of insulin which is how markets normally should work they allege instead that the these Pharmacy middlemen are competing to raise the price of insulin we uh commissioner slauer who I'm joined eating or
▶ 0:57:49colluding uh pardon me I didn't hear the first part of beating or colluding what was the beating or comp competing the allegation in the complaint is there's a competition to raise uh to raise the prices um and uh I'm joined by commissioner Slaughter she and I are the only judges uh who are uh uh presiding over that case in an appellant manner because our colleagues chairman Ferguson and commissioner Holier are both recused and so now that
▶ 0:58:20it's the administration's contention that we are removed there are no judges to adjudicate that case and so the pharmacy middlemen have uh have moved to stay it uh that move that stay was granted that request for stay was granted yesterday and this case won't be adjudicated for at least another 105 days so I think that's three and a half months and the evidentiary hearing I understand will will occur even later but basically it's it's permanently not permanently but indefinitely on Ice um and I don't think anybody wins from having a case
▶ 0:58:50like that not adjudicated thank you we know that unfortunately one of the ways new technology is deployed is to find ways to break the law is computer generated pricing or algorithmic pricing being deployed to violate the antitrust laws and what can the FDC do about it one of the things we're hearing a lot are allegations that instead of um outright colluding to use your term just sitting down in a smoky room you know like the beef trust did in Chicago you know in the early 1900s
▶ 0:59:20and just set prices what a lot of competitors are doing is saying oh no no you know we compete but we happen to use the same you know algorithmic pricing uh uh software and and although there are allegations for example in the real page lawsuit uh from doj that they are in fact also picking up the phone and just straight up colluding increasingly what you see are cases where um they just use the same software and so I think this is absolutely a core concern the FTC has uh issued various requests for information around
▶ 0:59:50uh um aspects of this uh we issued an intern report around uh algorithmic pricing in January and it's something I think we need to continue to uh track closely thank you we all recognize that AI carries with it enormous potential as well as possible perils we also all recognize that it's a field that continues to develop often that rapid clip can you explain why the ftc's involvement in evolving Industries even while they're undergoing changes is a good thing absolutely you know I I understand folks
▶ 1:00:21who say know you don't want too aggressive antitrust enforcement that's a bad thing but for me the case that jumps out is the case you mentioned the proposed Nvidia arm merger uh Nvidia is a chip supplier arm is a chip designer it's a vertical deal arm was valued at the time of that deal for $40 billion uh FTC sued they dropped that merger and as of like 958 this morning arm was valued at I think $114 billion and so the answer to your question uh uh Congressman Nadler
▶ 1:00:51is that so the market can continue to evolve so that Scrappy staru can access all of these critical resources that companies like these provide without the limitations like the ones I referenced in my opening statement where they incumbents are getting locked in and startups are getting squeezed out thank you and finally our fields of law uh all fields of law can and should evolve over time in recent years there's been increased attention as to how competition affects not only consumers but also workers with
▶ 1:01:21that perspective in mind how should how should we be thinking about how a I might impact the Workforce I would say the biggest thing people are not talking about is the need for some kind of protection for workers in the workplace so that they just can't be scanned head to toe and replaced by algorithms and this isn't no longer a thing from Hollywood this is something you're seeing in jobs like call centers online therapy Etc gentleman's time my time is expired I yield back now recognized gentleman
▶ 1:01:51from Texas Mr Gooden thank you miss maluan the Biden Administration passed sweeping executive orders on AI which weren't authorized by any congressional action or directive do you think the previous administration bypassed Congress and micromanaged AI development without public accountability yes would you like to comment further sure I do I think that it's a perfect example of the rush to regulate what you all are doing here today is having a very constructive conversation about one
▶ 1:02:21aspect of AI and I think that's to be applauded I think coming out with an EO that puts large restrictions on how people are allowed to innovate testing rules that haven't really been put through either the common law process in the courts or a congressional process I think is always a mistake even if I had agreed with the rules that were there I I wouldn't support it um but I didn't and I think the lifting of that uh executive order with the current Administration is generally a very positive step and so what role should
▶ 1:02:51Congress play in your mind in ensuring the that AI governance uh reflects competitive neutrality market dynamics and constitutional accountability as I somewhat snarkily mentioned in my testimony I do think that the biggest thing Congress could do would be to consider preempting the rush of state regulations on AI I think there's very well-intentioned state legislators they see that Congress isn't moving on this they want to do something but a patchwork of potentially 50 plus
▶ 1:03:21different regulatory regimes for AI is the kind of hurdle that could really slow us innovators down and certainly the not not the kind of hurdle that they're facing uh in China so I think it's a infinitely like unpolitically satisfying answer but I think Federal preemption should be something um serious lawmakers consider and I and what I think you know to the Anti-Trust question that we're talking about today um you know
▶ 1:03:52let's wait and see until a what problems arve um and also what laws and tools are already on the books that regulators and lawmakers can use to react to those problems um you know price fixing is still price fixing whether it's done in a smoky room with meat which actually sounds kind of great the Meat part the meat wasn't okay um it was a good visual though I want to give you full credit for that um or done with um AI technology and an
▶ 1:04:22algorithm these things are still illegal fraud is still illegal whether it's you whatever kind of Technology you use so I think taking things as on a Case by casee basis is a smarter approach to not making the mistake of over regulating and hurting innovation in the US you mentioned China do you feel um where do we rank in terms of attracting investors and are we doing better or worse than China with respect to AI well I think the structure is so different right we're
▶ 1:04:53happily it's private investment here in the US for the most part um but China is pouring billions of dollars into these Technologies and I do think um that without tying one arm behind our back my money's on the US to out innovate always but I do think that that state Patchwork of regulations or unwarranted and overzealous antitrust uh intervention could put us at a real disadvantage and I think it's it's like we've been saying there's different points along the AI
▶ 1:05:23ecosystem so it's hard to give you one answer about all of it but it's it's a close race thank you yield back gentleman yields back gentleman from California is now recognized for five minutes thank you Mr chairman I want to welcome our Witnesses today you know every day the newspaper something new with AI new developments new companies competition Innovation medicines new medicines drug developments manufacturing Supply chains a lot of good
▶ 1:05:53stuff but I do believe we need guardrails but they have to be guardrails that don't harm Innovation or harm American firms us right now we the United States they lead the world us to be by a couple of years now they I think it's maybe two months maybe a couple of weeks compared to China Mr Chilson and Mr kigo if I can ask each one of you a yes or no question gentlemen
▶ 1:06:23would you say that University Research played an enormous role in developing AI yes no yes over the 40 Years of Mr Coniglio yes I would say the same if you look at this chart you can see that is in fact true um I know private companies are developing and investing in AI but second question gentlemen the future Workforce training that a Workforce research still happening
▶ 1:06:53at universities I think some of it lots of companies also okay Mr Coniglio I would agree so if we could have funding for University Research today are we damaging the American pipeline students future students who become leaders in AI fundamental research are we hurting ourselves by cutting off University research funding Mr Chilson
▶ 1:07:23Mr Coniglio yes no I I'm honestly not sure Mr kigo I I would certainly say that uh funding from universities is very important to drive Innovation and that's true generally and I say that in the context of our main competitor which is China which are essentially doubling down their investment in this area I think that's well established that's known now let's look at this chart of some of the top AI
▶ 1:07:54companies data from 2023 many of these firms are started by immigrants this is in 2023 can you imagine the number of immigrants started AI firms for 2024 probably a whole lot more and this doesn't even reflect major Tech started by Sergio Brien of Google or Elon Musk so gentlemen another question for you do
▶ 1:08:24you agree that immigr have played a huge role in developing and advancing technology and AI sectors yes no absolutely Mr Coniglio yes so this country we really want immigrants in this country who can contribute to Innovation and we don't want to scare them away have them go to Canada China India not even come to this country would you say that's yes no Mr chillson
▶ 1:08:54America is the best place to do AI in the world Mr Coniglio I would agree we need to keep American AI leader and use all tools we can to make that happen because over the last 50s probably more like 100 200 years America has always attracted the best and brightest from around the world because they know opportunities in this country exist so I agree that overregulation misplacement of antitrust
▶ 1:09:24enforcement can harm AI can harm this country's companies as they seek to compete with China but I'll tell you looking at this administration's policies of cutting research funding to universities scaring immigrants away from studying or creating new companies in the US creation of unstable markets tariffs these three factors in my opinion are going to hurt this
▶ 1:09:54country even more long-term damage long-term damage to our leadership our economy and our future and I do hope we begin to focus on what's made this country great what helps us in the last 50 years innovating leading the world because we can't afford to lose the AI race thank you very much Mr chairman and I yield
▶ 1:10:25gent before I do can I add U some articles for the record recognized chairman I'd like to ask unanimous consent to introduce the following articles first China's top universities expand enrollment to beef up capabilities in AI second article 65% of top AI companies have immigrant Founders article number three Trump science policies Poe long term
▶ 1:10:55risks New York Time Times March 31st Fourth Article Trump Administration has begun a Warr and science researchers New York Times March 31st fifth article China leads the world in generative AI adoption sixth article formal Google employees create 14 of the top 50 AI startups seventh article Trump loves AI but his terrorists ramp up cuss for data
▶ 1:11:26article number eight Apple chip Engineers return to China joins Fudan University amid push for talent article n number nine immigrant entrepreneurs bring jobs and Innovation forbs May 23rd 2024 article number 10 from Underdog to genius Yale computer scientist son juano returns to China article number 11 tech companies are telling IM immigrant employees on
▶ 1:11:56visas not to leave the us thank you Mr chairman without objection the gentoman from Wyoming is now recognized for five minutes thank you China is trying to control the global AI sector through extensive State directed Investments aggressive subsidies and protectionist trade measures it is making substantial Investments to secure its Global position through initiatives like made in China 2025 and the new generation artificial intelligence
▶ 1:12:26development plan Mr Chilson how might China's government subsidies and protectionist policies affect global competition in AI so China's model for AI Innovation is the uh very different than the US's it's largely state sponsored um it is driven through uh a structure that is designed um to make make sure that the Chinese Communist party has its finger in everything thing and it means
▶ 1:12:57that the end result is uh a design from the top ecosystem they pour a lot of money into this and so and they have talented people and so they do have surprises occasionally the Deep seek uh AI model that came out um they they can get a lot done with that model ultimately however I think the US model if we don't you know tie one or both hands behind our back um is going to win in this space because we have the talent we have the investment and we have
▶ 1:13:27uh and we have the the ecosystem that rewards trying new things out and seeing if they work and so uh I worry a lot about China I think uh modeling our and this is why I was a little bit um confused about the university question a top- down investment model that that that tries to look like China is not the right model for the US I'm glad to hear that and I'm also excited to hear about your optimism because what would be the Strategic consequences if
▶ 1:13:57China achieved dominance in the global AI space well there's a lot of different consequences and we could just look at uh we could look at cultural ones uh we could look at strategic National Security ones and I think those are the ones that I think raise the most eyebrows um this techn some examples yeah so this technology is very powerful uh both in an offensive and defensive manner for cyber security um so both to defend from cyber security attacks and to and to cause and so uh being ahead in that Race
▶ 1:14:28Matters a lot a lot of our infrastructure in the US obviously is is needs to be strong against those types of attacks and I think that AI has a huge potential to be a defensive uh barrier to those types of things uh but we need to stay ahead in the race well I agree with you on that as well um this committee has observed with concern harmful policies also coming from the EU on privacy antitrust censorship and more now that artificial the now the artificial intelligence
▶ 1:14:58act will impose significant compliance costs on affected companies particularly American businesses that play a pivotal role within the AI sector Mr Coniglio how should we as members of Congress be concerned about the impact of this framework on our constituent constituent businesses and Are there specific ways in which the EU regulations might disadvantage smaller American AI companies as compared to larger firms thank you very much for the question
▶ 1:15:29congresswoman um I would say we should be very concerned about the regulatory approach that the European Union is taking uh not just with the AI act um one of the things I would say they did learn from the gdpr is um now to do regulation that targets American firms specifically so that they don't burden their smaller firms with regulation and that's really been the lesson with the dma um which is absolutely disproportionately having very harmful effects on American businesses um really our Tech leaders um and it was intended to do so um so
▶ 1:15:59I think that U as I recall letter from from chairman Jordan um starting to investigate those practices is very important and something we need to continue to do so do you have recommendations as to what Congress specifically ought to do in space um it's a very complicated area I would note um with respect to potential legislation um in Korea uh there was a proposed bill by representative Miller I believe to talk about about um potential Tools in a trade area that could be used to the extent that um
▶ 1:16:29regulations are being basically weaponized as de facto protectionist policies against American companies and I think that might be absolutely be the right framework to think about it okay Mr Chilson in your testimony you cite how competition is robust and Global across all layers of the AI stack how should Congress consider protecting American companies in such an environment where is such a policy even achievable or worthy of consideration
▶ 1:16:59so uh American companies lead the world in this so I I don't know that uh they need protection from Congress but what they do need is the ability to continue to innovate build uh get the the supplies and the the data that they need and there's a lot in the regulatory space that Congress could could work on I think in particular we we've mentioned it a couple times but one of the biggest threats is well-intentioned but often very um abstract and not welldeveloped uh state level regulation
▶ 1:17:29which could limit a lot of this Innovation so preemption is important I think it's very important thank you and I yield back gentle woman's time has expired now Rec chairman I have you have consent request gentleman's recognized thank you Mr chairman I'd like to enter into the record in article AI watch Global regul regulatory tracker that details how many more regulations than the US does an AI does on AI development and deployment without objection
▶ 1:18:00the gentoman from Vermont is now recognize for five minutes thank you Mr chair uh commissioner Bo bedya thank you so much for being here and commissioner Slaughter it's it's really nice to see you uh commissioner bedya as commissioner at the FDC I think your experience on competition artificial intelligence and how these things affect Everyday People is extremely important to this discussion and we all understand that we're in the early days of what may be a massively
▶ 1:18:30transformational techn technological moment it's plausible that this may be like the emergence of the internet the mobile phone or really even electricity but it's so important that we don't lose sight of the Central Point here which is how does this technology help or hurt working people that's what I'm focused on commissioner bedya you spent a great deal of time as FTC commissioner outside of DC traveling
▶ 1:19:00around the country hearing from people and I want to know have you heard a sense of concern from people working people about how AI is impacting their lives sure so I I confess a lot of my roundtables have focused on you know groceries you know uh um Pharmacy that kind of thing everyday cost what's that everyday cost everyday cost that's right you know I will say a a couple things on this you know a lot of people look at
▶ 1:19:31um what happened around the actors and writer strikes and they say oh that's just a Hollywood thing but entry-level actors and entry-level writers don't make that much money and you had situations where people were um were quite worried and with good reason that the cost of selling your first script was going to be to submit you know all your work to be fed into to one of these AIS so that there would be no need to hire you in the future um I also do think there have been a lot of concerns
▶ 1:20:01uh I think my colleague commissioner Slaughter has has done a round table on this on the use of price fixing algorithms in rental housing markets that's where I'm going yes and that's a real concern that's exactly where I'm going uh let's let's jump to that because this is a deep concern of mine could you tell us in in real terms because you had talked about earlier that it's not just the algorithm itself itself in terms of real page but there seems to be instances that we can look to there
▶ 1:20:31seems to be evidence that there is actually some collusion happening here and that's something that I'm deeply concerned about and we all should there is a crisis of housing in this country and renters are over a barrel right now they don't have a lot of options so can you talk a little bit about how this is impacting regular people just in terms of trying to afford their rental housing sure so the allegations in the space are that um these algorithms not just uh
▶ 1:21:02don't just offer the exact right amount of an increase so that a renter swallows the increase rather than tries to find a different place there's allegations of actual overt in the real page lawsuit calling between landlords to coordinate but there's also allegedly information sharing creating a pool of data that these landlords can draw on uh to increase rent with without saying while being able to say oh we never called each other one really interesting point here is sometimes antitrust harms because they're a little complex can get
▶ 1:21:32a little technical I'll just point out that one of the corporate landlords in the real page suit is a company called gyar FTC is also simultaneously suing grey star for packing People's rent checks with these fake hidden fees like oh you know you want no cockroaches in your apartment you got to pay extra for that and so extra for no cockroaches huh precisely and and so you see you know anti-competitive conduct arm in-arm with uh conduct that hurts consumers in my view pretty obviously so I do think it's important in this hearing as
▶ 1:22:02we talk about the importance of not stifling Innovation to at the same time be able to hold both truths we can be careful in our regulations we can be careful in the guardrails that we're putting on but I don't think anyone here at least I hope not that anyone on the antitrust committee would be supportive of L landlords colluding to raise the price of rent and I know in some instances we've seen that this
▶ 1:22:32AI Dynamic pricing scheme has led to increases of over $800 over the course of a year of not just these hidden fees that we're talking about but the the prices that they're paying uh for rent itself and of course you've talked about uh how essential workers are being replaced in key Industries where we see a patients Elite legally being denied care because of an AI based recommendation where artists are being robbed of their work and I just have to
▶ 1:23:02say we have got to remember the importance of following a law when it comes to having FTC Commissioners and I think it's outrageous that you and Commissioners Lauder were illegally removed from your positions we need you on the watch to take care of my renters back home in Vermont who were being screwed over gentle gentlewoman's time is I yield back gentlewoman yields back I now
▶ 1:23:33recognize a gentleman from North Carolina Mr Harris for five minutes thank you Mr chairman and uh thanks to all of you on the panel for uh being a part of this hearing today on January 23rd 2025 president Trump issued an executive order titled removing barriers to American leadership and artificial intelligence aimed at solidifying the United States position position as the global leader in AI I for one applaud the Trump administration's leadership on this issue Mr Chilson would you just take
▶ 1:24:03a moment and explain how this executive order will indeed help solidify our position as the global leader in AI as the EO States well it's a sea change from the the Biden executive order which was the third longest executive order in history um and and basically set a government wide call for agencies to figure out how to regulate AI um this trumpet executive order is the opposite
▶ 1:24:33uh it's focused on figuring out how can we create the opportunities or how can we maximize the opportunities from uh this amazing technology which is grown here in America and so I I'm some of its mechanisms uh you know it directs the office of Science and Technology planning to create an AI action plan those comments have gone in to that agency and I think they're going to come out with a a comprehensive approach the but the main thing here is the total change in perspective it's one from fear
▶ 1:25:04and risk that this technology is going to hurt people to recognizing that has huge opportunities not just for consumers not just for everyday price uh everyday uh things that they use but also I think in creating a lot of competition in the AI industry but also across the economy as a whole you you referenced the uh Science and Technology policy I know section four of Trump's executive order requires various executive agencies to
▶ 1:25:34coordinate on the creation of an action plan to submit to the president in 180 days and the action plan should lay out how we can achieve AI dominance so you and your colleague Mr Chelson I understand that the abundance in um Institute submitted recommendations to the office of Science and Technology policy on what should be included in that action plan could you take just a moment and summarize what your recommendations might be right so uh at the very
▶ 1:26:04top I I I think you've heard this concern repeatedly uh across this hearing um is is stemming the tide the Flowing Tide of State AI regulations what we have right now is a a set of regulatory schemes that regulate from the very top the most abstract level of AI these general purpose models it's a general purpose technology it can be used in millions of different ways and states are trying to say that these companies have to make sure
▶ 1:26:34that that model can never be used in a way that might hurt somebody and that's the type of Regulation that is not only impossible to comply with um it it doesn't it will be impossible to enforce as well and so I think that Congress needs to look at this look at or the the white house needs to look at different ways to stem this tide whether through the bully pulpit or proposing legislation to Congress that will help uh stem that flow uh I think it's a it's a big Challenge and and Congress and the White House are
▶ 1:27:04need to step up to that well let me ask you this can Congress play a role in helping the United States achieve the goals that have been set forth in the executive order absolutely I I think it will be essential that Congress does so okay and are there any legislative efforts that will bring us towards the vision set forth by the Trump Administration well I I think there's a lot of different models we could take one one state action that has been very useful Utah has an AI act that creates a AI learning laboratory where people can come in
▶ 1:27:35get um uh regulatory mitigation when they don't understand fully what the risks are because they're technology is new uh and and and both the legislators and the company can learn together so the most recent example of this was uh a technology that creates it's an AI uh mental Wellness app for teenagers a really important problem um you can understand the sensitivity there they worked with the the this regulatory sandbox to
▶ 1:28:05create uh uh not only just the the app itself but also there's been uh legislation that was proposed to Utah to to the legislature that governed some of those types of apps and so it's a Cooperative thing I think it's a kind of structure that might work very well at the federal level as well very good well thank you so much Mr chairman yield back gentleman yields back the gentleman from Illinois is now recognized for 5 minutes thank you uh Mr chairman and uh to all the witnesses here today to commissioner Slaughter
▶ 1:28:35for uh also being here to observe the proceedings as usual so far in this hearing it looks like my colleagues the Republican side of uh this panel uh is here to Champion corporate interests over workers and consumers today their obedience is making them argue against even reasonable regulation of the AI industry while not surprising is still incredible to see them making these claims with a straight
▶ 1:29:06face given everything that's going on let's start with the fact that the Trump Administration and its billionaire Overlord Elon Musk are weaponizing AI to carry out their Lawless and unpopular agenda they're using AI to arbitrarily surveil students expand the power of DHS and ice and gut agencies in the hands of billionaires and authoritarians like musk and Trump AI is a
▶ 1:29:36loaded gun waiting to be used on immigrants workers and consumers this is exactly why it's absurd to oppose Common Sense regulation of the AI industry let's talk about what that Common Sense could be it's also absurd because we know what happens when we don't enforce antitrust and consumer protection laws against technology companies as my colleagues have pointed out the failure to apply these laws to Big tech companies
▶ 1:30:06at the dawn of the social media age has led to the dominance of these companies which has routinely abused workers exploit consumers and deployed their technology to expand surveillance and trample on privacy rights that is the consequence of inaction we must learn that our mist from our mistakes and we must prioritize workers and consumers over corporate profits
▶ 1:30:36so let's talk about what that looks like commissioner bedya thank you for being here today I stand in solidarity with you as you Face Donald Trump's illegal efforts to fire you and commissioner Slaughter but can you talk about the competition between AI if it exists and workers and the implications for labor rights sure uh I was down in um in batri Alabama
▶ 1:31:07um a couple months ago and there was a case from Pascagoula which is right near there of a call center worker who um had a high school diploma um a single mom and she had been able to take this job and find the middle class she bought a house nice neighborhood great schools and what was starting to happen is that there was this AI transcript that was being generated of her calls but it was wrong you know people
▶ 1:31:37on the gulf you know my Western Louisiana have a different Cadence uh different accent slightly and the trans the AI generated transcript was failing and she would get docked for those errors and one of the things she openly wondered was uh um because there was also other software operating that that the workers thought was going to be used to replace them she openly wondered am I am I training my replacement um so these are the kinds of folks who who may be hurt by these efforts to uh scan track surveil uh swallow
▶ 1:32:07up all this data about um about people working really important jobs uh that might be used to replace them thank you for sharing that uh and from uh based on your work at the uh Federal Trade Commission what kinds of protections do you think are needed for workers if Congress were to act so I've already mentioned the um the need for a workplace Privacy Law the other thing we urgently need in my personal
▶ 1:32:37view is some kind of guard rails against automated management increasingly you're seeing allegations um that people are getting fired automatically on the job because uh of the way they were tracked maybe it thought that they were just loafing around when they were actually going to the bathroom when they're actually repairing the Machinery on the warehouse floor you also see instances where people are increasingly having their emotions analyzed on the job this is another call center example there was an AI that thought that set off this
▶ 1:33:07emotion distress alarm anytime the caller at the end end of the line started laughing and so you have technology that doesn't work as well as people think it does being used to fire dock people fire people dock their pay and there need to be guardrails around that kind of conduct labor unions that of have often succeeded in putting those Protections in place but I think everyone needs those kinds of protections not just folks who are lucky enough to be in a union thank you and uh my time is exhausted uh Mr chairman uh before I turn it back I seek unanimous
▶ 1:33:37consent to submit uh an article entitled thank you open AI peels back chat gbt safeguards around image creation without objection uh gentlem gentleman Neil's back gentleman from Virginia is now recognize for 5 minutes well thank you Mr chairman U my goodness after hearing my friend from California talk I'm reminded of the old adage uh when you're a hammer everything looks like a nail and when you're a pro- regulatory Democrat everything
▶ 1:34:08every industry every opportunity to regulate means drive right in and regulate uh Miss maluan um can you speak to what would happen to the AI industry if the US were to adopt heavy-handed regulation uh which country are we in competition with right now that would take advantage of that and further um run away with development in AI I think if American innovators are sufficiently
▶ 1:34:38distracted with regulatory hurdles and legal concerns you are taking a limited amount of energy and resources away from them turning out the best product at that point the alternative for much of the world will be Chinese products so the meta question to keep in mind is do you want the World building on us-based products or China based products that's not to say that the illegal things that happen in relation to AI
▶ 1:35:09shouldn't be addressed I think in large part due to already existing law or the Congress might not consider new privacy legislation those are all things that be can be considered when problems arise but it's important to not lose sight of what we're here to do I don't think that most Americans are looking for AI to be really really regulated I think they're looking for AI to be really really prosperous and successful well to that end uh China has a long
▶ 1:35:39history of intellectual property theft particularly in Ai and semiconductor technology how can the US better protect its AI industry from Chinese Espionage and should we be more aggressive in sanctioning Chinese companies that benefit from stolen IP you know you know I think this sounds obvious but to to the extent that all of that can work I think that's great but I think at some point if you're dealing with um Bad actors the the way to win is to win and I think that you make the biggest mistake by hampering the
▶ 1:36:09efforts of us innovators with all this sort of the sideshow of all the things that can possibly go wrong of course there are going to be challenges and harms that are very real people's jobs will be replaced by a certain amount of automation I will point out that that has been happening since the dawn of time it doesn't mean we don't need to have real attention paid to those circumstances but it's not worth holding an entire country back in the kind of technology that will benefit every single American and people around the globe hopefully from AI products
▶ 1:36:40because we can think of examples of someone losing their job it's a tragic situation for that individual but I would hope that the overall benefit to the economy and to society and prosperity of Americans compensate in some way for that churn that churn is real but we can't use those examples as an excuse to hamper an incredibly important technology but at the same time you have big tech companies arguing that scraping copyrighted material for AI falls under fair use uh but this practice
▶ 1:37:10could severely undermine artists journalists and content creators should the US uh continue to enforce its protections uh to prevent AI developers from profiting off stolen intellectual property I think intellect ual property with the forward movement of Technology as a bit of a moving Target I think it's certainly an area where Congress can look to revisit and adjust as necessary I don't know that we're there yet but I think that those are are very valid concerns it's I'm certainly not here to argue that uh there will be no
▶ 1:37:41regulatory or legal reaction to AI I'm just here to argue that it's better to go cautiously forward on a case-by Case basis and and fair use in intellectual property might very well be one of those now several lawsuits including New York Times versus open AI argue that AI models unlawfully use copyrighted Contra copyrighted content for training uh given these legal challenges do you think courts will ultimately Force AI developers to pay licensing fees and how might that impact competition and innovation in the industry it's
▶ 1:38:11my personal Pro policy not to comment on what uh courts might do it's possible um I do think one of the pressure points in AI progress for the US is is data sources I think there the market is innovating even for those synthetic data there's other Solutions but new data more data um is an important Balancing Act to keep in mind when you're talking about limiting access to that for maybe the next companies that come along I think that there is uh there's tradeoffs that need
▶ 1:38:41to be weighed there um there's a balance a balance there's a balance right and as in most of uh intellectual property law I think um but also I'll quickly make the point that with data it's not always more is better we're finding that out up to a certain point you need a certain amount and it needs to be good and there's engineering progress that can be made on top of that data um but it's not the end all Beall that um AI you know it's not the only Factor that's important for innovation in a
▶ 1:39:11thank you gentleman yields back Mr chairman have your unanimous consent request gentleman's recognized Mr chairman I ask for unanimous consent to submit for the record the article by AI now Institute entitled us China AI race AI policy is industrial policy that shows Chinese AI Innovation is growing rapidly despite China having stronger antitrust enforcement than the United States without objection thank you uh the uh chair now recognize the
▶ 1:39:41gentleman from Georgia for five minutes thank you Mr chairman in an article written by Cecilia Kang of the New York Times back on uh last week she reported that for just over 2 years technology leaders at the Forefront of developing artificial intelligence had made an unusual request of lawmakers they wanted Washington to regulate them the tech executive Executives warned lawmakers that generative
▶ 1:40:11AI which can produce text and images that mimic human Creations had the potential to disrupt National Security and elections and could event entually eliminate millions of jobs AI could go quite wrong Sam ultman the chief executive of open AI testified in Congress in May of 2023 we want to work with the government to prevent that from happening and so for two
▶ 1:40:42years the tech industry AI creators have been warning regulation uh but now we have a group of three lobbyists here uh requesting uh that we uh not apply any regulations what what has changed Mrs Malu Jin just for recordkeeping purposes I am not a lobbyist and well I know that you say that you're not but youring
▶ 1:41:13your funding comes from the industry that you're here representing today but let me let me let let me move on uh the main ingredient for artificial intelligence is data which allows AI models to learn co-president musk owns an AI company uh with its groc and um you know so
▶ 1:41:43there's always the problem of AI companies needing to uh get a Competitive Edge uh to uh have more data to train uh their models and uh co-president musk is in a unique position now because he also runs the uh so-called Department of uh or Doge uh in the past two and a half months musk's Doge
▶ 1:42:13team has gained access to vast databases at agencies like the Internal Revenue Service and the Social Security Administration which include our personal information and just this past weekend Doge gained access to the federal Personnel payroll system we know that Doge has already copied massive amounts of our personal data onto its servers and using that amount of data to train
▶ 1:42:44his AI model would give co-president musk a huge Edge over his competitors now the administration will tell us that is being careful with our personal data but this is the same Administration whose National Security advisor accidentally invited a journalist to a group chat on a private unsecured messaging app where the Trump team was discussing War plans and classified information and it's the same Administration
▶ 1:43:14that conducted national security business over personal Gmail accounts this Administration has a culture a PL playing fast and loose with secret and private information so now how can we trust Elon Musk with our personal data when he and his AI company have so much to gain from it financially uh Mr Bova Mr badya give a a
▶ 1:43:44broader answer if I may um um I do think speaking just as a for the FTC um I am very worried about the information the commission holds getting in the wrong hands the FTC regularly as a matter of regular course of business collects Market sensitive information information about competitive strategy and even top level information about certain shops being active at certain
▶ 1:44:15times could um for a person but definitely for an AI be used to generate extremely sens inferences about otherwise confidential Market activity so Elon Musk has his hands around that kind of information uh commissioner uh I talked about the dangers of uh of co-president using his uh personal data Pro co-president musk using our personal data to train his AI models do you
▶ 1:44:46also see a threat to Consumers and what would your concerns be about that the main thing I think about um with the use of data obtained from government agencies being used to train a model speaking generally is let's say a mistake is made and data is swallowed up into that model that shouldn't be um 20 years ago you go into a system and just delete those files but that's not how these models work now this is like me saying to you Congressman please unlearn my face right good
▶ 1:45:16luck with that it doesn't make any sense and so I'm obviously oversimplifying a little bit but it's very difficult to to um unscramble those eggs and so I'm worried about competitive information getting into these models uh and and therefore getting into the wrong hands even if we realize it after the fact uh um that is definitely a real concern I have and those wrong hands are not necessarily in China they're right here in Doge gentleman's time has uh Mr chairman expired Mr
▶ 1:45:46chairman Mr chairman have a UC request um gentleman it's recognized thank you Mr chairman I request un sent to submit a CNBC article entitled Elon Musk who co-founded firm behind chat GPT warns AI one of the biggest risks to civilization where Elon mus States quote we need to regulate AI safety it is I think actually a bigger risk to society than cars or planes or medicine close quote Mr chairman not of jaction and chairman of the full committee Mr
▶ 1:46:16Jordan is now recognized for let let me first do unanimous consent in light of the previous uh previous question recognize uh I'd like to ask you can uh enter into the record story from the hill FTC must be held accountable for its widespread leaks of confidential data without objection Mr chillson uh you you worked at the FTC is that right that's right Chief technologist at the FTC I think was your title acting Chief technologist yes yeah and you focused on I'm looking
▶ 1:46:46from the bio here the economics of privacy blockchain related issues is that that accurate for work for the commissioner yes yeah and you're an attorney as well I am yes you understand the Bill of Rights the Constitution all the things you know we they teach us in law school and all that all those all important is it appropriate for the FTC to ask an American company the journalists that they have communicated with I I don't think so sir I don't think so either but that's exactly what happened at the FTC Mr bedya worked uh works at
▶ 1:47:17uh just a couple years ago they sent a letter to Twitter after Mr musk had purchased the uh the business and said it's recently reported that Twitter has been providing third certain third party journalist information and they named the journalist Barry Weiss Matt tby Michael shellenberger Abigail shrier they name the journalist and they say this identify all journalists and other members of the media to whom you've granted any type of access to the companies of communication is that appropriate I I don't see what it would have to do with with most of
▶ 1:47:47the types of actions that the FTC would bring seems to me it's totally getting that you know violating the First Amendment freedom of the press you got to write as a company people in a company to talk to journalists and yet the FTC wants to know any and every journalist you've communicate name for specifically and wants to know any others you've talked to what do you think Mr Mr Chilson pretty bad stuff that was going on there yeah um let me ask you this then too uh they also ask they wanted to know every reason why Twitter terminated
▶ 1:48:17former Twitter employee Jim Baker do you know anything about that Mr Chilson why they be asking about that guy I I I I don't know much about that and I don't know why they I got my hunches Jim Baker was the general counsel at the FBI when the FBI was doing all the crazy things going to the fisa court getting warrant spying on presidential campaigns he then goes to work at Twitter M Mr musk buys Twitter and says I'm going to get rid of this guy and now the FTC wants to know why I find that strange too every journalist you've talked to and why you got rid of
▶ 1:48:48Jim Baker let me ask you another one ernston young was named the assessor in the consent degree uh Focus between the FTC and Twitter the assessor the specific assessor was a guy David Rog he testified uh under oath and said quote that it if ernston young did not include negative findings against Twitter the FTC raised the Spectre that it would create other challenges for ernston young over time does
▶ 1:49:18that seem to be the kind of kind of a you know communication that should be going from the FTC to an to the assessor at ernston Young Mr Chilson seems like a form of uh soft coercion yeah is that accurate Mr bedoya did you guys do that Mr Mr roke again this is under oath in the in the case is that is that what happened at the FTC why would you tell ernston young you better find out the right thing you better better find something negative against Twitter you may not get business with us over time thank you Mr chairman for the question I I'm
▶ 1:49:48not familiar with that particular communication and so given that I am under oath I don't want to give a wrong answer here so you are you disputing whether it happened or not it's Court filing no sir I'm not disputing that I'm just saying I'm not familiar with that particular communication and like you said I'm under I'm asking if it's appropriate or not it happened here's what he said if erns and young did not include negative fightings findings against Twitter the FTC raised the Spectre that it would create other challenges for erns and young over time you hire ER young to be assessors in these
▶ 1:50:18kind of consent decree uh uh Arrangements um all the time you can see the the obvious threat there I'm just asking if that's if that's appropriate Mr chairman who is saying that statement who's writing it documents that David Ro communicated in the in the court uh that we have out forgive me Mr re is a ernston young executive yeah he's the assessor you guys hire and he was I I'm sorry I take this very seriously and so what I would ask is if you submit it for the record
▶ 1:50:48I'll take a good look at it and give you a full and complete answer but I'm not familiar with the context of the statement why' you have to know about Baker why he was terminated companies are allowed to fire people Mr chairman I did not sign those cids I did not sign those subpoenas and so I don't know the exact circumstances surrounding that individual okay okay no no comment there all right um uh Mr uh Coniglio uh the Mr bedya raised three concerns earlier and I I just got a few seconds but I wonder if
▶ 1:51:18and any of you can any of you three can comment on this uh three warnings that he point out vertical integration AI keeping private data private and then the surveillance concern um do you have a different perspective on those three concerns or tell me what your thoughts on the three warnings he laid out in his his testimony thank you for the question um I can start with the first one about AI Partnerships and vertical integration any competitive conduct um so uh I I think that um the concerns about foreclosure uh which are the typical uh anti-competitive harm that you you think about when you go with
▶ 1:51:48vertical integration are certainly very premature at this stage we see robust competition at the foundation monol level and the cloud level which suggests that a vertical integration between let's say a cloud company and a and a foundation model is unlikely to result in any sort of exclusionary conduct um with respect to the Partnerships and sort of a horizontal so to speak reduction of competition between let's say a firm a big Tech firm that may have a partnership and the idea being that because they're investing in these companies they're less likely to compete um again I
▶ 1:52:18think it's unlikely uh that that's going to result in a substantial lessening of comp competition again because of the robust uh competition that exists at the foundation model level but also because of the pro competitive benefits that these Partnerships can have uh specifically providing uh internet uh excuse me AI Foundation model startups with the sort of patient Capital they need to grow sustainably and actually innovate faster okay I know I'm out of time but can you talk about the Privacy issue real quick too the the the the anyone of you want to talk on the Privacy
▶ 1:52:49I mean I have concerns about this whole facial recognition and stuff and some of the examples that Mr Boya gave in his testimony so give me your quick thoughts on that and then I'll then I'll be happy to yield back Mr chairman so uh in many ways the the Privacy issue in uh artificial intelligence especially these deep learning models is uh much more complicated than it is in the the form of social media and so uh when you train these models what you get is a uh something that does not have any of the actual training data in it so you can never look into a model and see the specific training
▶ 1:53:19that was in there so the Privacy implications here are are ones more on the inference side and not about the about actual data being in these um and so it's it's much more like uh you remembering that something happened but not remembering it precisely and therefore I thinkle the sorry the I think the privacy concerns are less gentl time has expired thank you Mr chairman chairman gentleman back ask M's consent to enter the record the letter from Gary Shapiro and Kinsey Fabo
▶ 1:53:50of CTA dated April 2nd 2025 also the statement of Jennifer hudston from uh KO uh dated April 2nd 2025 and the letter from Graham uh duault of the app Association dated April 2nd 2025 um without objection and Mr chairman M uh gentleman from Illinois has a uh UC request yes uh thank you chairman I request
▶ 1:54:20unanimous consent to add to the record uh a tech policy press article entitled Doge plan uh to push AI across the US federal government is wildly dangerous without objection thank you uh the uh the ranking member of the full committee is now recognized for five minutes thank you kindly Mr chairman and thanks to our Witnesses uh today uh it's hard to think of an antitrust matter more pressing than concentration in the AI Market
▶ 1:54:50the dominance of a handful of a companies presents a long-term problem for our national security our democracy our privacy and basic fairness in the marketplace um but president Trump has plunged our government into chaos and disabled the federal agencies that we depend on to address such problems it will be difficult to effectively respond to dangerous Market concentration in the Assembly of all human knowledge if we have governmental power that is
▶ 1:55:21dangerously concentrated itself in the president to the exclusion of Congress as the lawmaking branch in the Judiciary as the protector of constitutional rights and values over a century ago Congress established the Federal Trade Commission it was created as an independent agency to enforce antitrust and consumer protection laws outside of the controlling pressure and power agendas of any single president or party for more than a century the FTC has protected Americans against scams fraud and other unfair
▶ 1:55:51and deceptive practi practices it's also promoted and protected competition in the marketplace which benefits consumers workers and small businesses driving innovation in Business Without Monopoly Congress designed the FTC to be led by five Commissioners across party lines who serve seven-year terms are subject to Senate confirmation and can only be fired for cause Congress structured this Independence to ensure that the FTC would serve the nonpartisan interests of the American people and be insulated
▶ 1:56:22from partisan political control over 90 years ago the independence of these Commissioners was tested and the Supreme Court unanimously reaffirmed that the president cannot unilaterally fire an independent FTC commissioner without cause unitary executive power violated the careful Federal design and infringed congress's lawmaking power to establish the FTC as an effective and balanced instrument for the public good yet president Trump chose to violate federal law
▶ 1:56:52and defy the Court's long-standing precedent by attempting to fire without cause the two Democratic members of the FTC he did so to end the nonpartisan Independence of the FTC and to make sure it responds to his momentary political demands above the national public interest is contemplated by Congress accordingly the Commissioners have brought suit to reverse their unlawful firing and two as commissioner Slaughter stated make sure that the work of the commission is done
▶ 1:57:22without fear or favor and more specifically that we can take on the biggest companies in America without fear of getting fired for failure to do a favor to the president's friends or donors or corporate allies the strongest Federal rules on AI were established by President Biden in a 2023 EO the Trump Administration reversed that executive order which laid down the guard rails for the AI industry not content with this roll back the president has now hobbled and undermined the lead cop on the aib the FTC
▶ 1:57:53which has for years been at the Forefront of holding big Tech including AI to account it's hard to debate the proper scope of regulation in this political space When Donald Trump has reportedly granted Elon Musk unlimited access to our most private and sensitive records data that's undoubtedly invaluable to xai his AI company today none of us here know whether musk is using our data classified information and other sensitive data from databases across
▶ 1:58:23government to train his company's AI models and gain an unfair advantage over competitors and against citizens musk has refused to answer our many requests on this topic and now he's crippled the agency charged with investigating these very Tech abuses even if we came together and found agreement on regulatory reforms and safeguards for AI development we still now lack an expert independent agency to enforce our decisions the president and Trump
▶ 1:58:55uh the president and musk are ushering in a new regime in which monarchical power cronyism corruption and siop fancy rule he's using his office to enrich himself his friends and his donors all at the expense of the people the attempted firing of two FTC Commissioners and his subsequent removal of any FTC resource that might serve as a check on big Tech illustrate how the president is dismantling the Machinery of government to serve his own ends our
▶ 1:59:25constitutional order is under attack to concentrate all political power in the president it's the political equivalent of what we're trying to prevent in the economic sphere I hope that our witnesses can give us their best uh insight as to how to deal with this problem but we are facing a structural crisis now in our government thank you Mr chairman I yeld back gentleman yields back chairman Mr chairman the uh chairman is recognized for a UC request yeah i' ask consent to enter into the record the letter from
▶ 1:59:55August 26th of last year sent by one of those oligarchs that the ranking member just uh put up there uh Mr uh Mr Zuckerberg the letter he sent to the committee saying that that they in fact censored Americans at the request of the Biden Administration back hearing we thank the witnesses for appearing before the committee today without objection all members will have five legislative days to submit additional written questions for the witnesses or additional
▶ 2:00:25materials for the record without objection this hearing is adjourned e