WEBVTT - FTC Chair Lina Khan Talks Future of AI Regulation

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>You just got out of speaking with the folks at

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<v Speaker 2>Y Combinator. Talk to us a little bit about who

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<v Speaker 2>you're speaking to and why you're here.

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<v Speaker 1>What's the message.

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<v Speaker 3>Well, thanks so much for having me, Emily, And an

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<v Speaker 3>important part of my job is going around the country

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<v Speaker 3>and hearing from Americans across markets, across sectors to understand

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<v Speaker 3>what are the pain points that they're seeing in the

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<v Speaker 3>markets that they're trying to work in, compete in, buy in.

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<v Speaker 3>And so I'm so glad to be here in San

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<v Speaker 3>Francisco meeting with folks across the tech community, including founders,

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<v Speaker 3>including vcs, including startups, and trying to understand, you know,

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<v Speaker 3>how do we make sure that our free and fair

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<v Speaker 3>enterprise system can remain robust and that innovation and competition

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<v Speaker 3>can thrive, especially at this moment of technological change and

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<v Speaker 3>a potential inflection point.

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<v Speaker 2>Obviously, how AI will play out is very much top

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<v Speaker 2>of mind here. I just spoke with Meta CEO Mark Zuckerberg,

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<v Speaker 2>who unveiled the largest open source AI model ever this week,

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<v Speaker 2>and really double down on what he thinks are the

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<v Speaker 2>benefits of the open source approach. Take a listen to

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<v Speaker 2>what he had to say.

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<v Speaker 1>The way that we can control our own destiny on

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<v Speaker 1>this and make sure that we have access to leading

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<v Speaker 1>AI is by building it and having it become an

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<v Speaker 1>industry's standard. But it actually gets stronger by being able

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<v Speaker 1>to share it and have the ecosystem around it.

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<v Speaker 2>Where do you stand cher con on Meta's open approach

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<v Speaker 2>versus closed source competitors like open AI and Google and

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<v Speaker 2>Zuckerberg's remark specifically, well, look, without.

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<v Speaker 3>Weighing in on any specific company. As a general matter,

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<v Speaker 3>historically we've seen that openness and open source can be

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<v Speaker 3>a critical vector of innovation, right. I mean, what happens

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<v Speaker 3>traditionally when you render some of these ecosystems more open

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<v Speaker 3>is that it can lower barriers to entry, It can

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<v Speaker 3>lower costs for entrepreneurs and startups and really enable them

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<v Speaker 3>to innovate much more freely. And so we want to

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<v Speaker 3>make sure that that tradition continues. We are watching very closely.

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<v Speaker 3>I think there's still an open question around what openness

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<v Speaker 3>really means in the AI context. Our team has been

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<v Speaker 3>focusing on this idea of open weight models, which we

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<v Speaker 3>think could similarly engender a lot of competition and innovation

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<v Speaker 3>and make it easier for startups and entrepreneurs to compete

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<v Speaker 3>on a level playing field. Of course, we need to

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<v Speaker 3>really closely understand what are any restrictions licensing restrictions that

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<v Speaker 3>are being included here and could those be fore closing competition.

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<v Speaker 3>More generally, we also need to be aware of how

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<v Speaker 3>there are significant incumbents that may have an outsized role

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<v Speaker 3>to be playing because they have key control over the

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<v Speaker 3>raw material and key inputs, and so we need to

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<v Speaker 3>be aware of the broader potential competition issue us or

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<v Speaker 3>bottlenecks or choke points that could emerge in ways that

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<v Speaker 3>could inhibit innovation and inhibit competition. And so that's what

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<v Speaker 3>we're going to be talking with founders and vcs and

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<v Speaker 3>others about today.

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<v Speaker 2>Something else you've been looking into more recently is surveillance pricing,

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<v Speaker 2>which is how AI is being used to rapidly change

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<v Speaker 2>pricing based on consumer behavior. And there are some really

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<v Speaker 2>dystopian concerns here about how this could lead to dangerous

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<v Speaker 2>financial targeting. What are some examples you've seen of this

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<v Speaker 2>and what are you hoping to find.

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<v Speaker 3>So as you know, for years now, Americans have had

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<v Speaker 3>their personal data and information closely tracked and surveilled by

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<v Speaker 3>a whole set of companies in ways that can really

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<v Speaker 3>threaten people's privacy. What we see now is that firms

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<v Speaker 3>could also be using this enormously personal data about people

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<v Speaker 3>to also set person specific prices based on what they

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<v Speaker 3>know about you, based on what you're feeling, who you're seeing,

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<v Speaker 3>what you're browsing, and so we want to make sure

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<v Speaker 3>that we are looking under the hood and understand what's

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<v Speaker 3>going on here. So, for example, you can imagine that

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<v Speaker 3>a hotel that knows you've already bought plane tickets may

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<v Speaker 3>show you a higher price than they show somebody who

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<v Speaker 3>hasn't really decided on where they're going to visit. You

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<v Speaker 3>can imagine a restaurant that knows you have a one

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<v Speaker 3>hour lunch break could hike prices for you during that hour.

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<v Speaker 3>And so these are just some of the types of

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<v Speaker 3>practices that we could see take hold if this type

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<v Speaker 3>of surveillance pricing is allowed to develop.

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<v Speaker 2>Interesting we're all still feeling the effects of this crowd

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<v Speaker 2>strike outage, and so many people are shocked about how

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<v Speaker 2>a company that is so small could just shake up

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<v Speaker 2>the world like this. What's your take on this and

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<v Speaker 2>is there something to investigate here.

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<v Speaker 3>So as a general matter, I think this really underscores

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<v Speaker 3>the trade offs between kind of fragility and resiliency, and

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<v Speaker 3>how when you have more centralization, or when you have

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<v Speaker 3>enormous dependence on just one firm or a very small

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<v Speaker 3>number of companies, that can make it so that a

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<v Speaker 3>single disruption can have cascading effects and really lead to

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<v Speaker 3>all sorts of breakdowns. And so as a result of

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<v Speaker 3>this one incident, for example, we saw over three thousand

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<v Speaker 3>flights grounded. We saw doctors that were no longer able

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<v Speaker 3>to prescribe medicines for their patients, We saw courthouses that

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<v Speaker 3>had to close off proceedings, and so the impact here

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<v Speaker 3>was significant, and it's really underscoring the importance of making

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<v Speaker 3>sure we have resilient markets and resilient systems so that

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<v Speaker 3>a single crash like this doesn't lead to so much

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<v Speaker 3>outsized disruption.

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<v Speaker 2>I do have to take a moment to talk about

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<v Speaker 2>the presidential election. A number of prominent tech folks have

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<v Speaker 2>endorsed President Trump for a variety of reasons, but I

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<v Speaker 2>have heard specifically multiple tech executives and investors complain about

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<v Speaker 2>how they can't do deals on your watch, you have

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<v Speaker 2>any concerns that your agenda has that all alienated the

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<v Speaker 2>tech community or could impact the impact of your agenda

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<v Speaker 2>going forward.

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<v Speaker 3>You know, it's been such an honor to serve and

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<v Speaker 3>then Biden Harris administration, and you know, we're just focused

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<v Speaker 3>on doing our work. What I oftentimes hear from the

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<v Speaker 3>business community, including small businesses, including entrepreneurs, is that they

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<v Speaker 3>want markets to be more open and more fair and

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<v Speaker 3>more competitive, rather than incumbents being able to squash out

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<v Speaker 3>maason competitive threats. I mean, our free enterprise system is

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<v Speaker 3>one where the best ideas are supposed to win, and

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<v Speaker 3>we've historically seen that it's the disruptors and entrepreneurs that

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<v Speaker 3>have been a key vector of innovation. And so our

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<v Speaker 3>job at the FTC when we enforce the antitrust laws

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<v Speaker 3>is to make sure that our markets stay open and

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<v Speaker 3>fair and competitive. And that's something that you know, most

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<v Speaker 3>businesses and most entrepreneurs should really be able to get behind.

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<v Speaker 2>Former President Trump's running mate jd Vance has actually praised

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<v Speaker 2>your work. In fact, I believe he said that you're

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<v Speaker 2>one of the few people in the Biden administration that's

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<v Speaker 2>doing a pretty good job. In his opinion, what do

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<v Speaker 2>you make of the irony there? And you know, how

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<v Speaker 2>do you see the FTC moving forward in the next administration.

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<v Speaker 3>So I will speculate about what's going to happen in November.

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<v Speaker 3>I do think we see enormous bipartisan agreement that we

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<v Speaker 3>need to reinvigorate and double down on anti trust enforcement.

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<v Speaker 3>We need to make sure that monopolies can't illegally use

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<v Speaker 3>their power to jack up prices for consumers, to really

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<v Speaker 3>undermine workers, or really stamp out entrepreneurs in small businesses.

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<v Speaker 3>And so that bipart is an agreement around the importance

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<v Speaker 3>of open, fair competition to protect our free and fair

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<v Speaker 3>enterprise system is absolutely critical. I mean, you know, just

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<v Speaker 3>the other week, the FTC release an interim staff report

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<v Speaker 3>looking at the practices of the pharmacy benefit managers and

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<v Speaker 3>some of our initial findings. And that's an area, for example,

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<v Speaker 3>where we see enormous bipartisan concern on both sides.