FTC Refers Complaint Against Snap's AI Chatbot to Justice Department Amid Controversy

Divided FTC Refers Complaint Against Snap's AI Chatbot to Justice Department | PYMNTS.com

"The complaint pertains to the company's deployment of an artificial intelligence [AI] powered chatbot, My AI, in its Snapchat application and the allegedly resulting risks and harms to young users of the application," the FTC said in a statement. The statement said an FTC investigation "uncovered reason to believe Snap is violating or is about to violate the law and that a proceeding is in the public interest." The FTC said in a Thursday press release that it issued the statement about the referral after the commission voted 3-0-2 to do so in a closed-door meeting. Two commissioners were absent. "Although the Commission does not typically make public the fact that it has referred a complaint, we have determined that doing so here is in the public interest," the statement said. Reached by PYMNTS, a Snap spokesperson said in an emailed statement that it has worked to make My AI beneficial for its community while also being transparent about the product's capabilities and limitations. "Unfortunately, on the last day of this Administration, a divided FTC decided to vote out a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence," the statement said. "It also fails to identify any tangible harm and is subject to serious First Amendment concerns." Snap added that the FTC's complaint would stifle innovation and competition. "We look forward to working with the new Administration on AI policy that bolsters U.S. innovation while protecting our community," the statement said. One of the FTC commissioners who were absent from the closed-door meeting, Andrew N. Ferguson, said in a Thursday statement that the commission's announcement of its referral of a complaint is an "unusual step." "I did not participate in the farcical closed meeting at which this matter was approved, but I write to note my opposition to the complaint against Snap," Ferguson said. "Because the complaint itself remains non-public, I cannot at this time release a detailed analysis of its many problems." The other commissioner who was absent, Melissa Holyoak, said in a Thursday statement that she voted against holding the closed meeting because the commission should be focused on facilitating an orderly transition to the Trump administration. "Certain actions, such as initiating litigation or continuing proposed rulemakings, will have long-lasting consequences for the incoming administration, diverting already scarce Commission resources to defend misguided policy objectives and novel legal theories," Holyoak said. Snap debuted My AI in February 2023, saying the chatbot can help users but also warning that it "is prone to hallucination and can be tricked into saying just about anything."

FTC Refers Complaint Against Snapchat to DOJ Over "My AI" Feature

The Commission was vague on the details, but said that it " pertains to the company's deployment of an artificial intelligence powered chatbot, My AI, in its Snapchat application and the allegedly resulting risks and harms to young users of the application." My AI uses OpenAI tech to let Snapchat users chat and ask questions within the Snapchat app. It launched in 2023, and the company says that millions of its users use the feature. A spokesperson for Snap tells The Hollywood Reporter that the complaint "is based on inaccuracies, and lacks concrete evidence. It also fails to identify any tangible harm and is subject to serious First Amendment concerns." DOJ referrals are not typically made public until charges are filed, and the FTC said in its statement that "although the Commission does not typically make public the fact that it has referred a complaint, we have determined that doing so here is in the public interest." The referral -- made days before the Biden administration is set to hand over control of the DOJ to the Trump administration -- may not go anywhere, particularly given a statement from Republican commissioner Andrew Ferguson, who said that he "did not participate in the farcical closed meeting at which this matter was approved." Ferguson is set to replace Lina Khan as FTC chair when Trump is inaugurated. The Commission voted 3-0-2 to authorize the issuance of the statement, with Ferguson and Commissioner Melissa Holyoak recorded as absent. "Because the complaint itself remains non-public, I cannot at this time release a detailed analysis of its many problems," Ferguson added. "But for now, I can say that the complaint's application of Section 5 of the Federal Trade Commission Act is not only wrong as a matter of statutory interpretation, but is also in direct conflict with the guarantees of the First Amendment." The FTC has been taking a close look at AI tech over the last year or so. Last year Reddit disclosed that the Commission had reached out about its deals to license AI training data for LLMs. "Since introducing My AI, Snap has harnessed its rigorous safety and privacy processes to create a product that is not only beneficial for our community, but is also transparent and clear about its capabilities and limitations," a Snap spokesperson said in a statement. "Unfortunately, on the last day of this Administration, a divided FTC decided to vote out a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence. It also fails to identify any tangible harm and is subject to serious First Amendment concerns. "While we share the FTC's focus on ensuring the thoughtful development of generative AI, this complaint would stifle innovation and competition in a critical and growing sector of the economy," the statement continued. "We look forward to working with the new Administration on AI policy that bolsters US innovation while protecting our community."

US FTC refers complaint about Snapchat use of AI chatbot to Justice Department

WASHINGTON (Reuters) -The U.S. Federal Trade Commission said on Thursday it has referred to the Justice Department a complaint against Snap Inc., that alleges its messaging app Snapchat used an artificial intelligence chatbot that harmed young users. The consumer protection agency did not provide any further detail on the alleged harm from the My AI chatbot, but said publicizing the transfer of the complaint to the DOJ was in the public interest. The FTC said its investigation "uncovered reason to believe Snap is violating or is about to violate the law." Shares of Snap briefly dipped after the news and are unchanged for the day. (Reporting by Jasper Ward and Doina Chiacu; Editing by Caitlin Webber and Rod Nickel)

Snap shares drop as FTC refers MyAI chatbot complaint to the DOJ

Snap CEO Evan Spiegel, joins CNBC 'Power Lunch' on September 17, 2024.CNBC Snap shares closed down 5% on Thursday after the Federal Trade Commission said it would refer a complaint against the company to the Department of Justice. The FTC's non-public complaint involves allegations that Snapchat's My AI chatbot poses "risks and harms to young users," the commission said in a statement. The complaint stems from the FTC's compliance reviews with Snap following a 2014 settlement regarding allegations of public deception pertaining to data collection by the company. As part of the FTC's compliance reviews of Snap, the agency said it had uncovered the possibility that the company "is violating or is about to violate the law." "A proceeding is in the public interest," the FTC said in its statement. The FTC did not specify what about the My AI chatbot its complaint was focused on, but the chatbot has previously drawn scrutiny. A Snap spokesperson pushed back against the FTC's claims in a statement to CNBC. "Unfortunately, on the last day of this Administration, a divided FTC decided to vote out a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence," the Snap spokesperson said. "It also fails to identify any tangible harm and is subject to serious First Amendment concerns." The spokesperson added that while the company shares the FTC's "focus on ensuring the thoughtful development of generative AI," Snap believes that the "complaint would stifle innovation and competition in a critical and growing sector of the economy." Snap debuted the My AI chatbot in 2023. It is powered by the large language models of OpenAI and Google, giving it the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other AI-powered chatting tools. The chatbot has been noted for providing problematic responses. In one instance while speaking with a reporter who was pretending to be a teenager, the chatbot answered explained how to hide the smell of alcohol and marijuana, The Washington Post reported in 2023. At the time of the chatbot's initial release, Snap said that My AI, like other AI-powered chatbots, is "prone to hallucination and can be tricked into saying just about anything. Please be aware of its many deficiencies and sorry in advance!" In Oct. 2013, the United Kingdom's Information Commissioner's Office issued a preliminary enforcement notice against Snap, alleging that the company's My AI-related risk assessment "did not adequately assess the data protection risks posed by the generative AI technology, particularly to children." Although the FTC said that it voted during a closed meeting to issue a public statement about it's case against Snap and its ensuing referral to the DOJ, it noted that FTC commissioners Melissa Holyoak and Andrew Ferguson were absent. The FTC also pointed to a dissenting statement by Ferguson, who President-elect Donald Trump named in December to replace Lina Khan as the next FTC chair. Ferguson noted that these kinds of referrals "are not disclosed unless and until the complaint is filed in court by the Department or the Commission." "I did not participate in the farcical closed meeting at which this matter was approved," he wrote. Ferguson added that he opposes the FTC's complaint against Snap, but that he can't "release a detailed analysis of its many problems," because the case is not public. Ferguson wrote that the complaint's interpretations of an FTC law is "wrong" and that it is "in direct conflict with the guarantees of the First Amendment." If the DOJ files the complaint, Ferguson said he will "release a more detailed statement about this affront to the Constitution and the rule of law."