FTC Continues To Wade Into Copyright Issues In AI Without Understanding Anything

Last year we were dismayed (and somewhat annoyed) to see the FTC step way beyond its bounds and expertise by issuing a ridiculous comment to the US Copyright Office regarding questions around AI and copyright. In it, the FTC (which has no authority — or expertise — regarding copyright law) argued that fair use was somehow anticompetitive, and resulted in “unfair competition.”

This is the opposite of truth. A key part of the reason for fair use is to enable greater competition, rather than locking up content in a monopoly scenario. As we’ve highlighted time and time again, if AI systems had to license all the data they train on, it would be hugely anti-competitive in that only a few of the largest tech companies could afford such a license, effectively limiting AI innovation to those giant companies with deep pockets. Google, Meta, and Microsoft can afford these licenses. But few others can, and the end result might greatly limit the access to these technologies and competition from new (and open source) models.

It wasn’t just me who was annoyed either. Three well known copyright experts/academics, Pam Samuelson, Chris Sprigman, and Matthew Sag, called out the FTC for being fundamentally misguided on these issues.

We are concerned especially about the suggestion in the FTC’s Comments that AI training might be a Section 5 violation where it “diminishes the value of [a creator’s] existing or future works.” A hallmark of competition is that it diminishes the returns that producers are likely to garner relative to a less competitive marketplace. This is just as likely to be true in markets for creative goods, such as novels and paintings, as it is in markets for ordinary tangible goods like automobiles and groceries. AI agents that produce outputs that are not substantially similar to any work on which the AI agent was trained, and are thus not infringing on any particular copyright owner’s rights, are lawful competition for the works on which they are trained.  Surely the FTC does not plan to have Section 5 displace the judgments of copyright law on what is and what is not lawful competition?

Moreover, even if, contrary to our expectations, courts declare AI training to be infringement (because outside the protection of the Copyright Act’s fair use provision), the FTC should think long and hard before layering the prospect of Section 5 liability on top of the remedies already available under the Copyright Act.

Unfortunately, the FTC seems committed to this somewhat bonkers position.

Last month, it published an FTC “staff report” about “AI and Creative Fields,” based on a roundtable they held with a ridiculously one-sided panel of folks from the creative industries, who more or less all agreed that everyone should be forced to give them money at every opportunity.

Given the entirely one-sided nature of the panel, it’s no surprise that the participants insisted that training on their works was a horrible infringement of their rights (something that has still not been determined by any court, and would be a disaster for creativity should it be found to be accurate).

But, seriously, what the fuck is the FTC doing endorsing many of these bonkers points without pushing back on why they are, themselves, anti-competitive and problematic? Instead, the FTC again endorses the untested idea that all training data must be licensed (which would, again, further concentrate the power of the largest AI companies). It also argues that “style mimcry” is a concern, when that’s kind of the basis of almost all creators learning and building their own styles.

While the conclusion of the report finally admits that many of these issues are beyond the FTC’s jurisdiction, it does not explain why they still feel the need to weigh in on these issues with a wholly one-sided approach, with repeated explicit endorsements of anti-competitive copyright monopolies, which will lead to greater concentrations of wealth and power.

All of that seems to go against the FTC’s stated charter to encourage more competition. I miss the days when the FTC actually used to recognize the anti-competitive nature of modern copyright and patent law.