During a much anticipated Open Commission Meeting announced by Commission Chair Lina M. Khan, the Federal Trade Commission (“FTC”) voted in favor of issuing one new policy statement and one new report to Congress.

First, the Commission unanimously voted in favor of issuing a policy statement on FTC initiatives to investigate pharmacy benefit managers and other intermediaries, specifically regarding rebates and fees paid by drug manufacturers to prescription drug middlemen. The FTC’s presentation on the issue emphasized the Commission’s belief that these benefits are provided in exchange for favorable terms for those offering the benefits that result in the exclusion of the lowest cost drug products from the market at the expense of the public. These alleged anti-competitive theories come on the heels of the Commission’s announcement on June 7th of the launch of its investigation into the prescription drug middleman industry.

Second, the Commission voted 4-1 in favor of approving and publishing a report to Congress evaluating how artificial intelligence can be leveraged to combat online harms. According to the Commission, this report includes a survey of the solutions artificial intelligence can offer, as well as its drawbacks, and the ways in which social media companies are currently building and using artificial intelligence. Ultimately, the report cautions against recommending or requiring the use of artificial intelligence to combat online harms on the basis that the technology instead exacerbates online harms, as opposed to combatting them.

The report identified three areas of concern with respect to AI:

  1. Inaccuracy. The FTC report said that algorithms are often inaccurate as they are developed improperly or using faulty data.
  2. Biased. The FTC report found biases that resulted in discrimination against certain protected classes.
  3. Privacy. The FTC report found that AI tools can incentivize and enable commercial surveillance and data extraction practices that violation consumer’s privacy.

Chair Kahn, Commissioner Slaughter, Commissioner Wilson, and Commissioner Bedoya voted in favor of approving and publishing the report, and these Commissioners expressed their concern of current data collection practices, discriminatory software development, and privacy concerns associated with the development and use of artificial intelligence. Commissioner Phillips dissented, noting his belief that the report did not accomplish what Congress had requested, as it fails to focus on the benefits of artificial intelligence and instead indicts the technology without taking into account the perspectives of those who use artificial intelligence to combat online harms. The approval of this report signifies the Commission’s skepticism of artificial intelligence, especially regarding the methods used to develop it, and include privacy and bias concerns, as well as potential exclusionary uses of such technology.

We will continue providing updates here as new developments arise.

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Special thanks to summer associate, Logan White for her contribution to this post.