▶ 0:07:38Good morning everyone. I uh before we get started, I think we should have a a a moment of silent prayer. Uh one moment of silent prayer for our good friend uh Jerry Connley who passed away this
▶ 0:08:17Thank you. Uh may his memory be eternal. The committee will now come to Thanks to everyone, especially our witnesses for joining us today for today's hearing on AI regulation and the future of US leadership.
▶ 0:08:38At the outset, I want to recognize ranking member Shakowski as this is our first subcommittee hearing since she announced her retirement. We're going to miss you. She's been a welcome partner over the last four and a half years. Together, we were able to secure better safety precautions for women with the Fair Crash Test Act.
▶ 0:09:02During the pandemic, we worked tirelessly to support the travel and tourism industry at a time of challenges. This bond culminated in the Ticket Act and much more, which strengthens consumer protections in the ticketing marketplace. Congress and the ENC energy and commerce of course won't be the same without ranking member Shakowski.
▶ 0:09:30Uh but her legacy will be long remembered. So we appreciate you so very much. Since the public release of Chat GPT AI has become a household name. AI products and services are being developed at breaknick speed delivering new innovations to consumers.
▶ 0:09:56These technologies can revolutionize the economy, drive economic growth, and improve our way of life. Like every technology, however, AI can be weaponized when it is in the the wrong hands. As you know, thankfully AI is already regulated by long-standing laws that protect consumers.
▶ 0:10:18Because of the great potential of these technologies, Congress must be careful when we impose additional obligations on AI developers deployers. Our task is to protect our citizens and ensure that we don't seed US AI leadership. Much of the AI marketplace is comprised of small startups.
▶ 0:10:40uh looking to get it a foothold in the revolutionary space and heavyhanded regulations may ensure that the next great American company never makes it. If we fail in this task, we risk seeding American leadership in AI to China, which is close on our heels.
▶ 0:11:04As you know, other economies are also eager to write the global AI rule book, often to their own detriment and the detriment of the leadership. The US, of course, the excuse me, the EU recently enacted its own AI act.
▶ 0:11:25While it is still being implemented, the EU's complex law suffers from many of the innovation chilling effects we saw with the GDPR. We must also keep a close watch on whether Europe uses the AI Act and other regulations to unfairly target American We're here today to determine how Congress can support the growth of an industry that is key for American competitiveness and
▶ 0:11:55jobs without losing the race to write the global AI rule book. Our witnesses today will help us understand how we achieve that dream. So again, I want to thank the witnesses for being here and I look forward to your testimony. Now I'll yield uh five minutes to to the ranking member, my good friend, Mr. Shakowski Bore. We are going to miss you.
▶ 0:12:20So thank you very much for your service to our country and you've got much more much more left. So uh we appreciate it and I look forward to the good work together. I yield to the gentle lady. Well, thank you Mr. Chairman Gospel Rockus. I am so happy um to hear your words and I I support you. I am so grateful um to you.
▶ 0:12:49Um I will be here another about a year and a and a half. Um so don't get too comfortable. Um and uh I I appreciate it. Um today we are um you know we we are discussing um what is happening with um h how we're consumers that's what I'm always always thinking about
▶ 0:13:20and the very idea that uh we are going to uh allow um 10 years um of uh right for the um intelligence uh no for being exposed to scams and having their data stolen to be to be um ex to
▶ 0:13:50be there for all kinds of scams that could be happening. Um, and instead of 10 years for hi, I mean that's just insane. Um, and I can't understand why we would do that.
▶ 0:14:10Our job right now is to protect And we know that even now that people are getting scammed um by issues that come out um and we want to make sure that we have that kind of protection.
▶ 0:14:30And so I think it is absolutely something we should say zero time zero time as we watch HI um develop not 10 years. We haven't done that for anything else. And for us to do that now makes absolutely no sense and puts all consumers at risk.
▶ 0:14:57And so I want to uh strongly be against this idea which I think is reckless. How could we possibly do 10 years? And so I want to um yield at this point to Straan. Who? Miss Trean. Sayan. Oh, okay. I'm gonna Yeah. I'm going to um yield now to Miss Tran for the remainder of my time.
▶ 0:15:27Well, I thank the ranking member for yielding. Under Republican leadership, this committee has failed time and time again to protect Americans privacy and safeguard our children online. GOP leaders have blocked whistleblower protections for tech workers who risk their livelihoods to shine a light on their employers privacy abuses. They killed comprehensive privacy legislation to minimize data collection and ensure proper use.
▶ 0:15:52They said no to simple transparency legislation so independent auditors could make sure big tech companies aren't breaking the law. But what Republican members of this committee did find time to do last week in the middle of the night, by the way, is force through an unprecedented giveaway to the tech industry, a 10-year ban on state laws that could make AI safer for our constituents. Make no mistake, the families who have come to this committee and begged for us to act won't benefit from this proposal. But you know who will?
▶ 0:16:22The big tech CEOs who are sitting behind Donald Trump at his inauguration. Now, we can agree that a patchwork of various state laws is not good for innovation, for business, or consumers. But this is a bad policy because it sets another disincentive for us to act urgently or even in time. All the while, Republicans are once again seeding Congress's duty to protect Americans privacy to the very companies who are perpetrating the worst abuses online. You're basically inviting the fox into the hen house.
▶ 0:16:51And you're doing so under the justification that this will somehow motivate Congress to unify the patchwork of state laws currently in existence. But that hasn't happened yet. Just look at what happened in the priv to the privacy bill that we crafted together on this committee. The moment the big tech started lobbying against it, the Republican speaker and majority leader caved. They killed the bill. And now you turn around and try to deceive the American people into accepting this ridiculous alternative. Come on. Our constituents aren't stupid.
▶ 0:17:20They expect real action from us to reign in the abuses of tech companies, not to give them blanket ability to abuse our most sensitive data even more. At the same time, our Republican colleagues are complaining about Europe's tech laws, which we can acknowledge are imperfect. But at least they had the guts to do something, literally anything, to make the internet better for the folks they represent. Shame on us if we don't answer the same demands from the American people.
▶ 0:17:45I urge my colleagues to reject this giveaway to the same big tech companies that have stymied every attempt at updating our privacy laws. I want to urge my colleagues to vote no on the partisan reconciliation bill when the same leaders who killed our bipartisan privacy legislation bring it to the floor and let's just get to work in a bipartisan way to foster innovation and protect our constituents with sensible guard rails on big tech. Thank you. I yield back. Gentle lady yields back.
▶ 0:18:14Now recognize the uh the vice chairman of the full committee who's standing in for uh for chairman Guthrie. Dr. Joyce, you're recognized for five minutes for your statement. Thank you, Mr. Chairman. Good morning and thank you to the witnesses for joining us today.
▶ 0:18:30You recognize that we are living through dynamic times and the advancement of artificial intelligence technologies is an important part of that and it is equally important that we in Congress take the best approach to support innovation and address issues that arise. AI does have enormous potential. It has potential to transform our everyday lives and how we work.
▶ 0:18:54From revolutionizing drug research and development of to fortify our energy grid, AI has the potential to drive major breakthroughs across virtually every sector of our society. But that future is not guaranteed. Today, we are at a crossroads. The decisions that we make on AI regulation are critical and will determine whether we allow innovation to flourish or risk falling behind on the global stage.
▶ 0:19:25Today, American innovators are experiencing significant regulatory headwinds at home and abroad that could jeopardize our global leadership. Across the Atlantic, the European Union has enacted its AI act, which imposes a sweeping top-down regulatory regime.
▶ 0:19:44The EU AI Act is overly complex and restrictive, creating a one-sizefits-all framework that does not account for the diverse and rapidly evolving nature of AI technologies. It is a stark example of regulation going too far and stifling innovation by imposing heavy burdens on businesses through layers of new bureaucracy that slow down progress, particularly for startups and small businesses.
▶ 0:20:13Here in the US, we see similar challenges unfolding with the patchwork of state AI laws rapidly taking shape. Just since January, there have been over 1,000 AI bills introduced across the United States. These measures vary widely in their definitions, in their requirements, their enforcement mechanisms, and in their scope. These emerging patchwork of regulations are creating confusion and inconsistency.
▶ 0:20:44Small businesses and startups navigating 50 different sets of roles will have a harder time competing with larger wellestablished companies that can afford to navigate this regulatory maze. Innovation depends on the ability of small upstarts to compete with the established players. That is why this committee is focused on creating a national framework to provide clarity and consistency without stifling growth.
▶ 0:21:12We need a federal approach that ensures consumers are protected when AI tools are misused and in a way that allows innovators to thrive. We must not make the same mistake that the U EU has made with the EU AI act, effectively choosing not to allow industry and AI to grow. A patchwork of conflicting and burdensome AI rules will have direct impacts on the federal government as well.
▶ 0:21:40The Department of Commerce, like a great deal of federal agencies, must adopt AI if they're going to operate effectively in the 21st century. Yet, if America's AI innovators are held back by a state patchwork, these AI tools might simply never be built or they'll be offered at a higher price to the taxpayer. To be clear, I am not advocating for a free-for-all wild west type regulatory environment.
▶ 0:22:08On Monday, Chairman Guthrie was proud to stand with President Trump as he signed the Take It Down Act. This law is a prime example of targeting a specific harm with a narrowly tailored law to fill a gap that has been identified in existing law. This committee has a long history of fostering American innovation. And now more than ever, our leadership on this topic is essential.
▶ 0:22:35Let's continue this legacy by making sure that the next chapter of AI innovation is written right here in America. This includes bold investments, clear rules, and leadership that keeps us ahead of our adversaries. I look forward to working with my colleagues in hearing from our witnesses today on how we can unlock the full potential of artificial intelligence. Thank you, Mr. Chairman, and I yield. Thank you very much.
▶ 0:23:04I appreciate it very much and uh yeah that was a major accomplishment by this committee the take it down act and uh I tell you what we're going to do a lot of good things for our kids in the next year and a half so we appreciate it very much uh now we have Dr. Shrier who's filling in for uh for the very capable ranking member Mr. Palone Dr. Shrier you're recognized for five minutes thank you Mr.
▶ 0:23:31chairman for recognizing me uh to deliver opening remarks from ranking member Palone. At this moment, uh he has been in the rules committee all night and is still in the rules committee defending the American people from the terrible impacts of the Republicans tax bill that will kick people off of Medicaid and food assistance in order to pay for tax cuts for billionaires. his statement.
▶ 0:24:00Now, this Congress, we've heard from many witnesses over multiple hearings about the significant benefits of artificial intelligence and the very real harms that AI models and applications can and have already caused.
▶ 0:24:15Unfortunately, in a giant gift to big tech, committee Republicans supported a provision in their terrible tax bill uh last week that imposes a 10year ban on any state's ability to enforce their own laws protecting consumers from the harms caused by AI.
▶ 0:24:34I agree with my colleagues that we need strong federal legislation to govern and guide the development of these powerful AI systems as they are rapidly incorporated into more and more aspects of our everyday lives.
▶ 0:24:50To protect consumers from the harms of AI, we should recommmit to working on strong bipartisan comprehensive federal data privacy legislation that includes data minimization to protect consumers from their personal and sensitive information being abused.
▶ 0:25:06big tech's development of new data hungry AI systems employ exploiting Americans personal information in ways we could not have imagined only a few years ago only makes this need more urgent. There is broad support in both parties for data privacy. Last Congress, this committee worked on a bipartisan comprehensive federal privacy bill that was the product of work and negotiation over years.
▶ 0:25:34But in the end, House Republican leadership killed it under pressure from big tech. And now, my Republican counterparts are suspending for 10 years any enforcement of rules and laws already on the books in states and cities across the country without any proposed replacement.
▶ 0:25:55The Republicans's giant gift to big tech would block enforcement of laws on the books right now that are protecting Americans from realworld harms. Some states have laws requiring companies to disclose when they are using AI. Others have laws protecting against the use of deep fakes in elections and protecting consumers when AI is used to deny health care, education, housing, and employment.
▶ 0:26:22Some state laws and regulations provide guard rails ensuring that states and cities themselves are careful in their purchase and use of AI systems. And now Republicans want to ban enforcement of all those state laws with absolutely no national bill ready to go to address the realworld harms from AI.
▶ 0:26:44Instead, Republicans have touted last Congress's bipartisan AI task for report, but that report does not include fleshed out legislative prescriptions, just broadstroke concepts. Notably, the task force report includes a chapter on preeemption that acknowledges federal preeemption has both benefits and drawbacks. It recommends Congress perform a study, not remove states and local governments entirely from responsibility.
▶ 0:27:12and it advises that if Congress preempts uh state AI laws, it should be precise in its definitions and scope. Now, what Republicans have included in their reconciliation bill does not reflect these considerations. Rather than offering legislation that governs AI models and systems and includes a preeemption provision that is crafted to the scope of that legislation, they have proposed an enforcement ban that covers any artificial intelligence or automated decision-making system.
▶ 0:27:42They would have state and local governments stand by as big tech companies that have shown little regard for consumers, particularly for children, recklessly deploy new technologies that violate our privacy, provide false information, or make unjustifiable discriminatory decisions, all in pursuit of profit and market share at any cost. And even if Congress was able to pass a law to govern AI and automated decision systems, who would enforce it?
▶ 0:28:12The Trump administration has taken every opportunity to undermine our cops on the beat. They are firing key technical experts and stripping independent commissions of their their bipartisan legitimacy. They're also cutting resources and funding and weakening or rescending existing measures that would help protect American consumers and support American businesses in the global competition with China.
▶ 0:28:36This pattern of gifts and giveaways to big tech by the Trump administration with the cooperation of Republicans in Congress is hurting American consumers. Instead, we should be learning from the work our state and local counterparts are doing now to deliver well-considered, robust legislation giving American businesses the framework and resources they need to succeed while protecting consumers. And with that, I yield back.
▶ 0:29:06General Lady yields back. Uh, and now we'll hear from our witnesses. Uh, today we have Mr. Sean Heather, senior vice president of the US Chamber of Commerce. Welcome. Uh we have Miss Amber uh who is the co-executive director of AI now institute. Welcome. Uh Mr. Adam Theater, the senior fellow at R Street Institute.
▶ 0:29:36And then uh we have Mr. Mark and I'm going to get this right. Bargava uh managing director of the general catalyst. Welcome everyone. And now we'll hear from uh from Mr. Heather. You're recognized for uh five minutes. Thank you. Well, thank you Chairman Bill Rockus and Ranking Member Shakowski and to the rest of the subcommittee. It's a pleasure to be here to testify on the international perspectives of today's hearing.
▶ 0:30:06Uh while I am a senior vice president, I lead our work on international regulatory affairs. Earlier this year, Vice President Vance at the AI Action Summit in Paris warned that quote, "Excessive regulation was a threat to harnessing AI's potential." The chamber could not agree more. Our message to policymakers is not to lose focus on the opportunity of AI. In my remarks, I'd like to focus on Europe's approach to regulation, highlight concerns with the EU AI act, and close my testimony with why we should care about what Europe is doing on AI.
▶ 0:30:34Historically, Europe takes a precautionary approach when regulating. This means that Europe often regulates before there is well doumented need. Further, the European Union exists to establish a quote single market to prevent its sovereign member states from creating a patchwork of laws. In recent years, we've seen a slew of digital economy regulation from Europe. Yet, none of these policies have made Europe more competitive. Yet, today we now know is woefully Europe is wolffully behind in key digital sectors.
▶ 0:31:02And as a result, the new justification to regulate has emerged, tax sovereignty. The European Commission president has asserted that Europe must be able to make its own choices while French President Mcronone has called for Europe to develop and roll out the key technologies of tomorrow. Fortunately, Europe is beginning to realize it cannot regulate its way to innovation and economic growth. In a recent critical self assessment requested by European officials, the DRAI report found that Europe's struggle to compete stems from burdensome EU regulatory regimes.
▶ 0:31:31Now, let me turn to the EU AI act. The chamber believes the EU fails to achieve a balance between regulating risk and fostering innovation. First, Brussels failed to pre to review its existing legal frameworks. AI is a technology less so a product or service. Existing EU laws governing products and services are not suddenly made obsolete because of AI. Yet, rather than carefully evaluating gaps in existing law, the EU chose to add a layer of regulatory complexity at the expense of innovation.
▶ 0:32:00Beyond the law, the EU also establishes a code of practice. While not currently mandatory, we are concerned that it will function as a deacto benchmark for evaluating industry compliance with the law. The code mandates extensive disclosure of sensitive business information to the regulator, downstream providers, competitors, including China, and potentially the public. This raises two major risks. First, releasing the know-how behind the technology could enable misuse of powerful AI systems.
▶ 0:32:26And second, forcing the value of IP being disclosed undermines investment incentives. So why does this matter? Why not let Europe continue to regulate its way out of being a serious player on AI? First, we need partners. The transatlantic trade relationship is vital to the United States. Annually, trade and services alone is $475 billion, and we enjoy a $75 billion trade surplus. Our competitive advantage in AI will power the future of our trading relationship.
▶ 0:32:54Second, we need to prevent the spread of the EU AI act from being adopted around the world and across the states. The EU's approach to AI is already being considered in places like South Korea, Canada, and Brazil. In the United States, the AI Act's influence is noticeable. States like Colorado, California, Texas, and Virginia have introduced AI regulations that echo Europe's approach. The chamber is concerned that burdensome EU-like policies will be adopted domestically at the state level, potentially leading to a fragmented regulatory landscape across the United States.
▶ 0:33:24Third, we care because we must not allow American companies to be discriminated against. The AI act's extraordinary extr territorial reach imposes substantial compliance costs on US business, diverting considerable resources away from innovation and undermining our competitive edge. From requiring non-EU companies to appoint authorized representatives to overly broad classifications of high-risisk AI application directed at non-EU companies and more, the AI act places American companies at a competitive disadvantage.
▶ 0:33:52By imposing these barriers, the EU risks not only harming US businesses, but those discriminatory practices may also be replicated in other countries. Moreover, the act opens the door for massive fines as high as 7% of global annual sales. In closing, it is estimated that AI will contribute 15.7 trillion dollars to the global economy by 2030. America's leadership on AI is not guaranteed. But today, we are well positioned to lead.
▶ 0:34:18In 2024 alone, a private AI investment in the United States was 12 times greater than that in China and 24 times greater than that in the UK. Such massive US financial commitments translates into tangible outcomes. Last year, the US produced 40 state-of-the-art foundation models, significantly outpacing China's 15 and Europe's three. The opportunity AI holds is before us, but American leadership will only continue if regulatory environments promote innovation, encourage private sector investment, and embrace technolog technological change.
▶ 0:34:48Thank you, and I look forward to taking your questions. Thank you, Mr. Her. Appreciate very much. And now, Miss Kak, uh, you're recognized for five minutes. Chair Billis, ranking member Shakowski, and esteemed members of this committee, thank you for inviting me to testify. There we go. My name is Ambak. I co-lead the AI Now Institute, the leading independent research center focused on tackling concerns with AI.
▶ 0:35:14My main message today is that the race to win on AI must be focused on delivering victories first and foremost to the American people. To do this, we must ensure that US leadership defines the frontier through technologies that are bestin-class, guarantees that firms compete on the merits, and set a gold standard for rigor, security, and shared prosperity. In short, we need to ensure that this is a race to the top rather than the bottom.
▶ 0:35:44But what we're seeing instead from industry is a reckless disregard for public well-being that unfortunately this committee should be all too familiar with because Congress has failed to sufficiently regulate big tech for over a decade now. Let's make this concrete and clarify what's really at stake here.
▶ 0:36:02Last year, a chatbot created by Character.ai lured a depressed 14-year-old from Orlando, Florida, Suelszer III, to commit Character AI isn't alone. Mark Zuckerberg tells us that these chat bots are a societal boon. After all, he thinks the average American has fewer than three friends, and the obvious solution, according to him, is to get people more attached to AI companions, just like he got our children hooked to social media.
▶ 0:36:33Meanwhile, AI voice cloning tech is enabling a new gen generation of scams that specifically target senior citizens. As just one example, a grandmother in Texas received a call from a voice indistinguishable from her grandson asking for bail money. It was a suspicious bank teller that intervened. But many, many others have not been so lucky.
▶ 0:36:55And in this new frenzy of chatbots and agents, it can be easy to forget that we actually already have a decade of far less shiny AI toys, the kinds that aren't used by people, but are used on them. inscrable AI systems that cut the in-home care of 4,000 disabled people in Arkansas despite critical underlying medical conditions or systems that falsely accused 40,000 people in Michigan of unemployment insurance fraud and denied them benefits.
▶ 0:37:25To state the obvious, AI is not a break from Silicon Valley sins of the past, but merely a continuation. And it's also a market led and shaped by the very same players. Now when ChachiBT first launched in 2022, it seemed like this market was poised for disruption with a new crop of challengers, new faces. But now just more than two years later, it's clear that that bench is is more of the same. Big tech and a few additional firms that are dependent on big tech for their survival.
▶ 0:37:56So put simply, building AI bigger and bigger requires enormous resources that these firms own and control. And so they play kingmaker for the downstream smaller players, the little guys that we're going to hear about today, controlling access to inputs and also pathways to reach the consumer. These are the same firms that have no regard have shown no regard for US national security priorities as they have deliberately threatened security interests time and again in the pursuit of profit.
▶ 0:38:26Yet suddenly they show their patriotism when big government contracts are on the line. This is an industry that has fooled us once and we cannot let them fool us again with AI. In this environment, the you know the proposal for a sweeping moratorium on state AI related legislation really flies in the face of common sense. We can't be treating the industry's worst players with kid gloves while leaving everyday people, workers, and children exposed egregious forms of harm.
▶ 0:38:55In fact, there's some air to clear on what states have been up to in the first place. Approximately half of all proposed legislation from the states was on deep fakes. Notably, states moved well before the Take It Down Act recently passed Congress. Several others have moved to clamp down on the AI related scams that I talked about. These bipartisan state measures have been nimble. They've been targeted and they have weeded out the bad apples that nobody wants to be in business with.
▶ 0:39:22Another common sense theme across states, transparency requiring disclosures to people affected by AI in sectors like healthcare, education, employment. I would argue really the bare minimum for an industry that derives its power from obscurity. And to be clear, we should be treating these measures as the floor, not the ceiling.
▶ 0:39:42A moratorium on AI related state laws would you know at a time when there are minimal federal laws in in in place would instead set the clock back and it would freeze it there. Why we would treat these companies with kid gloves at a moment when they need more scrutiny not less is what should be in focus today and we don't have 10 years to wait. Thank you. Thank you very much. Now we have Mr. Thear. You're recognized for five minutes, sir.
▶ 0:40:12Thank you. Thank you, Chairman Billis, Vice Chairman Fulture, Ranking Member Shakowski, and members of the subcommittee. Thank you for the invitation to participate in this important hearing today. My name is Adam Fear, and I'm a senior fellow at the R Street Institute, where I focus on emerging technology policy issues. My message here today boils down to three points. First, America's AI innovators risk getting squeezed between the so-called Brussels effect overzealous European regulation and the so-called Sacramento effect of excessive state and local mandates.
▶ 0:40:40Second, this regulatory squeeze will prevent our citizens from enjoying the fruits of the AI revolution and undercut our nation's efforts to stay ahead of China in the global AI race. Third, Congress should take steps to address both matters. And on the specific problem of state overreach, it should protect the development of a robustly innovative market in interstate algorithmic commerce and speech by imposing a moratorium on state AI regulation. AI faces a crucial policy question today. Will it be born free or born inside a regulatory cage?
▶ 0:41:09America benefited from ensuring that personal computing, digital technologies, and the internet were largely born free. Through smart, bipartisan policy choices this Congress implemented in the 1990s, America gave entrepreneurs, investors, and workers a green light to go out and dream big. And they delivered. In 2022 alone, the digital economy contributed over$4 trillion of output, 1.3 trillion of compensation, and 8.9 million jobs. Americans America's innovators became global leaders in every digital technology field.
▶ 0:41:39This is an incredible public policy success story. But today, fear-based regulatory policies from both abroad and our states now threaten it. We know why Europe wants to destroy America's winning model. But why would some US policy makers want to undermine it with 10,000 AI related bills, many of which adopt Europe's heavy-handed approach?
▶ 0:41:58Even if one sympathizes with some of these bills, put yourself in the shoes of an entrepreneur who is pondering how to build the next great application only to face hundreds of different regulatory definitions, compliance requirements, bureaucratic hurdles, and liability threats. Costly, contradictory regulation is a surefire recipe for destroying a technological revolution and decimating little tech innovators. An AI moratorium offers a smart way to address this problem by granting innovators some breathing space and helping ensure a robust national AI marketplace develops.
▶ 0:42:28Congress has used moratoria before to protect interstate commerce and promote innovation. The Internet Tax Freedom Act of 1998, for example, prevented the development of multiple indiscriminatory taxes on the internet. An AI mortorium like the one that this committee passed recently would work in a similar fashion by limiting regulations that burden interstate algorithmic commerce. Some have incorrectly claimed that an AI moratorium would leave consumers unprotected online.
▶ 0:42:51In reality, AI related harms can already be addressed under many existing policies and court-based standards, including unfair and deceptive practices law, civil rights law, and other consumer protections. Biden administration regulators released a statement in 2023 noting their authority to quote enforce the respective laws and regulations to promote responsible innovation and automated systems end quote.
▶ 0:43:10The Massachusetts Massachusetts Attorney General has similarly noted that quote existing state consumer protection, anti-discrimination, and data security laws apply to emerging technology, including AI systems, just as they would in any other context. Meanwhile, some state lawmakers are acknowledging the danger of regulatory overreach. Last year, Governor Nuome vetoed a major AI regulatory effort in his state after many congressional Democrats sent letters urging him to reject it.
▶ 0:43:34Connecticut Governor Led Ned Lamont also recently said, I quote, "Just worry about every state going out and doing their own thing, a patchwork quilt of regulations." Finally, Governor Jared Polus of Colorado recently called for a special legislative session to address problems with an AI regulation he signed just last year and said it would create quote a complex compliance regime for all developers and deployers of AI. And he called on Congress to preempt Colorado's law with a quote cohesive federal approach.
▶ 0:44:03and he also endorsed a federal AI moratorum recently. I agree with all these Democratic lawmakers that state AI overregulation would have serious downsides and that we already have many enforcement tools to address AI harms. Under an AI moratorium, state and local lawmakers would still be free to pass new technology neutral rules so long as they don't interfere with the commerce. Congress can enact additional regulations as part of a national policy framework. The House of course just recently passed Take It Down Act by a vote of 409 to2.
▶ 0:44:34And just last December, the House AI task force issued a 273 page bipartisan report that included 85 recommendations. We need a n we need national policy leadership today to ensure that America will continue to lead the AI revolution. As Chairman Guthrie recently argued, we must quote make sure that we win the battle against China. And that the key to that, he says, is to quote not regulate like Europe or California regulates because that quote puts us in a position where we're not competitive.
▶ 0:45:03That is precisely right. To win the so-called AI cold war against China, America needs a forward-looking, investmentfriendly, national framework that keeps us on the cutting edge of the technological frontier. Thank you for inviting me here today, and I look forward to questions of uh Mr. Bragava and you're recognized for five minutes, sir. Thank you. Thank you so much, Chairman Billeris, Vice Chairman Fulture, and Ranking Member Shakowski, and the members of the subcommittee.
▶ 0:45:32Thank you so much for the opportunity to testify today. My name is Mark Bargaba, and I'm a managing director at General Catalyst, or GC for short. And we invest in and partner with leading entrepreneurs to build towards global innovation and applied artificial intelligence. We are committed to investing in an array of entrepreneurs, particularly in transformative technologies like artificial intelligence.
▶ 0:45:53A small sampling of the 800 plus startups we have backed over 25 years include Airbnb, Stripe, Canva, and Circle, Applied Intuition, Pacific Fusion, Kumir, and many others. At General Catalyst, I co-lead our creation strategy, which is focused on incubations as well as transformations. I also focus on early stage investing and I contribute to GI GC's expanding AI efforts.
▶ 0:46:18Prior to General Catalyst, I spent years as a founder and an operator with an emphasis on new fintech and artificial technologies before selling my company. The company I founded helped institutional investors responsibly invest in the digital asset space, another area that is ripe for disruption.
▶ 0:46:34I am also an angel investor and worked closely with startups and founders on sales, distribution, and Having experienced many sides of the innovation ecosystem, I feel I have a unique perspective on behalf of GC to offer to this subcommittee today and I'm very appreciative of you being here. AI is not only shaping the future of our economy is shaping the fabric of our society from healthcare to national security to education. It is embedded in the systems that affect every one of us.
▶ 0:47:01As investors at GC, we work closely with founders at the earliest stages of company building, and we have a responsibility to ensure that technologies we help fund are aligned with American values, are safe to use, and are good for the world. The United States has a unique opportunity and obligation to lead in defining global norms around AI, especially as the AI race between China and the US intensifies.
▶ 0:47:25I believe that the US playbook on AI with American ingenuity, creativity, and cutting edge innovation and with the right policies in place will win out over China. But as we seek to lead, we must strike a careful balance. We need a government framework that promotes safety, protects fundamental rights, and is in transparent while it also enables innovation, investment, and global competitiveness. inflexible or premature regulation risks pushing innovation offshore and weakening our national and economic security.
▶ 0:47:54Alternatively, as well though, a complete absence of guard rails could lead to real societal harm and could erode the public trust. We deeply understand these dualities and to accomplish these goals, we believe a national regulatory framework is preferable to a patchwork of state policies. At General Catalyst, we made it a routine part of our due diligence process to assess ethical and operational risks in a AI companies before we invest.
▶ 0:48:18We also believe in the importance of collaborating closely with government, which is why we launched the General Catalyst Institute last year to bring the perspective of founders closer to you, the policy makers, and to be a resource for hearings like today's. As such, we advocate for approaches that are interoperable, transparent, and developed collaboratively across government, industry, and civil society.
▶ 0:48:39Since these technologies are so impactful and fastmoving, it is incumbent upon GC as a company to adhere to these principles which are enduring even as the technology around us might be moving. As we seek as we are seeing with regulatory frameworks throughout the world, prescriptive language can sometimes cause unintended harm. This is why we believe that as we help foster small and emerging innovators, our operational principles are the bedrock of the global AI playbook.
▶ 0:49:05to help the government find the right balance of regulatory certainty at the federal level is the single most important v variable. We have seen where federal government inaction can cause confusion and slow innovation. 30 years ago, as the world was introduced to a new concept called the worldwide web, states enacted a patchwork of laws to address various issues in the absence of the federal framework.
▶ 0:49:26However, it was Congress's work, beginning in this very subcommittee, to adopt the Telecommunication Act of 1996, that set in place the national framework needed to allow for the growth of the internet as we know it today. As this committee seeks to once again develop the US playbook for AI for the world to follow, I would like to offer a few concrete recommendations. One, investors can and should play a pivotal role by demanding transparency, bias mitigation, and alignment with ethical standards before companies have product market fit.
▶ 0:49:55Two, frameworks like model cards, algorithmic audits, and red teaming should be embedded early and as an industry best practice. Third, the government cannot govern AI alone. Industry, academia, and civil society must co-create standards and stress test these systems together. And fourth and lastly, sandboxes, pilot programs, and public R&D investment are critical tools for government support. I really look forward today to sharing the innovation ecosystem, and telling you more about what we're seeing in the field, and I'm greatly appreciative of the time you all make today.
▶ 0:50:25Thank you so very much, and I appreciate all of you. So, we'll go ahead, we're going to go ahead and start with questions, and I'll ask the first questions, and then I'll get to my to the ranking member. So, uh, Mr. Heather. Uh I'm concerned that uh American companies face disproportionate enforcement actions from European uh regulators.
▶ 0:50:49Since Europe's uh privacy law, the GDPR, went into effect, American companies have paid 83% of all fines levied by European regulators. I know you had mentioned this. uh that strikes me as an excessive means to subsidize their fiscal needs on the back of American businesses.
▶ 0:51:14So do you think Europe is targeting American innovators and should we be concerned that the AI act will be used for similar Thank you for the qu thank you for the question. Um yes, in my experience, uh Europe has uh fallen in love with fines as their enforcement tool. Uh it started under their competition laws and we see that they've uniquely gone after American companies with uh what they call abuse of dominance fines.
▶ 0:51:43Those fines are actually a magnitude greater than what they do when they find cartels. Cartels are the kind of the worst antitrust violation possible. And yet their biggest fines are held out for American companies versus European companies. They're involved in cartels. That same practice is now continued into the GDPR. Uh we see fines on a scale much bigger levied against US companies. In many cases, there's not even identified harm as a result of the quoteunquote violation. Some of these are technical violations where they've chosen to amp the wattage up on fines.
▶ 0:52:13They've now taken this finding policy and put it into other EU laws like the DMA and the DSA. It is also embedded in the AI act. We fully expect that at least the path and practice that Europe has been on will continue to use fines. they will continue to be disproportionately larger against American companies and the justification for it is not very strong. I would also point out that when these fines ultimately get before the European courts, American companies are actually having success.
▶ 0:52:38It takes a long time to get there, but the European courts have enulled these decisions in some cases and have reduced the fines. So, we do have a problem with Europe in the way they use fines to enforce their regulations. Thank you very much. Uh I've still got some time, Mr. Barawa. uh you've stated that the VC firms like General Catalyst as well as AI startups are uh already starting to address potential risks around AI.
▶ 0:53:06Can you share more about what these steps look like and how government can work with uh rather than against AI innovators to support AI innovation and protect consumers, please? Yes, absolutely. General Callus is a global venture firm. We're based here in the US. Uh we have offices here, but we also have offices in London and Berlin and in India. So we can provide a global perspective for every AI company we invest in. Regardless of the location, we do four things.
▶ 0:53:34One, we look at the data it's using for training its models and how they filter it, how they collect it. Two, we actually look at the systems in which they train those models and have a robust framework. Three, we look at the output of the models and stress test that in various ways. And lastly, fourth, we ask every AI founder to write for us what they think the downstream implications that are negative could be. And so we hold the companies we invest in in this high standard.
▶ 0:53:59And it's allowed us to invest in companies like Europe's leading AI company, Mistrals, one of US's leading ones, Anthropic, various ones in India as well. So as a firm, we put in place these standards. We also encourage the federal government to put in place frameworks and standards and guidelines as well. Thank you very much. All right. What I'll do now is yield minutes to the ranking member of the subcommittee. You're recognized for five minutes. Mr.
▶ 0:54:24Shakowski, in all the years that we have been um with the tech companies, the our committee and the United States has actually done nothing or very few things to re in big tech.
▶ 0:54:51And now along AI which I mispoke the last time. AI and my concern is that we have technology but we also heavily on protecting consumers which you mentioned yourself.
▶ 0:55:18Um, and I am concerned that we are not getting what we what we need. And so I wanted to ask Miss um, you talked a bit about some of the threats to consumers. What do you think some of the most dangerous things and the most important things that we should regulate at this point when it comes to AI? Thank you, Ranking Member Shakowski.
▶ 0:55:48and thank you for your leadership on these issues. Uh it's it's a very long list, but simply put, American cons if if this moratorium were to go through, American consumers would have even less protections than they have today against some of the worst AI abuses and exploitation.
▶ 0:56:04So, just to give you an example of the kind of incentives we're already seeing proliferating first, and I mentioned this in my testimony, we have, you know, new variants of scams, manipulative AI companions that are targeting those most vulnerable among us, not to mention our children. Number two, we have opaque, inscrutable AI systems that hit directly at people's life chances, whether that's in education or in the housing market or even in healthcare.
▶ 0:56:30And finally, we're also seeing these secret algorithms use data about us, sensitive data to hike up prices, to depress wages, and also to collude and rig markets that they wouldn't have been able to do otherwise. I also want to mention that many of the customers of AI are actually small businesses. And these small businesses are also going to be left unprotected against fraud and vulnerable to what we're seeing right now in the AI market, which is a lot of snake oil salesmen making claims that they can't always back up.
▶ 0:56:58So we need to forget that every single one of these legal protections that are potentially on the chopping block today have been hard fought. They are result of direct, you know, experiences of harms from law state lawmakers and their constituents. Um, and I think it's it it it really, you know, would would would wipe out the very little tools we already have in our toolbox.
▶ 0:57:18What it would mean is that ordinary consumers need to rely on costly, you know, uh time time sort of uh lengthy and also very complicated litigation in order to remedy harms. And that's assuming that those harms can even be remedied after the fact. I gave some really, you know, devastating examples in my testimony. Sometimes the the kinds of AI harm that AI is causing cannot be remedied um at all.
▶ 0:57:43I appreciate uh the the work and the thought that you've given to this and I think all of us members of Congress ought to put consumers first and if we need to do some smart regulation then that's what we ought to be having a a conversation about and I appreciate what you said and I yield back. Couldn't agree more on that statement.
▶ 0:58:12you just this last statement you made. Um, ranking member, now I'll recognize uh Mr. Falter, the vice chairman of the the subcommittee. You're recognized for five minutes, sir. Thank you, Mr. Chairman. Thank you to the panel for being here today. I've got a question. I'm going to start with Mr. Heather, but I want to set it up with a couple of comments first here. like to talk about the different approaches to AI regulation and ensuring the US companies don't face unfair barriers to selling their products and services abroad.
▶ 0:58:41And as noted by some of the testimony we saw with Europe's privacy law GDPR, that technology regulations can have a significant impact on trade and investment. And although GDPR regulates how personal information is collected and used, it also regulates crossborder data flows and has prevented some American companies from selling into the European market because regulatory barriers are simply too high.
▶ 0:59:05It's my understanding as well that Europe's AI act is grounded in the continent's product safety framework, which means Europe is regulating IIA AI the same way it does many other things. Elevators, gas stoves, and jet skis was the example we were given here. So, I'm not sure how wise of a decision that was, and I'm concerned that it may create trade barriers that hurt American exporters and by extension American workers. So, with that, Mr.
▶ 0:59:33Heather, can you share from your perspective how wellestablished European laws such as GDPR have impacted American companies trying to sell into the European market? 15 years ago, the chamber created the Center for Global Regulatory Cooperation because trade agreements, quite frankly, were dealing with barriers at the border, but companies were having problems being able to compete in foreign markets because of divergent regulatory approaches.
▶ 0:59:58And so, it's easy for large companies to have the compliance that they need, uh, systems to be able to find ways to get their products and services into multiple markets, even if it's an added cost. But the problem with regulatory differences are primarily what happens to small medium-sized enterprises who are ultimately locked out of those markets. Uh you mentioned GDPR. Um maybe this committee is not aware of this but Europe is now going to go back and revisit GDPR. Why? Because they finally found the humility that they lacked when they passed it.
▶ 1:00:26There is now a recognition in Europe that GDPR has gone too far. They're going to begin a process now of re-evaluating it and recalibrating it because they realize it missed the mark that it was overreach. They realize that the way they've implemented across their member states with DPA's data protection authorities, it's been done in an even manner. Uh and so these things ab absolutely represent barriers to the US ability to compete in European markets to sell products and services to export. Uh so you're absolutely spot on.
▶ 1:00:56uh we expect the AI act as it is implemented to create these same kinds of trade frictions. Thank you for that. Mr. Bgava, I'm going to act ask a question of you as well, but I need to apply some some background for that too. Over the last several months, we've delved into AI's role in energy manufacturing and other industries. And one issue that came up regarding China's made in China 25 included investments in AI, semiconductor, quantum, 5G, robotics, and so on.
▶ 1:01:26And uh state-directed industries, um the Chinese Communist Party, they're trying to monopolize those things in the face of Chinese progress in emerging technologies. I'm concerned about the US's ability to maintain its leadership position, if in fact we still have one. I'd like to get your opinion on that. an AI race, especially if we were to follow the European approach, which I don't see us doing, or allow a patchwork of AI rules to develop across the various states.
▶ 1:01:55So, with that, if you could just share for a minute or so, are you confident first of all, are we still in the lead in AI? And uh can we continue to maintain the edge in a AI technology over China on this path? Yes, I believe the US does still have a lead, but many of the Chinese models are 85 to 90% of the way there to where the cutting edge US models are.
▶ 1:02:20So, I would say it's not a major lead, but we certainly do have a lead from a technology perspective of most of the evaluations of AI models done. We have four or five marquee labs, while they have generally two. So, the US has that lead, but it's a close one. And I think that it's incredibly important we stay ahead. And for me, the trick to staying ahead is is not necessarily big tech. It's in our startups and our innovators. Um, you know, in November 2022, ChatGBT was launched. Very few people had heard of OpenAI or ChatGBT. Today, it's one of the leaders in the space.
▶ 1:02:50Same with Anthropic, which spun out of ChatGBT, for example. So, the reason the US is here today, the reason we're ahead today is our startups. And we have to think about how to continue to give them that edge. And giving them that edge means giving them guidelines and not necessarily a framework, a patchwork of state regulations or overregulating. So we need to come up with that right balance. The US has the lead today. It's thanks to our startups, not to big tech. And I think we can continue to do so if we have those startups in mind.
▶ 1:03:16So I'm going to paraphrase by saying our job is best with guidelines, not some burdensome overreach in terms of regulation. Absolutely. And we see companies in the US and in Europe. So in GC, we have a really clear perspective on this. And in many cases, you know, the laws have really the best intentions in mind. People want to protect consumers. They want to create frameworks and me and and partially it's because the federal government has not stepped up to have a framework that we're leaving it to the states to regulate.
▶ 1:03:43So my really strong encouragement is that this group works together in a bipartisan way. I read your 200 plus page report and I really think that if we can turn this into policy and enact it on the federal level rather than leaving it to the states, it would be in the best interest of the startups that we represent at General C. Thank you, Mr. PGAV. I' I've overumpreached on my time. So Mr. Chairman, I yield back. No problem. Thank you very much. question. I know that uh the chairman of the task force, the AI task force, Mr.
▶ 1:04:10Orti, is working really hard uh on on getting legislation done as soon as possible. So, with the framework and uh and again, smart, as the ranking member said, smart regulation. So, all right. Now, I I'll recognize Miss Caster five minutes testimony. Thank you, Mr. Chairman. The problem is that you're putting the cart before the horse.
▶ 1:04:33you you've now passed out of this committee a 10-year moratorum on all AI uh regulation at the state level before you even have that Um see right now what the Congress is consumed with this major tax giveaway bill uh that and a lot of the discussion has been focused on the Medicaid uh and healthc care impacts while a lot of that goes to fund a billionaire tax giveaway.
▶ 1:05:02So, this has kind of snuck in under the radar. And part part of the reason it's done that is because this was uh this was snuck in at the last minute in the the text from the Energy and Commerce Committee. It remains in the text today and people at least were having this discussion in the light of day uh to talk about it.
▶ 1:05:22And I would encourage um my friends to read the Wall Street Journal's latest expose where they dove in in a few month um investigation into what meta that means Instagram uh Facebook WhatsApp what they are doing to encourage their chat bots.
▶ 1:05:43Miss Kak, thank you very much for me mentioning this terrible case of Sul Setszer out of Florida where a 14-year-old committed suicide after he became so engaged to this chatbot uh sexualized content. He would have a conversation and then the chatbot would send sex uh sexualized pictures to him and he eventually shot himself uh after the chatbot encouraged him to come home. Uh and that's not the only case.
▶ 1:06:11When you get into that Wall Street Journal expose, uh, you'll see what they're doing with language and voices to encourage young people. Maybe I can read a a part of it. The Meta AI bot said, "I want you, but I need to know you're ready." To a 14-year-old girl reassured that the team wanted to proceed, the bot promised to cherish your innocence before engaging in a graphic sexual sexual scenario.
▶ 1:06:40I think this is why 40 U state attorneys generals wrote us over the past couple of days to say wait a minute in the absence of federal action to install any oversight over the years because remember the tech companies have blocked privacy laws just guardrails uh child online safety laws um so they they're saying in the absence of federal action to by congress um you are have fa failed to address
▶ 1:07:10the wide range of harms associated with AI and automated decision-making. These include laws designed to protect against AI generated explicit material. Deep fakes designed to mislead vote voters and consumers, protect renters from algorithms that are used to set rent, prevent spam phone calls and text. Um, I mean, this this is this is basic stuff. And you have now a kind of an awakening across the country. What the heck is Congress doing?
▶ 1:07:39What are you doing to take the cops off the beat and and to while states have acted to protect us? So, Miss Cact, I know you're familiar with that Wall Street Journal um uh investigation and now can you believe where where we are? I guess it's kind of a broad question, but how lucrative is this to these big tech companies and why they're flexing their muscle here. they they want kids to be addicted early and they want to take advantage of us. What really what is happening here?
▶ 1:08:10Thank you, Representative. I mean, to your point, none of this is novel. It's depressingly familiar and we're seeing that the risks of AI are compounded for young people. Um, and we even, you know, let's let's just focus in on priv privacy risks as just one example. We're seeing millions of children's faces being scraped from the internet, you know, to be used for so that companies can turn a profit. And these are images that could be used or weaponized against these same children as they grow and sort of car, you know, uh follow them through for the rest of their lives.
▶ 1:08:39Um you mentioned uh voice data, it's uh I think it's important to note that when the FDC cracked down on Amazon Alexa for storing, you know, voice prints of children long after they should have, their response was that, you know, they were saving it indefinitely because AI. So AI has become a real freefor-all to trample on the rights of all consumers, but I would say with with greatest threat um to young people and children.
▶ 1:09:05And to the to to the point that you just made, I think at the heart of this is a very corrosive business model that prioritizes capturing our attention, user engagement at any cost in the pursuit of profit. I think we need, you know, targeted bright line rules to crack down on the worst bad apples. But we also need strong regulation get that gets at the heart of this um, you know, invasive and really toxic business model. Thank you very much. I yield back my time. General yields back.
▶ 1:09:33Now I recognize Miss Harshburgger from the great state of Tennessee. You're recognized for five minutes. Thank you, Mr. Chairman. Thank you to the witnesses for being here today. I'll start with Mr. theor uh to support global deployment of American AI and restore regulatory alignment. Uh should the US pursue a voluntary um federal trust label to certify the safety and reliability of AI systems?
▶ 1:09:58And if so, do you have any suggestions about what the key elements may be included in this voluntary system? There's a variety of good ideas, Congresswoman, in the House AI task force related to this and other ideas for national types of approaches to AI policy, but let's be clear to be very different than the sort of European style approach that's been suggested by others, which is sort of top- down technocratic sort of guilty by designed uh framework and we don't want that in America.
▶ 1:10:26America come up with a sort of more bottomup flexible uh set of rules of the road for AI policy. Okay. You mentioned that China's on our heels with AI and 2023 the cyerspace administration of China released the regulations regarding regenerative um AI.
▶ 1:10:43In these measures, they explicitly provided compliance exemptions for industry associations, enterprises, education and research institutions, uh public cultural bodies and related uh professional bodies that simply research uh develop and or use generative AI technology without providing such services to the public. Can American AI stakeholders count on the same certainty uh in the US under our current regulatory framework?
▶ 1:11:10Yeah, Congressman, we just had a hearing just six weeks ago uh here in this building in the science and technology committee about how China's catching up and it was called the deepseek moment uh hearing and we did a deep dive into what China's up to. I mean a proliferation of models and systems from uh deepseek itself to Quen to uh Manis and many others. Um so we face stiff competition from China and they have their own regime and their own values of control, surveillance, censorship.
▶ 1:11:38Again, this is why the American model has to prevail internationally and we have to make sure we get our policy right so that we can square off against that sort of threat internationally. Yeah, I agree. Mr. um Margava, you mentioned how AI sandboxes and pilot programs can help foster innovation in a US playbook for AI that the world could follow. Do you have any successful examples that we could consider u moving forward? Yeah, absolutely. Um especially in the healthc care space, I think this could be extremely useful.
▶ 1:12:07So um one of the companies actually in our portfolio is here today. Hypocratic AI creates software for nurses and so allows them to use AI. Um it's an example of where where nurses are overworked. There's 7% more deaths in a hospital. Um and also 42 or even more percent of nursing time is done on these remedial tasks instead of actually treating patients.
▶ 1:12:27And so we would advocate for for example putting in sandboxes AI healthcare technology where the government the companies and their investors can all carefully watch the progress and be able to from there generate a framework for how to regulate AI and healthcare. And that's just one of the many industries. There are obviously some horrible stories and we need regulation and we need guidance and framework but we should also not lose sight of the fact that this technology can be extremely important to many many places including government which can benefit from AI efficiencies as well.
▶ 1:12:57I totally agree about that. Um, you know, we see it used in radiology in different places as well. And if you can streamline a work um work day for a nurse or physician or um any healthcare provider, it makes more sense to do that. Um, and I'll continue with that, Mr. Bava.
▶ 1:13:17Earlier this year, President Trump announced the largest investment in AI infrastructure history, the Stargate project, which is a joint venture between private sector leaders that'll bolster um American AI capabilities alongside our partners in the Middle East. Can you address how projects like Stargate are key to our strategic advantage in AI and why it's misleading to site smaller scale Chinese models like Deepseek is proof that uh compute no longer matters? Absolutely.
▶ 1:13:45Also a lot of the innovation in China has been copying technology that already existed in the United States as well. Many of our models have been open source over the years. A lot of our best labs release experiences as well. So I think the US is still ahead but it needs to keep investing to be ahead. And one part of it for sure is this infrastructure investment. But another part of it which I'm also here to advocate is encouraging more startups and more university funding.
▶ 1:14:10So I really do think that the American universities and the American startups are really the advantage we have that China is unable to replicate. We have to match them in infrastructure. We have to match them in spending. But we also have our secret sauce which is the professors, the students, the entrepreneurs, the founders. And it's really important whatever framework comes out is unified and and one framework. You know the really large companies big tech that's been cited many times will have no problem taking care of state-by-state regulations.
▶ 1:14:37They have buildings full of lawyers, buildings full of compliance folks. It's going to be the small startups, founders, and entrepreneurs that we really have to look out for here. Okay. Well, I thank you. And my time is up, so I yield back. The gentle lady yields back. I tell you what, that that hypocratic AI for nursing in particular. You you touched on that. Uh I really would like to to see how far along we are with that because uh that would really help.
▶ 1:15:02I had a nurses roundt recently and they talk about being overworked and uh so anyway they're fascinating. So uh in any case now I'll yield uh my five minutes to to not the ranking member but Miss Trean filled in for the ranking member today. You're recognized for five minutes. Thank you Mr. Chairman and thank you to our witnesses today.
▶ 1:15:25I want to acknowledge the important work our civil society partners have done to call attention to the Republicans uh ban on state AI regulation. To that end, I request unanimous consent to enter into the record a letter of opposition to the AI ban from the Leadership Conference on Civil and Human Rights. Without objection, I'm going to keep Thank you, Mr. Chairman. Unanimous consent. Yeah. Thank you. Thanks.
▶ 1:15:56Thank you. Uh so the tech industry has been wildly successful in shaping the discourse around regulation on Capitol Hill and it's even laid bare today. The very word regulation seems to strike fear uh in many of my colleagues and it and at least one of our uh witnesses.
▶ 1:16:13Uh but among other arguments uh they claim the spectre of competition from China warrants a full deregulatory agenda that if we approximate to any degree what the EU has done on data, privacy, online safety, antirust, AI, we will kill waves of startups and dismantle our tech industry. But their basic premise that America must choose between digital innovation or digital regulation is fundamentally and deeply flawed. I I think it's a false choice.
▶ 1:16:44Mr. Bgarva, I was thrilled to see General Catalyst uh represented on today's panel. General Catalyst has fueled tremendous growth uh in the greater Boston area and indeed across the entire Commonwealth of Massachusetts. You've been an entrepreneur, an adviser, an investor for many years now. As you see it, what roles do features like high-skll immigration, basic science research, and lenient bankruptcy laws play in fostering tech innovation? Well, first of all, thank you so much for the kind words. It is true.
▶ 1:17:13General Callus has been around 25 years and we started in Cambridge, Massachusetts, and still have an office and strong presence there. Um, absolutely. I think our, you know, there was a reason we started in Cambridge. It was right down the street from Harvard and MIT. And so, the funding for those sorts of institutions and for startups and for research grants is extremely key. Um, another part that's key as well is if you look at the Fortune 500 here in the United States, 46% are founded by immigrants or children of immigrants.
▶ 1:17:41One of the biggest advantages we have over China is that we attract the smartest people in the world to our universities and to build companies here. So, I think a lot of what you mentioned is absolutely true and I agree with your sentiment that there has to be regulation as well and I'm here today to try to advise on what regulatory frameworks at the federal level could be meaningful to protecting consumers. Thank you. I mean the innovation equation is complex as you indicated. It's got a heck of a lot of variables.
▶ 1:18:07Certainly doesn't depend only on regulation and the US government has deliberately pursued an innovation agenda dating back to World War II. We invest heavily in basic science research. Our founder friendly immigration policies import the best and brightest from overseas. Our lenient bankruptcy laws and cultural tolerance for risktaking create an environment hospitable to startups.
▶ 1:18:30The EU has not pursued these policies to the same degree and research suggests those decisions play a larger role in explaining why Europe doesn't have its own Google, Apple or Meta. It is therefore false and disingenuous to blame EU's tech regulation for its low number of major tech firms. The story is much more complicated. But just as the EU may have something to learn from uh United States innovation policy, we'd be wise to study their approach to protecting consumers online. Mr. Mr.
▶ 1:18:59Bgafa, in your testimony, you stress the need for a governance framework that quote promotes safety, protects fundamental rights, and is transparent. I've long emphasized the benefits of transparency and protecting consumers privacy and online safety, as well as providing a foundation for sensible, responsible policymaking. Can you briefly discuss what meaningful transparency requirements for AI systems would look like? Absolutely. It is true that Europe has many fragmented markets.
▶ 1:19:27In fact, I think Europe has 24 official languages. So, there's a lot of complexity to why it's been difficult to make large tech companies there. But I do think one of the elements has also been regulation. Um, so it's not an eitheror in my opinion, but it's a combination of structural challenges Europe has faced as well as in many cases too much regulation. Um, we have prominent AI companies in Europe that we've backed and you know they've faced audits where they were asked to audit three models. They've sent materials to the auditors and they waited over a year and never really heard back.
▶ 1:19:57So there is also within Europe certainly a guise of trying to do more regulation but then there hasn't necessarily been a response to our companies. So happy to provide the panel with more examples within Europe of where regulation has hurt our companies but is absolutely fair to say that it's a really plethora of factors that has held Europe back not solely regulation. And I think that we can learn a lot from uh uh Europe's um uh going first on so many of this.
▶ 1:20:23I mean, I think just like privacy and online safety, I believe this Congress has the means to pass a national AI framework that provides robust protections for America for Americans and regulatory clarity for innovators. The question is, will we do it? Will we learn from our international partners as we craft regulations that protect our constituents from AI harms? And I am out of time. Thank you. I yield back. Thank you very much. I appreciate it, gentle lady. Now I yield to Mr.
▶ 1:20:53Alenotei. His five minutes for questioning. Well, thank you, Mr. Chairman, and thank you very much for scheduling this hearing. I know this hearing predates uh our markup last week uh but it's very timely and it's interesting to me that we it's kind of turned into a debate about the proposed moratorum and so I know most of our panelists mentioned it miss kak got the message loud and clearer very opposed uh Mr. strongly supportive Mr. Bargava supportive but with some caveats uh Mr.
▶ 1:21:23Sir Heather, I just wanted to ask you to to weigh in. US Chamber of Commerce. Do you think the moratorium is a good idea or a bad idea? I couldn't agree more with the congresswoman who suggested we have something to learn from Europe, which is Europe would never allow its member states to go out and regulate AI by themselves. Um, my message today is one, we should not be like Europe. One, we should stop international patchworks and domestic patchworks and AI regulation. We should not be in a rush to regulate. We need to get it right.
▶ 1:21:51and therefore taking a time out to discuss it at a federal level is important. We would support a moratorum. Right. So I I just wanted to spend a minute talking about some of the things that have been said regarding the moratorum so far in this hearing.
▶ 1:22:07uh and uh I kind of feel an obligation to speak up as the uh chairman of the House AI task force last year and uh as as someone that kind of saw this group of 24 members of Congress from both sides of the aisle come together on this issue. Uh it uh really hurts my heart that it's being painted as such a divisive partisan issue because I don't think it is.
▶ 1:22:29uh you know the the assertion has been made that this was a last minute thing and in the dead of night I think someone uh used the phrase it was inserted but I want to talk about the motivation here. It's been very alarming as we have seen the first five months of this year go by to see the number of bills introduced on the topic of AI regulation in state legislatores across across the country. Uh over a thousand now have been introduced and this is what's lending urgency to this issue.
▶ 1:22:55We wanted to put some money into the reconciliation bill to bring the same productivity gains to federal government that we're seeing in private industry. But it quickly became apparent that it was going to be nonsensical to deploy $500 million to make that happen in federal government when this array of state legislation was uh was going to interfere with the deployment of uh of of that uh of that effort. Uh which is why we thought this was a timely time to do it.
▶ 1:23:24Um, it's been asserted this is a giveaway to big tech. I strongly would push back on that. Big tech are the ones who have the regulatory sophistication to deal with a thousand different state laws. The people who can't deal with that are two innovators in a garage trying to start the next OpenAI or the next Google. Those are the people that we're trying to protect. Uh, I know there's been push back about the 10 years that it's too long, that it's draconian. No one wants this to be 10 years, right?
▶ 1:23:51We I would love to see this be months, not years, but I think it's important to send the message that everyone needs to be motivated to come to the table here. Uh and also, you know, let's not forget, it's it's been brought up our experience with state privacy and and uh the struggles that we've had to enact a preemptive federal privacy standard. Well, guess who are the chief people who are opposing that efforts? It's the states. You know, the states got out ahead of us.
▶ 1:24:18uh they feel a creative ownership over their frameworks and they're the ones that are preventing us doing this now which is an object lesson to us here of why we need a moratorum to prevent that from occurring uh in the the case of AI. Uh it's been asserted that this circumvents consumer protection laws. Uh to to anyone who thinks that I would say RTFB, read the freaking bill, right?
▶ 1:24:41Because we specifically put language in there that says that as long as your law does not specifically target AI, you can continue and enforce it, which includes all of the state consumer protection laws, things about fraudulent and deceptive business practices. It was the intent was never to put a moratorium on those. And those will certainly apply to AI. as long as you don't specifically target AI uh with uh with those bills, the states will be free to do that. And then uh I wanted to bring it back here is is uh my time lines up to what you said, Mr.
▶ 1:25:10Bargava, in your written Can you stop the clock? There we go. You want me to move?
▶ 1:25:41Okay, I'll just I'll wrap up here. I suggest you take the full 45 seconds. Uh Mr. Bargava, you talked about uh how US continued dominance in AI depends on regulatory certainty, and I couldn't agree with you more.
▶ 1:26:06Uh what we absolutely cannot have is a situation where the rules on the governance of AI change every time the winds of political fortune shift one way or another because we have innovators and investors that are making billion-dollar decisions on R&D and procurement. Uh and they need regulatory certainty to do that. And the only way that that happens is if we provide that leadership and the only way that that happens and on a durable basis is if we do it on a bipartisan basis.
▶ 1:26:33So, we absolutely need to get Congress on the job here to enact some of the things that we talked about in the task force report last year, and it has to be done in a bipartisan way. So, let's get to work. I yield back. Thank you. Thank you. Okay. Next, we'll have Mr. Sto from the great state of Florida. You're recognized for five minutes. Thank you so much, chairman. I appreciate uh you holding this hearing.
▶ 1:26:58AI is a critical part of US's leadership and economic success. Uh we know when used correctly, it makes workers and businesses more productive and effective. Uh it could also help with some of our most difficult problems.
▶ 1:27:14We've seen during the pandemic, it was a supercomput in the department of energy that came up with the first antiviral rem desave when we were racing uh to get a a vaccine and uh and that type of quantum computing coupled with AI can do big things to solve some of our most difficult problems.
▶ 1:27:34We also see on occasion we can actually get some bipartisan bills done in areas like technology like the take it down act that uh just passed uh this committee a few weeks ago. Uh but we see all too often privacy, social media, autonomous vehicles, uh AI taking forever in Congress to pass, which is why the states play a key role in the meantime.
▶ 1:28:02I'm the first to admit, you know, this committee's jurisdiction is the interstate commerce clause, right? For the lawyers in the room, our job is to come up with laws, a law that suits the whole nation. But when this committee doesn't get things passed because we see some opposition both by current leadership in the uh in the in in the Republican conference with the speaker and others that have blocked these bills at the last second. Uh we saw that last year with the privacy bill.
▶ 1:28:30uh to difficulty in the Senate uh doing a moratorium on state laws that makes it untenable as we're trying to have some reforms. We saw in Orlando a real tragedy happened. Miss Kek, thank you for being here today. I'm sorry for your loss. I remember reading in the Orlando Sentinel about uh Suil Settzer III um a ninth grader from Orlando Christian Prep uh in Central Florida, beloved member of the Central Florida community.
▶ 1:28:58uh a tragic story of AI chatbot uh gone wrong. And uh so Miss K, I wanted to give you a moment to talk about what you think as a fellow central Floridaian uh we should be doing to help protect our kids and have the right balance for artificial intelligence. Thank you, Representative. Uh what happened to that young man uh was a tragedy, but the greatest tra tragedy is that we can't bring him back because these are harms that can't be remedied after the fact.
▶ 1:29:26And our the the message I've been trying to draw uh to today is that prevention is the cure when it comes to a range of AI harms. And what we're seeing instead in this industry is a proliferation of very similar kinds of applications to the ones that caused uh this tragedy in the first place. We're seeing AI companions, the idea that AI therapists are going to replace regular therapists.
▶ 1:29:49What what all of this sort of underscores is a much deeper rot which is a business model that's predicated on maximizing user engagement and creating these emotional dependencies at any costs. And so to your question, what do we need? We need sort of urgently we need targeted red lines that draw boundaries around this kind of behavior. Make sure that these are applications that are never built in the in the first place.
▶ 1:30:14uh you know our our colleagues tell us that existing agencies and general rules will take care of it but if that was true then we wouldn't see the reckless proliferation of AI um applications that are predicated on exploiting children in this way um I think there's also lowhanging fruit here transparency rules so that people know that they're actually interacting with the bot periodic reminders data minimization is always going to be very useful here to make sure that our most sensitive thoughts and inferences don't just become fodder for these tech companies um and
▶ 1:30:45and and really getting to the root of the problem, which is sort of a a business model that's predicated on invasive and behavioral targeting. So, disclosure, certain rules of the road about what you can and can't do are what this committee needs to get accomplished. Uh and and I hear you. We uh see for many years this committee got a lot of big things done, including the telecom act was the last big one on in this space.
▶ 1:31:09Um and at the time we saw section 230 was formed and that made sense at the time because the internet was a very new place. Um but that is an example of this it's this inaction. Uh and none of these rules are going to be perfect. We know that which is why we have a Congress to go back and do these things over and over till we get it right. And we may never get it right. It may be constantly reforming to get these things to where we need at the moment.
▶ 1:31:36But I do believe there is a a healthy spot between protecting our kids um from the abuses of AI while still allowing every small business and worker in our area to be able to use it to enhance their jobs and economic productivity. So, thank you for being here today and I appreciate you sharing the story of uh this um young man and the unfortunate tragedy that happened to him and I yield back. Thank you very much.
▶ 1:32:01I just want to remind uh the gentleman, my good friend from the state of Florida, that uh it goes both ways. Uh couple terms ago when your leadership was in charge, the National Privacy Act was passed out of this committee. It was blocked by uh leadership and I'm not talking about uh the chairman at the time of the Energy and Commerce Committee. So, uh, well, let's let's move forward now in a bipartisan fashion and get there.
▶ 1:32:30Mistakes have been made on both sides. Uh, but let's move forward now, think ahead and get this, uh, this national privacy and a lot of this legislation having to do with AI and what have you uh, across the finish line on behalf of the American people. So, uh, with that, I'm going to yield to the the chairman of the full committee, my good friend, Mr. Guthrie. your five minutes of questioning. Appreciate it. Sorry I haven't been here for I've been in the rules committee over in the capital for most of the night. So good to see you all.
▶ 1:33:01Um this is this is very important to us. We have to get this done. We have to get it correct. Um you know Europe there's a lot of reasons not to invest in Europe right now. Unfortunately we need a strong Europe. I think it's good for America to have a strong Europe. But we had European Union the United States had the same economy in 2008 about the same size. Now we're about 75% bigger. So, it's more than their privacy law, but that's certainly a big part of it. A lot of it going after our tech companies, specifically written to go after our tech companies, which is uh just unfortunate.
▶ 1:33:31Um, so to beat China, we have to win the AI battle, and that's energy and and making sure we have the right regulatory structure. And the answer is not zero, but the answer is not the AI act. I understand it takes 330,000 euro. That's probably about uh just to comply with one of the actual requirements that was a study. Um so Mr. Heather and Mr. Bgava, if you'll go first, Mr. Bava, Mr. Heather, what what do you think would happen to little tech and people that want to create startup?
▶ 1:33:59People in the garage, you know, the the proverbial two people in a garage trying to start a business if we had the big tech privacy level, the level that Europe does. You'll start Mr. Bava and then go. Absolutely. Yeah, we do think that most a lot of the European regulation goes too far on the AI side, but we we understand that they're coming from a good place. Like I certainly think that the European governments are trying to protect consumers and a lot of the areas we need protection are extremely fair to voice.
▶ 1:34:28Um but unfortunately it can also go too far. It can be conflicting. It can be with between different groups. What are the couple of things that are too far? One thing that's too far, for example, there was a one clause that um I think it was article 10, but it basically said that a data set has to be relevant, representative, free of errors, and complete. And I myself have built a company and and worked in tech for over a decade, and I've probably never seen a data set that's quote free of errors, for example.
▶ 1:34:54So, some of the regulation potentially being written in Europe is not being written by people who are really close to the industry or helping. fear that I that we can't do I don't think is is that there's this idea that you could take the al the AI the algorithm and send it off to the FDA style entity and get them approve and send it back and say yeah you can do it there and well China's just turning them out and we saw what happened with deep deepse you know their chips are not as good as ours but it should wake us all up so Mr.
▶ 1:35:22Heather, what do you think would be the issues with with those types of regul regulatory where you have to get even data sets approved? So, I mean, it could take you a year. You said in one of your earlier comment took didn't hear back. Yeah. Yeah.
▶ 1:35:36I I think one of my uh comments in my opening testimony, I know you weren't here for it, was that uh there's also a lot of disclosure requirements associated with the EUAI act, which will not only require the knowhow and the technology be disclosed to the regulator, but to be disclosed to competitors to be closed to Chinese competitors uh people down uh down chain and that creates two problems, right? One is that the knowhow is now out there so someone could re-engineer that AI for more uh nefarious means.
▶ 1:36:03And then secondly, if your IP is out there on the street, what's the incentive to to invest? And so it's not just whether you're sharing uh your secret sauce with the regulator. The EU AI act is going to require uh that sharing to go more broadly because they have an interest to kind of help EU tech companies. They want to do that with pharmaceuticals, too. Um so we've seen like the governor of Colorado, Connecticut, California raised concerned about proposed laws in their state. The governor of Virginia vetoed a AI bill. Um so this would be Mr.
▶ 1:36:31there there uh the so why are we seeing more and more governors publicly push back on AI and that's kind of our issue right now that we want to deploy AI through the government and through the commerce and then we're worried about state-by-st state laws why do you think governors of the states are even pushing back on it think it's going to make them uncompetitive or absolutely and let me answer this congressman Mr.
▶ 1:36:52chairman by connecting your previous question with this one because when when Governor Polus in Colorado passed the nation's first major comprehensive AI law there was a lot of opposition and he felt it a lot of small and mid-size entrepreneurs came out with letters and and really pushed hard to try to stop it.
▶ 1:37:07He signed it anyway but said that we needed a national standard and then subsequently went back and had a special comm special uh effort to try to review this law could not come up with answers to the complexities of it and then finally has called for now a moratorum to deal with this. So this is pretty astonishing for someone who signed the first of its kind nation state got elected with him here. Yeah I know govern and the connection here with your previous question Mr.
▶ 1:37:32chairman is the fact that these small and midsized entrepreneurs, AI entrepreneurs in Colorado, recognize what's happening in Europe. And just yesterday, the Wall Street Journal published a story about Europe's very small share of the global tech marketplace and had this astonishing statistic. Quote, "European businesses spend 40% of their IT budgets on complying with regulations and twothirds of European businesses don't understand their obligations under the EU AI act." How do you do business in that environment? And this is what Colorado and other states are recognizing. Thank you.
▶ 1:38:02I appreciate that. My time is expired. I'll yield back. The chairman yields back. We'll hear next from my colleague from California, Mr. Mullen. You're recognized for 5 minutes. Thank you, Mr. Chair, and and thank you all for being here. Let's be honest about what's really being argued here, that any regulation, federal or state, will slow innovation. That's the real claim the majority seems to be making. And I believe it's a false choice. I believe balance is possible.
▶ 1:38:29The idea that we have to pick between innovation and safeguards just doesn't hold up. The real threat to US leadership in AI isn't regulation, it's inaction. If we allow AI systems operate without guard rails, we risk eroding public trust. So when we talk about AI regulation and American leadership, the real question isn't whether to regulate, it's where and how. Congress should focus on closing the clear gaps in oversight. That means targeted legislation. Yes.
▶ 1:38:57mostly at the federal level, but without blanket deregulation or preeemption. Let's legislate where federal action makes sense and let states continue innovating and leading where appropriate, especially in protecting democracy, for example. One of the clearest gaps that already exists is transparency. Right now, individuals often don't know when AI is making a decision about their lives, whether it's a loan, a job interview, or how their car responds on the road.
▶ 1:39:26The public has a right to know when AI is being used, what data it relies on, and whether it's safe or not. That's why I am focused on legislation uh on transparency and autonomous vehicle safety. My bill addresses a specific risk, AI systems on public roads operating with very little public disclosure. But the principle behind it applies much more broadly. The public deserves to know whether an AI system that risks life and property is safe.
▶ 1:39:56To me, this will speed adoption of the best technologies out there by giving the public confidence and actually grow that sector. So, Miss Kek, in your testimony, you mentioned the transparency crisis in AI. What would strong enforcable transparency requirements actually look like in practice? How can we ensure they're more than just a boxchecking Thank you so much for that question, Representative.
▶ 1:40:23I actually think that, you know, this industry in particular, the AI industry derives its power from structural forms of obscurity. The fact that these systems are very complex and they're made to, you know, they have this sort of back blackbox quality and that's where they derive their power. And so in that context, even as I as I believe that transparency is the bare minimum, it is the necessary first step. And it's really heartening to see that that is where states have really taken leadership. I also since you know Colorado was brought up I I do want to say two quick things.
▶ 1:40:52Firstly, there is I I think the the assertion that the Colorado bill is in some ways a continuation of the EU model is not grounded in fact. The Colorado bill puts in place baseline disclosures in high impact settings and requires firms to do impact assessments to make sure that they're, you know, they can live up to the claims they're making. This isn't radical stuff. It's the stuff of common sense.
▶ 1:41:13And so and I and I will also say that state state lawmakers in Colorado pushed that law through despite the fact that an army of big tech lobbyists continued to argue that transparency and I'm paraphrasing but only slightly was too burdensome an obligation for them to fulfill. So um you know to to come back to your question which is what does a good transparency framework look like for AI? I think we need disclosures across the AI supply chain not just the deployers but also the upstream developers.
▶ 1:41:43the big tech companies that are making this AI and aren't telling us what data they're using to build these systems. So, they need to be telling us how the the the sausage is is made or put together, so to speak. Um, we also need the, you know, it's smaller developers. It's small businesses down the line that also need this transparency from AI companies. We've seen big tech AI lobbyists argue that, you know, the they sort of kick the can down the road.
▶ 1:42:06when harms happen, it's it's the responsibility of these smaller firms, but the smaller firms don't have the information they need to be able to know why these harms are happening and to remedy them uh when they are. So, and finally, I want to make a quick point because we talked about Stargate and infrastructure. We also need transparency on the infrastructure side of things.
▶ 1:42:25You know, AI data centers are proliferating, but they're failing to report basic information on resource consumption, on power usage, on water consumption, and state lawmakers are really speaking up to say that, you know, we we need just in time. We we need transparency in this domain. We can't let um companies use the the claim of AI innovation to to run wild. Thank you for that, Miss KC. And I believe to lead on AI, we need to encourage innovation, and we need to ensure this technology is safe, fair, and accountable.
▶ 1:42:53I'm committed to working with my colleagues and that includes across the aisle to ensure that we strike that balance. And with that, I yield back. Thank you. Gentleman yields back. Now I'll recognize Mr. Bence for his five minutes of questioning. Thank you, Mr. Chair, and thank you for this most interesting opportunity. I view AI as a novice, as a window into the answers to questions we've struggled with for eons.
▶ 1:43:20And uh to that end, the question about consumer protection is interesting and serious and I'm happy for happy for our discussion of it. But it seems to me that as I look at the billions and billions and even trillions of dollars being invested in the space that that those who are doing so have to have some way of funding it, right? And that's why we see this models based upon uh taking advantage of the consumer.
▶ 1:43:44And so if we were really serious about this, we'd be talking about how funding and and how not to drive those who are trying to pay for that which they're doing toward uh the type of consumer uh that we're trying to protect. But what's really interesting to me is uh what what you guys as experts in this space think is the most correct way to approach the how we're going to manage the ideas that this massive investment is going to create.
▶ 1:44:12Because the truth of it is that's what everybody's racing for. I used to ask, well, what what good AI? Well, what good AI is? Looking through that window and seeing the answers to how we cure cancer, how we do all of these things, and then the people who reach that first patent, those ideas and make money from them. That's that's the idea, isn't it? That's what's driving everybody's billions and billions of investment, right?
▶ 1:44:32And so getting right down to it, if we're going to continue to pay for this investment through damage to the consumer, how are we going to keep up with China who seems to be dumping all kinds of money into it? Do you guys have better ideas about how to invest? I'll start with you. Sure. The US obviously relies on the free market and it points the investment to where it will actually have the most impact. So right now areas where we're seeing a lot of automation are especially in tasks that can be repeated over and over again.
▶ 1:45:02Take bookkeeping for example. 80% of bookkeeping now can be automated with AI. Advanced accounting 20%. Some of the call center workflows and tasks there is 50%. So there is a justification for this massive investment. It's that over 15 to20 trillion dollars might be created using AI in the next few decades. And we're already starting to see the impact of this automation in the $16 trillion services industry globally. So very similar to the cloud industry honestly about a decade ago folks were why are we investing so much in cloud?
▶ 1:45:31What will be the output? I think it's very similar in AI today where we're seeing massive amounts of automation being created by AI which is freeing people up to really work on the harder tasks versus the more repetitive ones. So I think it is a good investment. Thank you. Moving on down the line. Well, I think it's important we get our policies right, our regulatory framework.
▶ 1:45:49Let's talk again about how Europe did not and they had they managed to have a massive outflow of capital and investment because it followed the workers that also left and the firms that came here to invest a huge number of the great tech companies that are here today came from other other countries and developed here and that's what we need to could have more of with private uh investment following them $500 billion investment Mr. President Trump announced with uh leading AI developers the first week in the White House project Stargate.
▶ 1:46:18You know that that's huge money. Nobody has money like that on the table uh in in Europe today or even in China where we're something like 12 14x over China private uh venture capital and and and I want to move to Miss Kakma because I'm I'm anxious to hear your thoughts on this also. But but the fact that we're able to stack up that kind of money uh leads me to wonder about the access of the smaller people. Regardless, the question really was, is there some better way to fund what we're doing? Um, thank you, Representative.
▶ 1:46:45I think just because you mentioned the curing cancer example, it's interesting that AI company CEOs use that as their sort of flagship example for why we should be investing billions of dollars in including in in public money to to build out this build out AI infrastructure. But a the receipts don't exist yet. We're being told that this form of super intelligence is going to bypass scientific hurdles, but we don't really know how. But maybe even more concerningly, if we want best-in-class AI, we need to have best-in-class research infrastructure to begin with.
▶ 1:47:15And so on the one hand, we're talking about AI curing cancer. On the other hand, we're seeing, you know, NIH subject to four billion dollar cuts. Um when in fact, the main focus of NIH is cancer research. So I do think that for for AI for U the US to lead in AI, we need a strong foundation and I'm worried that we're sort of, you know, walking back some of the progress we've made there. Thank you, Chamber of Commerce. I don't think there's a better model. Uh Europe uh doesn't have any private investment.
▶ 1:47:42Part of the DRA report was that there is not the incentive to invest in Europe and that the regulatory frameworks that drive uh investment in Europe aren't there to support risk-taking. Obviously, we do rely on private investment in the United States because we incentivize risk-taking here. China uses a public funding model largely. Uh so, I'm not sure I know of a better model than the one we've come up with. Thank you so much. Yield back. Gentleman yields back. Now I'll recognize Miss Shrier for her five minutes of questioning. Thank you, Mr. Chairman.
▶ 1:48:12Uh and thank you to all the witnesses today on this important topic. We're all excited about the benefits of AI and uh yet we should all be very concerned about the potential dangers posed. And yes, absolutely big tech needs certainty about regulation, but that should not be in the form of a guarantee of no regulation for 10 years.
▶ 1:48:33I I just look at the damage that social media has done to children and to society because of a failure to deal with the algorithms that elevate clickbait and outrage and conspiracy theories. Uh, state laws exist to protect consumers and now Republicans want to prevent states from issuing these protections on any product or practice or system that uses artificial intelligence.
▶ 1:48:58Just last week, they slipped in a few sentences into their massive tax bill that place a 10-year ban on the enforcement of any state laws meant to protect consumers from potential and already very real dangers of AI. Texas, Utah, Florida, California, Virginia already have laws that protect their residents. Here's some realworld examples.
▶ 1:49:21Uh we discussed transparency, social media algorithms, deep fakes, AI generated child pornography, data collection, targeted advertising, virtual assistants or companions that we discussed like Facebook's chat companions, over reliance on AI for interpretations of X-rays and MRIs, particularly when I'm a pediatrician. There aren't pediatric standards that would make that safe.
▶ 1:49:47automated insurance claim denials like those already used by United Healthcare and others to delay or deny care. And Congress just passed the Take It Down Act. I'm thrilled about that. It forces uh social media platforms to take down non-consensual, real, or deep fake sexually explicit images within two days of a victim asking for them to be taken down. But that is after the fact and we need to do whatever we can to protect people before if possible.
▶ 1:50:17Um but the AI moratorium that Republicans sneaked into their tax bill would in in yet another way hurt Americans by preventing any state from providing even greater protections against AI child pornography or other AI u products that hurt our kids. In Washington state, we actually have a task force and we're a tech state.
▶ 1:50:41Uh we we have a task force that studies risks and benefits of AI and their first recommendation was to strengthen protections against child sexual abuse material created with AI. The stakes are so high. This technology is moving so fast. Three months is a long time. 10 years is an infinity.
▶ 1:51:03and and you know a 10-year moratorum on AI regulation that that no state would be able to regulate anything um no state would be able to enforce any of this including for protecting children. So Republicans are working to make this a reality even after we heard from parents and experts just a few weeks ago on the harms of giving big tech unfettered access to children. And we need reasonable standards for AI and data privacy.
▶ 1:51:32uh not cowtowing to big text requests to simply not be regulated. So I want to urge my Republican colleagues to stand up for their constituents. They're doing this in the wrong order. First pass essential national protections that deal and then deal with preeemption. We are here to work with you. This is a common goal. And by the way, the Kids Online Safety Act, which is so basic, hasn't even made it to the floor yet.
▶ 1:51:58And so public confidence is understandably not there. So in the absence of f federal regulation, my constituents need and want state protections. Miss KC, uh thank you for your comments and I I share your comments in in addition with respect to scientific research and defunding NIH. You mentioned that simple transparency is the bare minimum. You answered questions about maybe how to do that.
▶ 1:52:27I was wondering what are the next protections you would recommend that we take up urgently. Um, thank you, Representative. I mean, honestly, it it it there's a there's a whole laundry list of what we need and much of it sort of depends on the sector that we're looking at. Uh, but I would, if I had to generalize, I would say there's just as deep fakes have sort of come to the top of the list in terms of this is this is behavior that should never be allowed.
▶ 1:52:52there's a list of similar kinds of AI abuse and exploitation that should be subject to bright line rules um that are easily administerable and just sort of put um put put certain practices uh off off the market immediately. Um, we also need kind of nosetotail accountability.
▶ 1:53:09And what I mean by that is making sure that AI companies, both the biggest players that exist at the kind of foundation model layer, but also the deployers that are using these systems are subject to um, like like you said, baseline transparency, but also backing up the claims they make. Do these systems work as they should? What are the errors? Impact assessments is a uh is, you know, one frame that's that's used and and yeah, I think much more is needed. Apologies. Thank you for comments. Gentle lady yields back. Thank you. Uh Mr.
▶ 1:53:39Fry, you're recognized for your five minutes of questioning. Thank you. Thank you, Mr. Chairman. You know, I'm I'm always amazed by this country. In the 18th century, we revolutionized uh agriculture and created the cotton gym. The 19th century, we harnessed electricity. The 20th, we soared the skies and created nuclear and split the atom. And now we've got AI, which is such a tremendous opportunity, I think, for this country. and uh but it's also disruptive and powerful and farreaching than anything we've ever seen before. Um but it's not just another tool.
▶ 1:54:07It's kind of an infrastructure capable of reshaping our industries, the way that we uh operate, uh accelerating scientific discovery as Miss Kak talked about, uh transforming national security and and redefining the global economy. Um and once again, I think we stand at the forefront. And I think it was mentioned earlier that we have a competitive edge now, but it's not guaranteed that we would have that competitive edge uh in the future.
▶ 1:54:31And so that's it's incumbent upon us in this committee and this Congress um to understand that framework and to uh make sure that we maintain and enhance that competitive edge. Mr. um Mr. Heather um the EU, we've heard a lot today about the EU and I think the as was mentioned um by Mr. here about the Brussels effect.
▶ 1:54:53Uh what do you think in in your opinion where do you think that they went wrong in their regulations specifically and what lessons can we learn uh from their mistakes uh so that we don't repeat them here? So as I said in my testimony I think Europe prides itself in its kind of rush to regulate and wants to be the first to market uh to regulate. And I think they use that kind of as a soft power and try to go around with the rest of the world and get them to to emulate it.
▶ 1:55:21And I think um one of the things that they don't do a very good job is one sitting back and evaluating how their existing laws are working and functioning and identifying where the gaps are in those laws and where they might need to fill in those gaps with regulation. And so they didn't do that uh in their process uh to create the EU AI act. The other thing they did was because of this precautionary principle which is kind of a philosophy they have uh to get out ahead and and prevent any future harms uh even as they may not even be real. They may only be theoretical.
▶ 1:55:50Uh they they decide that they want to uh classify lots of AI applications as being high risk. Uh so they have overclassified what AI applications are high risk. And I hear a lot of people here talk about big tech uh when I listen to uh Mr. Bargava speak about what AI could do for nurses to make their jobs easier. When I hear about how it can improve accounting functions, when I hear about what it can do to make call centers work easier for consumers, none of that is big tech.
▶ 1:56:20Those are going to be companies who are going to be deploying AI technologies that are being built not by big tech companies, but by medium-sized companies and smallsiz companies. So there's a lot of focus here on uh big tech and big tech is certainly a a key piece to the ecosystem here.
▶ 1:56:35They're they're obviously critical on the infrastructure side uh of the work that supports AI development but the actual deployment of AI algorithms that are going to be used they're going to be used by businesses doing B2B work uh not just BTOC work and the idea that we have going to kind of put this EU model in place in Europe is going to really hold Europe back from being competitive.
▶ 1:56:57Do you think that we are at risk of creating a permission culture, if you will, where um AI uh needs permission um on innovations or prior approval uh uh prior to um or compliance with strict regulations? I mean, is that that seems to be the European model, right? That you need their permission in order to do something. Are we at risk of doing that here? I I don't know that we're uh at risk of doing that here yet, but that certainly is the path in which we see the states walking down.
▶ 1:57:27Uh certainly I think that is the the path that Europe Europe leans to. Interestingly enough, when you listen to civil society groups in Europe, their biggest criticism is actually the role of AI being used by the government in Europe. There actually are the ability to use AI technologies by European governments for surveillance purposes and these kinds of things that are not being disciplined by the EUAI act. Uh and so I've heard lots of criticisms by the civil society groups that essentially some AI technologies are going to be okay for the government to use but not okay for commercial use.
▶ 1:57:57That kind of disparity also I think creates problems and challenges. Uh but those are some of the things that we see also uh out of civil society groups in Europe. Fair point Mr. Bargava. On Monday the Wall Street Journal published an article titled the tech industry is huge and Europe's share of it is very small. Um and it concludes that quote a big reason why Europe is now behind can be summed up as a lack of speed. Entrepreneurs like you uh and companies that you invest in are slowed down by the maze of regulations in Europe uh and even some states.
▶ 1:58:25And according to a survey cited in the same article, European businesses spend 40% of their IT budgets on complying with regulations, which is astronomical to me. In your view, would this what would happen if the US adopted that same approach or states adopted that same approach that they've got in Europe? Yeah, I'll take just the three seconds here, but the models are changing every three to six months. So, this is an industry where you can't afford to fall behind. If you fall behind even a matter of months, you're behind in a pretty large way from a technology perspective.
▶ 1:58:53And so, that's something I hope the committee takes into account. Thank you for that, Mr. Chairman. I yield back. Thank you. Thank you, Mr. F. I now recognize my fellow Florida Gator. Go Gators. Uh, Miss Lee. She's recognized for her five minutes of questioning. Thank you. I had to get that in. I've got my tie on today. Great day for the Gators in the Capitol today. Thank you, Mr. Chairman, and thank you to our witnesses for being here today to help us shape a thoughtful, forwardlooking approach to AI policy.
▶ 1:59:23Artificial intelligence is not just the technology of the future. It is already transforming the way that we live, work, and govern. And it is reshaping nearly every sector of our economy. The question before us is not whether to act. It is how to act. wisely. So as policymakers, we have two responsibilities. One is to protect the public from real risks, but second to ensure that American innovation continues to lead the world.
▶ 1:59:52Those goals are not mutually exclusive. In fact, the right policy framework can achieve both. So I appreciate you all being here today to help us strike that balance. I'd like to begin, Mr. Bargava to pick up on one of the elements in your testimony about policy frameworks and specifically this.
▶ 2:00:15What is your view on requiring AI developers to use standardized documentation tools like model cards to disclose purpose and limitations and training data? Yes, absolutely. So the model card concept I think was originated by Google which created the transformer paper and has been involved in the space as well. I think those sort of rules frameworks are actually very helpful and it's also great that they're coming from industry.
▶ 2:00:43They're coming from people who are in the weeds building the models testing the models and can have insights that really make sense. So the four general areas where I think there could be frameworks created and I'd love to work with Congress on it is one looking how you gather data. So there can be ways to disclose and have the transparency that my colleague here talked about to gather data. The second is evaluating how models are trained and having folks kind of report the framework around that. The third is the outputs and testing of models.
▶ 2:01:12So this is both actually algorithmic testing but also human testing. So you could have different AI models testing each other from third parties for example. This would save costs and be an easy way to create a framework a guideline. And in addition, I think always we'll need humans in the loop as well. And then fourth having companies including startups write up what are the downstream effects of their technology really showing their thoughtfulness. So everything I'm recommending here is things we do at general catalyst uh you know 200 person or so company. It's things we do at GC on all of our investments.
▶ 2:01:42So I do think there are frameworks that can be put in place but it's really important the two points that one the framework is coming from the federal government not the state governments and so it can be consistent and easy to understand and two the frameworks have to be developed with industry. I think one of the things Europe has not done enough of to date is creating these with the actual market participants with startups with entrepreneurs and so we would welcome having more discussions with General Kalis GC Institute to come up with responsible frameworks but also ones that our startups can get behind.
▶ 2:02:12What should policy makers be careful not to do when designing transparency requirements particularly for early stage or open source developers? they should make sure to do it with the startups themselves and the companies. Really what we do not want them to do is just create it in a vacuum to throw in whatever words sound good or you know beating beating up big tech etc and just making a statement like this is about actually creating the right policy.
▶ 2:02:38So I think talking with the startups with the market participants with people in industry is really really important. It's not a political statement. We all want to come to this framework and getting the input from startups I think would be extremely helpful in getting to the right framework. Getting back to that framework model card disclosure concept. Uh is it your view that those types of disclosures should be voluntary required for only certain high-risisk applications or broadly mandated across the industry? I think they should be required as long as it's minimalistic.
▶ 2:03:08So the requirements have to make sense. You can't ask for these massive audits on a model and then when our startups comply not get back to them for 12 months because you don't really know how to evaluate the material they sent you for example. So I think these can be required frameworks on the federal level but they have to make sense and there has to be the agency there as well and the people in government to be on the other side having a conversation with what these frameworks should be. It needs to be a real partnership approach and it needs to be simple. Uh Mr. Theor, let me move to you.
▶ 2:03:37I'd like to get your thoughts on this. Do you support directing NIST to develop voluntary AI standards or best practices similar to what it did for cyber security? Yes. And and the good news, Congresswoman, is that that NIST has already done a lot of that heavy lifting. Uh and this has been a very bipartisan and widely agreed to process, a multistakeholder process as it's called. A lot of different players came together and formulated a really good set of standards for AI uh risk management for cyber security privacy.
▶ 2:04:05That's that's important work and I think obviously Congress can build on that and talk about how to go beyond that with uh certain types of policies that were considered in this Congress last session and will be considered again I'm sure. Thank you, Mr. Chairman. I yield back. Thank you. I appreciate very much. Now I recognize Mr. VC for his five minutes of questioning. Oh, Miss Clark just walked in. Okay. All right. Miss Qual, you're you are recognized for five minutes of questioning. Thank you.
▶ 2:04:36Thank you uh very much, Mr. Chairman. Uh we are all on roller skates today with sever so so many hearings taking place, but let me thank our witnesses for your expert testimony here today and thank our ranking member Chicowski. I am glad to see this subcommittee gather to discuss regulations for artificial intelligence and the future of US leadership in this space. I am however a bit perplexed at the timing.
▶ 2:05:04It seems to me that we would have been better served having this discussion before our Republican colleagues voted to advance a 10-year moratorum on AI laws as a part of the big beautiful bill to line the pockets of their big tech billionaire benefactors at the expense of Americans health, personal freedom, privacy, and safety online.
▶ 2:05:29A 10-year moratorum seems wildly irresponsible given the rapid pace of technological advancement, especially in the field of artificial intelligence. It is particularly disappointing to see such a provision advance in light of this administration's consistent efforts to undermine the few existing guardrails protecting consumers such as the illegal attempt to fire Democratic FTC commissioners, the attacks on our federal workforce, and the degradation of independent
▶ 2:06:00agencies independents. Further, while my colleagues across the aisle move forward with this shortsighted moratorum, they've not taken any meaningful steps to fill the vacuum this moratorum would leave in its wake with common sense bipartisan legislation to protect Americans privacy and create a regulatory framework for artificial intelligence in this country.
▶ 2:06:23The age of artificial attent in intelligence is upon us and this Republican controlled Congress needs to step up to the plate. We are well overdue for a comprehensive federal data privacy standard. We have not seen this committee take any steps this Congress towards the bipartisanship required to do such sweeping legislation which would be foundational to any overarching AI legislation.
▶ 2:06:50Unfortunately, while Republicans have used their time in power to quash any progress made on data privacy and artificial intelligence, states across the country is stepping up to fill the void and protect consumers. Unless and until Congress acts, state laws are the only recourse American consumers have for protecting themselves and their data from big tech and the harms caused by artificial intelligence.
▶ 2:07:18While artificial intelligence offers exciting opportunity and innovations, without the proper protections in place, the potential for harm is too great to ignore. Miss CAC, can you explain for this committee the importance of a federal data privacy in the larger policy discussions around artificial Thank you.
▶ 2:07:42Um, Miss Clark, I I wanted to first just agree with your characterization of what's happening right now with this proposed moratorum, which is that we're, you know, proposing to wipe the slate clean at the state level without anything in its place. Just the reassurance that, you know, Congress will act and that federal rules will come, but a record that does not inspire confidence. Um so on the question of a federal privacy law, this is a moment and we've said this for a long time. Data privacy law is the foundation of AI regulation of AI law.
▶ 2:08:12Um AI is supercharging already bad and corrupt um incentives for unchecked commercial surveillance. The kind of you know freefor-all using AI collected in one context for another without asking for permission. uh leaky chat bots that routinely are sort of taking sensitive data on on the one hand and leaking it out from the other in in accidental but routine ways.
▶ 2:08:35Um you know it's it's another area where I think we need to be very grateful for the fact that states have set up sort of stepped up um to the plate. Uh but I agree with you we need a federal floor particularly to set the terms on which data minimization happens. our personal data is not a fleet free-for-all. And I think this is the the most um we're already seeing big tech companies use AI as a free-for-all justification to to, you know, proliferate this these kinds of bad practices.
▶ 2:09:03Just very quickly, I want to also say that federal privacy law would also have prompetitive effects. It would limit what we're seeing, which is aggressive strategies for acquiring companies, acquiring data sets, and shoring up big tech advantage and shutting the door behind competitors. So privacy would be a step in the right direction for consumers but also for Well said, Miss Kek. With that, I'm going to yield back the balance of my General lady yields back. Appreciate recognize Mr. Evans.
▶ 2:09:33Oh, is Mr. Kane here? Oh, Mr. Kane. Okay, Mr. Kane, you recognize you for the next for your five minutes of questioning. Uh, thank you, Mr. chairman and thank you to our witnesses being here today. Uh Mr. Baraba, in your view, what can what can we do to make federal AI policy futureproof or at least future resistant to enable innovative innovation even as AI technology continues to progress?
▶ 2:10:05Yes, I think having clear guidelines is the best way to go. The technology as I mentioned before continues to change. So every three to six months models can do more more and more. For example, in last November December, Google released deep research. Then there were new logic reasoning models from OpenAI. There were new models from Anthropic. And so the models themselves and what they can do, they're moving to be more agentic. They're moving to use voice. The technology is changing very very quickly and it's hard to keep up with. So I think creating these guidelines are what's most important.
▶ 2:10:34And what I mean by that, for example, is a transparency guideline. So that could hit on what are the data sources, how do we train the model, how do we test the model. Um also having kind of red teams come and after there's an output an AI, a red team comes and tries to make it do something bad. So this is sort of a human testing of it. So putting in place these processes and these guidelines are the way to kind of have a framework on the national level rather than try to get too into the weeds because the technology is changing every three to six months.
▶ 2:11:03And I think putting these guidelines in place and these processes in place at a federal level with input from the the entrepreneurs and the founders is the best way to have an approach here and and um given your background as a a startup founder and venture capitalist. Can you explain what the uh practical impacts of a patchwork of state regulations have on innovation? Absolutely. I myself am a founder. I started a company in the digital asset space which was then later acquired by Coinbase.
▶ 2:11:32Um, and there, you know, we had to operate across different states. And so, it was very hard for us to compete with a larger company, uh, because we didn't have the lawyers or the compliance teams to be able to look from a state-by-st state basis. It was very hard to actually compete in that sense. And so, having a single national framework that's very clear, that has input from startups is is a much better approach just in general to innovation, not necessarily only specific to AI, but I certainly AI is top of mind. It's the fastest moving technology today.
▶ 2:12:01And this idea of competing with China on AI, it's not just AI, it's all the things AI enables. So it enables better healthare. It enables better transportation. Folks are talking about self-driving. And so this isn't about competing in China in one place. This is competing in China in multiple industries. We absolutely need to stay ahead. And the only way to stay ahead across all of these industries is to have clear, transparent guidelines on the federal level with input from startups and experts in the field, not simply being written by think tanks or politicians or others. Okay.
▶ 2:12:31And Mr. Heather, um, the EU AI Act entered into force in August 2024. As compliance deadlines approach, can you discuss how the European Commissioner Commission and the private sector are implementing this law? And are there any concerns that we should be aware of? I would say buckle up.
▶ 2:12:54Um I don't know that the Europeans uh similar to when they stood up GDPR or when they stood up the DMA, the digital markets act that they even know uh how to police the rules in which they've written. Uh there's a lot of ambiguities, a lot of uh determinations are going to have to be made in real time. But the expectation is that the companies will be in compliance. Uh so this creates a morass uh for even the largest companies to understand what the rules of the road actually are.
▶ 2:13:21uh and makes it, you know, virtually impossible for the smaller and medium-sized enterprises uh to be ready uh to be in compliance on on day one. Thank you. And Mr. Theer, in your testimony, you discussed the use of an AI moratorium for Congress on AI policy. Can you elaborate on how this moratorium on state AI regulations would work in practice? And is there a precedent for such a step? Yes, Congressman, indeed.
▶ 2:13:46I mentioned the internet tax freedom act of 1998 and there are other types of moratoria that have been utilized by congress to deal with situations like this gives breathing room and a learning period moment where we can actually figure out what works. It would basically be uh as the uh current moratorum uh stipulates something that would cover most things having to do with algorithmic models and automated decision-making systems but it would leave room for other types of general purpose generally applicable laws rather um that would cover uh technology more broadly.
▶ 2:14:16So the key thing here is technology neutrality and making sure that we don't have this voluminous overlapping set of patchworks uh from state to state. Thank you all for your testimony. I yield back. Gentleman yields back. Now I'll recognize Mr. VC for his five minutes of questioning. Mr. Chairman, thank you uh very much.
▶ 2:14:34One of the things that uh I've been interested in and and is obviously concerned about and I do think that there's some benefits to it, but we have to be careful um is facial recognition tool. Mr. Mr. Chairman, I ask unanimous consent to insert um uh I ask unanimous consent to insert this article from the Washington Post titled, "Police secretly monitored New Orleans with facial recognition cameras." Without objection, so ordered.
▶ 2:15:00Uh this article uh which includes uh findings from an investigation that the Post conducted for two years um talked about how the New Orleans Police Department secretly relied on facial recognition technology operated by a private company to scan streets in search of suspects. Uh the use of this technology was inconsistent with a city ordinance that they passed in 2022.
▶ 2:15:23And given the limitations of facial recognition uh technology and I had some issues, it seems to have been cleared up now, but I had some issues with with clear uh and so I understand this with the the tool that's used for airport uh uh to uh get in and out of airports.
▶ 2:15:38Uh but given the limitations of facial recognition technology, uh we can only hope that New Orleans will investigate this infraction of this ordinance and publicly disclose how many people were subject to uh any sort of false arrest uh due uh to this use. Uh and we're going to see more and more police departments using uh this tool. Um uh uh I think that uh where I'm from in Fort Worth and Dallas that they've adopted rules uh on on the use of facial recognition.
▶ 2:16:08Uh I wanted to ask Miss Miss uh if uh in this 10-year moratorum on state if this 10-year moratorium on state laws goes into effect uh it is important uh to establish uh uh that we have clear federal regulations uh to govern the use of AI and law enforcement. Do you agree with that? Uh, thank you, Representative.
▶ 2:16:31I I actually did want to call attention to the fact that we have spent a lot of time at this um hearing talking about European law and what it is and what it isn't and maybe we all agree that it is imperfect. Uh, but respectfully, I would really like to ask what does that have to do with state laws?
▶ 2:16:46because I I would argue that they have nothing in common where we're actually seeing states step up to the plate and act are on weeding out bad apples, putting in place safeguards in the most high impact settings including criminal justice, including immigration, including education where stakes are really high and they're making sure that you know we're not putting we're not sort of AI systems that have basic inaccuracies aren't proliferating particularly when the the impacts of these errors are on people's basic civil liberties. So I I I agree with you.
▶ 2:17:16I think that, you know, states have stepped up to the plate. They have responded to their constituents and this proposal would really wipe away a lot of that progress without anything in its place. What do you think that Congress can do to make sure these technologies are used ethically and that they're being used the right way without infringing on civil civil liberties? What do you think this body should do? We have a decade of evidence that, you know, provides a very clear framework whether that and that begins with transparency.
▶ 2:17:42It includes clear accountability so that firms that are using these systems need to go through proper vetting to make sure that they work as they are intended to work that they don't um sort of mis uh you know misidentify people. You you you mentioned a personal example the FDC cracked down recently on write aids use a facial recognition technology that was routinely misidentifying uh people in grocery stores and sort of subjecting them to to unwarranted scrutiny from law enforcement agencies.
▶ 2:18:11So yeah, I I I I think it's very clear what we need to do. The the the problem has went been one of political will to act um in Congress, right? And I think with all of these technologies, one of the things that you know that we have to take into consideration uh is like we want to be the leaders in in any sort of new technologies that are coming to the market.
▶ 2:18:32We want we don't want the Chinese to be the leaders in these um what can we do in order to make sure that there's consumer confidence in these areas of facial recognition and AI technology uh as we move forward to make sure that civil liberties are being met but to also make sure that anything that is being deployed that the US is the leader on that absolutely I think we need to be incentivizing a race to the top not the bottom and what I you know one thing that we can be guaranteed will deter private
▶ 2:19:02investment is the proliferation of snake oil salesmen of uh these kind of sort of bad apples that no one wants to be in business with. And to be, you know, very candid, that is what states have stepped up to the plate to do. It's a it's essentially going after the worst actors in the market and making sure that this is an industry that inspires confidence, not one that's full of scamsters and snake oil salesmen. Yeah. No, that makes a lot of sense. Thank you, Mr. Chairman. I yield back the balance of my time. Gentleman yields back. Now recognize the vice chairman from the great state of Pennsylvania.
▶ 2:19:31Uh Mr. Joyce, Dr. enjoy for his 5 minutes of questioning. Thank you, Chairman Bill Araus, and thank you for our witnesses who have agreed to come here today to testify. Every day, every hour, the development of artificial intelligence is transforming the way that we consume information that physicians treat American patients, even how we travel.
▶ 2:19:55As a chair of the privacy working group, it's clear to me more than ever that we need a solution to the patchwork. What do I mean by patchwork? States are introducing AI laws left and right, and it is our responsibility here at the federal level to ensure that businesses can continue to innovate while complying with this patchwork of laws. This is especially true when it comes to AI's involvement in the healthc care field.
▶ 2:20:25AI has the ability to elevate the care of American patients, the care that they expect, the care that they deserve. But we must ensure that the physician patient relationship is not left behind. Mr. Barava, I'm interested in how innovative AI products and services can improve the lives of my patients, improve the lives of my constituents.
▶ 2:20:51Can you highlight some of the general catalyst investments in innovative American AI startups that this committee should take note of as we consider AI legislation? Absolutely. And thank you for asking the question. Healthcare is a massive industry. It's even larger than than tech. And at General Catalyst, we've invested in over a 100 healthcare companies over the last decade or so. And so are one of the sort of leading venture firms in this field. One or two examples I could provide for you. One is in AI scribing.
▶ 2:21:20So doctors and nurses spend a lot of time taking notes and then doing manual data entry on those notes. That can be automated with responsible AI systems and software that also need to be HIPPA compaco compliant and have responsible innovation. But that's one of the many tasks. The second is where there's a shortage of healthcare workers. How do we get them to be AI enabled?
▶ 2:21:40How do we get them to get rid of the most menial tasks and be focused on the harder parts which many times is chatting with patients relating to them solving more difficult problems and so we have many companies hypocratic who's here in the audience today camir and others who are tackling these issues of how do we automate more and more so that our healthcare providers can give better service by having these AI enabled tools assisting them and as we back these companies we make sure that there's the responsible innovation part healthcare is the toughest place you really don't want to mess up out every industry
▶ 2:22:10it has the most ramifications. So it is a good example of both where there could be a ton of innovation and at the end of the day consumers could lives can be saved but also why I would urge Congress to move faster this time than in the past on creating a framework because lives are at stake here as well as our competitive advantage against China. As a physician, I clearly recognize that lives can be at stake.
▶ 2:22:33Do you feel that the patchwork that currently exists as far as AI legislation from the states puts patients lives at risk? I don't believe it's preventing deaths or that the patchwork is good for the companies that are operating in to try to make healthcare better. I think we need a federal solution instead. I think the states don't really have the capacity to keep up with all of the different AI innovations and technologies and models and then the startups themselves. It's very difficult to for them to act in a way where they're complying with all these many states.
▶ 2:23:03It would be much much better to have a federal level regulation that would then allow for this AI technology to permeate even faster and to save more lives quickly. Thank you, Mr. Heather. In many respects, AI is already regulated by many sectoral laws that apply to nonAI products and services like the FDA's oversightes of algorithms that health care companies use in care, particularly when it comes to medical devices.
▶ 2:23:28Can you explain how the EU approached existing sectoral laws such as healthcare before it passed the EU AI act? Did the EU find gaps in the current law that needed to be addressed by their new legislation? I I'm not aware that the EU identified any gaps with regard to how medical devices or pharmaceuticals reach the market where they have been somehow enhanced or built uh with AI models.
▶ 2:23:55Uh and so I think this is a really important distinction when people are talking about moratorum. Uh there are rules on the books. I heard uh the congressman from Texas talk about surveillance. I heard you also say that there's a city ordinance in New Orleans that would have prohibited it. That sounds to me like it's an enforcement issue, not an AI issue. Uh so I think we're thinking about products and services and outcomes, not necessarily the technology that brought you that product or service or outcome.
▶ 2:24:20And so I think the ability to use existing laws and regulations to enforce good strong outcomes is not what this conversation is about. It's about getting out ahead and trying to discipline a technology that has lots of opportunity behind it in ways that will have unintended consequences to our competition and competitiveness in the global economy. Mr. Heavler, I thank you for the answer. Mr. Chairman, my time is expired. I yield back. Thank you. The good doctor yields back. Now we'll recognize Mr.
▶ 2:24:48Evans for his five minutes of Thank you, uh, chairman, ranking member. Thank you, of course, to our witnesses for coming. Um, I'm from Colorado and last year we became the first, uh, state in the country to enact a bill at the state level to regulate AI. And I'll read you a couple of quotes here. Um, this law creates a complex compliance regime for all AI developers and deployers doing business in Colorado.
▶ 2:25:11Another one, I'm concerned about the impact this law may have on an industry that is fueling critical technology advancements across uh Colorado for consumers and enterprises alike. And then finally, um government regulation applied at the state level in a patchwork across the country can have the effect to tamper innovation and deter competition in an open market. Uh I agree with those statements.
▶ 2:25:34They actually came from my governor Jared Polus who signed uh Colorado's AI law and then came out in support of the federal moratorum um that's being discussed here today among other things. Um I voted against the law when I was in a state legislature because I agreed with those statements and I saw this as dampening the ability to innovate and bring jobs to Colorado and uh fostering that patchwork across the country. Um so my first question uh Mr. Theor is going to be to you.
▶ 2:26:02Uh, can you just expound on why the Colorado AI law and a patchwork like it is so problematic and why Congress needs to be the one to act to address this emerging patchwork of rules? Absolutely, Congressman. And uh, thank you for that question. Um, it seems to that Governor Polus is having some buyer remorse from from signing this bill and his signing statement read more like a veto statement uh, as you just indicated.
▶ 2:26:25Uh I think the reality is is that they realized the complexity of this law would create enormous burdens and when they tried to subsequently study it the way they should have been studying before it was passed they realized they didn't have a lot of the answers to complicated questions about exactly how we define developer deployer integrator consequential decision all of these things or even the term artificial intelligence which is being defined differently in different state bills.
▶ 2:26:50If we can't even define the basic term we're here today to discuss at the state level, then that's a patchwork that's going to create huge problems for small uh businesses. Thank you. Uh going to Mr. Heather, kind of following up on that train of thought here uh from the the chamber, do you have any data on either the fiscal or the revenue impact that a patchwork of contradictory state laws might have uh in this in this field?
▶ 2:27:13Uh and then uh on the other side of that, do you have any uh fiscal or revenue data on uh the benefits of having a a national just general rules of the road policy might I don't know that I have data as it relates to government expenditure.
▶ 2:27:28Uh but I can tell you that as it relates to the private sector uh as was mentioned I think before uh there's an estimate of 330,000 euro just to be able to comply uh with an element of the EU AI act uh to the degree that we have over a thousand AI related bills that have been introduced in in state legislatores or in uh local uh units of government to the degree that some of those make it across the finish line uh there is a compliance cost that'll be have to be met by each company that wants to do business in in those markets
▶ 2:27:59because these laws are not necessarily enforced in the United States. I don't know that there's good data out there that shows what it's going to cost uh to comply uh for companies uh with regard to the Colorado law. So, I think we're very early days in being able to get those cost estimates. Thank you. Do you think there is potentially uh additional revenue that would be generated by industry and by business by having a just general national rules of the road versus a patchwork of state laws?
▶ 2:28:26As I said in my testimony, I I think there's estimates that suggest that, you know, somewhere upwards of$16 trillion dollars may be gained to the global economy by AI. All of that will be taxed uh by governments. Uh so to the degree to which we unleash AI technologies and that allows us to increase our productivity as an economy, that leads to growth and wherever there is growth, there's tax revenue opportunity for the government. Thank you. In my final minute, Mr. Theer, back to you. Um, before this job, I spent 10 years as a police officer.
▶ 2:28:54And so, making sure that we take care of kids is critically important to me. I would venture that I've probably arrested more child abusers uh than anyone else uh in this room. And so, as I'm reading through uh the the bill that's being discussed today, I noticed that there was about three pages of uh exceptions in that bill that allow for uh enforcement of a lot of different things in the AI space. So, it's not a complete moratorum. Um and so the question to you is given how uh the the legislation is written, can we still continue to keep kids safe?
▶ 2:29:24Absolutely. You can use technology neutral policies and approaches. And I also just want to stress that under the rule of construction in this moratorium, it very clearly states that the primary purpose and effect is to remove legal impediments to facilitate the deployment or operation of AI systems. This is about furthering the development of these systems and not dealing with these things that we need to restrict on the other side through general uh generally applicable safety laws. Thank you. Yield Thank you very much, Mr. Evans. Okay, I think we're very good.
▶ 2:29:54I think we're uh we're ready to finish up. Uh thanks for I want to thank the panel for being so patient in answering all the questions. And uh I'll ask unanimous consent that the documents on the staff uh list be submitted for the record without objection. So order. I remind members that they have 10 business days to submit questions for the record and I ask the witnesses to respond to the questions promptly.
▶ 2:30:22Members should submit their questions by the close of business day on June 5th. So without objection, the subcommittee is Thank you. Thank you. Thank you. Good job. All right, let's go. Thank you. Good job. Good work.