In a notable regulatory development, the Federal Trade Commission (FTC) has promulgated a proposed policy statement addressing concerns that artificial intelligence companies may be manipulating the behavior of their systems contrary to reasonable consumer expectations for objectivity and accuracy.

The epicenter of the Regulatory Shift

As the proposed policy statement explains, the FTC Act prohibits businesses from engaging in “unfair or deceptive” conduct. The proposed statement describes how AI companies that distort their systems’ outputs to achieve undisclosed ideological objectives could be deceiving consumers in violation of Section 5 of the FTC Act. Such conduct may be at odds with explicit and implicit representations made to consumers about the effectiveness and suitability of AI systems for various tasks.

“The FTC wants to hear from businesses and consumers about their experiences and concerns regarding the subversion of AI systems for ideological ends,” said Chairman Andrew N. Ferguson. “This crucial input will help the Commission formulate a final policy that advances the goal of expanding America’s global dominance in artificial intelligence.”

JuridicalRamifications

The Commission’s proposed policy statement explains that state laws seeking to impose a patchwork of regulations on AI, such as Colorado’s Artificial Intelligence Act which appears to coerce companies into altering the output of their AI models to advance state ideological objectives, may be “impliedly preempted to the extent it conflicts with a federal regulatory scheme.” This aligns with a December executive order directing the FTC to address the legal implications of state laws requiring alteration of the “truthful outputs of AI models.”

PublicEngagement

The proposed policy statement will be published in the Federal Register. The public will have until July 31, 2026, to submit comments on the policy statement. Once processed, comments will be posted on Regulations.gov. The Commission vote authorizing the Federal Register notice was 2-0, signaling strong unified support for addressing this emerging technological challenge.