FTC Issues Notice to OpenAI over ChatGPT’s Privacy Data Breach

ChatGPT’s image looks rocky as its parent company, OpenAI, comes under scrutiny from the Federal Trade Commission. The U.S. consumer protection firm has issued OpenAI with a notice. The investigation is based on whether they have breached the consumer protection law, raising personal reputations and data leak concerns. It has been deemed as the quickest growing consumer app, with a record 100 million monthly active users gained within just two months of its launch. Its success started the race among big tech companies like Google and Microsoft to bring out their own AI chatbots.

Several questions regarding OpenAI’s use of artificial intelligence and data-gathering techniques have been raised since its inception. However, this move by the FTC looks like the final nail in the coffin.

The FTC Investigation

According to the Washington Post, the FTC sent a 20-page notice to the San Francisco based company, demanding records about how risks related to their AI models were being addressed. The newspaper also dubbed it as the “most potent” threat to date. The company had recently been on a global charm offensive, a move they undertook to parlay more favorable regulations for OpenAI. Their CEO, Sam Altman was on a world tour attempting to woo world leaders.

This probe comes after the FTC received numerous high-profile allegations, which includes the likes of The Washington Post, against the chatbot falsifying information and damaging people’s reputation. Mr. Altman took to Twitter to put forth his thoughts regarding the notice. He tweeted, “We’re transparent about the limitations of our technology, especially when we fall short.” 

it is very disappointing to see the FTC's request start with a leak and does not help build trust.

that said, it’s super important to us that out technology is safe and pro-consumer, and we are confident we follow the law. of course we will work with the FTC.

— Sam Altman (@sama) July 13, 2023

 

Pivotal questions OpenAI must answer

The FTC is looking to find if the company has been engaging in unfair or deceptive practices which could result in harming the consumer reputation. According to The Washington Post, the FTC has posed the following questions to OpenAI.

•       What steps OpenAI undertook to address the accusation that its products had generated statements about real individuals that were “false, misleading, and/or disparaging.”
•       OpenAI had disclosed a security bug that allowed some users to see payment details and some data from other user’s chat history. The FTC has asked the company to provide detailed records for the aforementioned case.
•       The FTC is also seeking information for any research, surveys, or tests that OpenAI conducted to assess consumer understanding on the AI generated “accuracy and reliability of outputs.”
•       The agency has demanded extensive details about OpenAI’s products and how the company advertises them.
•       OpenAI’s policies and procedure details that the company undertakes before launching upgrades. This includes a comprehensive list of language models that were held back citing security reasons.
•       Thorough description of any data that OpenAI uses in order to train their products, which mirror humanlike speech patterns.
•       The FTC wants to know how Open AI improves its models to make-up answers, or “hallucinate,” when the it does not have one.

What will happen to ChatGPT?

The situation seems far from ideal for OpenAI. The company will be levied with heavy fines if found guilty. The business could also be put under “consent decree,” which will determine the company’s data handling structure. A consent decree is an official order of agreement wherein the disputes are settled without admission of guilt or liability.

Not their first rodeo!

The European Union’s GDPR had previously raised data concerns against OpenAI. Italy subsequently turned the chatbot offline for a brief period. It was later reinstated given that they agreed to install age verification and allowed European users to restrict their personal data from being utilized for AI model training.

U.S falls behind on AI regulation policies

The U.S. lawmakers struggle to bring out regulations, trying to maintain a balance between technological innovation and consumer protection. The administration is deliberating over the decision whether to impose restrictions on AI tools such as ChatGPT. However, new legislation will likely take months to be in place. Lawmakers worry that imposing regulations may hinder the U.S innovation growth, which is directly in competition with China.

ChatGPT’s fate solely hangs on to their ability to provide detailed reports demanded by the FTC and its decision. The competition to take over the generative AI sector is on an all-time high, with Google’s BARD updates and Elon Musk’s new start-up xAI. This probe by the FTC only signals the upcoming challenges Tech companies will face. As technology advances and the world moves towards AI powered products, more companies may come under scrutiny.

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