FTC Investigating ChatGPT Creator OpenAI over Consumer Protection Issues

The ChatGPT app is displayed on an iPhone in New York, May 18, 2023. (AP)
The ChatGPT app is displayed on an iPhone in New York, May 18, 2023. (AP)
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FTC Investigating ChatGPT Creator OpenAI over Consumer Protection Issues

The ChatGPT app is displayed on an iPhone in New York, May 18, 2023. (AP)
The ChatGPT app is displayed on an iPhone in New York, May 18, 2023. (AP)

The US Federal Trade Commission has launched an investigation into ChatGPT creator OpenAI and whether the artificial intelligence company violated consumer protection laws by scraping public data and publishing false information through its chatbot.

The agency sent OpenAI a 20-page letter requesting detailed information on its AI technology, products, customers, privacy safeguards and data security arrangements.

An FTC spokesperson had no comment on the investigation, which was first reported by The Washington Post on Thursday.

The FTC document the Post published told OpenAI that the agency was investigating whether it has “engaged in unfair or deceptive privacy or data security practices” or practices harming consumers.

OpenAI founder Sam Altman tweeted disappointment that the investigation was disclosed in a “leak,” noting that would “not help build trust,” but added that the company will work with the FTC.

“It’s super important to us that out technology is safe and pro-consumer, and we are confident we follow the law,” he wrote. “We protect user privacy and design our systems to learn about the world, not private individuals.”

OpenAI has faced scrutiny elsewhere. Italian regulators temporarily blocked ChatGPT over privacy concerns, and privacy watchdogs in France, Spain, Ireland and Canada also are paying closer attention, including some that have launched investigations after receiving complaints.

The FTC's move is a serious regulatory threat to the nascent but fast-growing AI industry, although it's not the only challenge facing these companies.

Comedian Sarah Silverman and two other authors have sued both OpenAI and Facebook parent Meta for copyright infringement, claiming that the companies' AI systems were illegally “trained” by exposing them to datasets containing illegal copies of their works.

On Thursday, OpenAI and The Associated Press announced a deal under which the AI company will license AP’s archive of news stories.

Altman has emerged as a global AI ambassador of sorts following his testimony before Congress in May and a subsequent worldwide tour, including to Europe, where officials are putting the final touches on the world's first comprehensive rules for AI.

The regulations will focus on risky uses such as predictive policing and social scoring and include provisions for generative AI to disclose any copyright material used to train its algorithms.

Altman himself has called for AI regulation, although he has tended to emphasize difficult-to-evaluate existential threats such as the possibility that superintelligent AI systems could one day turn against humanity.

Some argue that focusing on a far-off “science fiction trope” of superpowerful AI could make it harder to take action against already existing harms that require regulators to dig deep on data transparency, discriminatory behavior and potential for trickery and disinformation.

“It’s the fear of these systems and our lack of understanding of them that is making everyone have a collective freak-out,” Suresh Venkatasubramanian, a Brown University computer scientist and former assistant director for science and justice at the White House Office of Science and Technology Policy, told the AP in May. “This fear, which is very unfounded, is a distraction from all the concerns we’re dealing with right now.”

News of the FTC's OpenAI investigation broke just hours after a combative House Judiciary Committee hearing in which FTC Chair Lina Khan faced off against Republican lawmakers, who said she has been too aggressive in pursuing technology companies over allegations of wrongdoing.

Republicans said she has been harassing Twitter since its acquisition by Elon Musk, arbitrarily suing large tech companies and declining to recuse herself from certain cases. Khan pushed back, arguing that more regulation is necessary as the companies have grown and that tech conglomeration could hurt the economy and consumers.



First US Trial against TikTok to Test Claims Platform Fueled Teen Mental Health Crisis

The TikTok app icon on a smartphone in this illustration taken October 27, 2025. (Reuters)
The TikTok app icon on a smartphone in this illustration taken October 27, 2025. (Reuters)
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First US Trial against TikTok to Test Claims Platform Fueled Teen Mental Health Crisis

The TikTok app icon on a smartphone in this illustration taken October 27, 2025. (Reuters)
The TikTok app icon on a smartphone in this illustration taken October 27, 2025. (Reuters)

An Alabama jury will hear the state's claims that TikTok and its Chinese parent company ByteDance made the platform addictive to young users and misled consumers about its safety, in the first case against the company to reach trial in the sweeping litigation over social media's impact on teen wellbeing.

The trial, which is scheduled to kick off Monday in Montgomery state court and expected to last two to three weeks, could provide a rare look inside TikTok, which has settled prior cases selected for trial and sought to keep details of its operations from public view, Reuters said.

Alabama’s lawsuit was filed last year by state Attorney General Steve Marshall, a Republican. At least 27 ‌other states and Washington, ‌D.C., have also sued.

TikTok has said it designed its platform with ‌teen ⁠safety as a key ⁠priority and argued that Section 230 of the federal Communications Decency Act shields online platforms from liability over user-generated content.

Representatives for the Alabama attorney general's office and TikTok, whose US operations were transferred this year to an entity led by US investors and 20% owned by ByteDance, did not respond to requests for comment about the trial.

Alabama claims TikTok's endless stream of videos makes it the most addictive social media platform and that its algorithm pushes young users toward increasingly intense content about violence and self-harm, contributing to a ⁠teen mental health crisis and causing the number of emergency room visits ‌for self-harm in the state to "skyrocket."

The lawsuit accuses TikTok of ‌falsely claiming it limits access to sexual and violent content for young users in order to have its app ‌rated safe for teens in app stores run by Google, Apple and Microsoft and of misleading ‌users about the Chinese government's access to US users' data.

The state seeks penalties and other relief.

REDACTED DOCUMENTS, SEALED FILINGS

TikTok’s decision to settle key cases and efforts to seal or heavily redact court records have kept much of the evidence about the privately held company's operations out of public view.

In addition to the states' cases, TikTok faces ‌thousands of lawsuits by individuals, school districts and municipalities over its alleged impact on young users' mental health. Meta Platforms, Snap Inc and Alphabet's YouTube are ⁠also defendants in many ⁠of these cases.

TikTok had settled all cases selected for trial against it, including claims by five young people and a Kentucky school district.

Alabama’s lawsuit claims TikTok asks users to self-report their ages, but it also allows users to evade its questions about their age by viewing videos without creating an account, which still allows the company to collect data on their viewing habits. The lack of an effective age restriction makes things like “Kids Mode,” which curates content for young users, entirely useless, according to the lawsuit.

The state also claims the platform traps kids in so-called “filter bubbles,” feeding them increasingly intense content on subjects that capture their attention, including violent or harmful material.

Last month, Meta reached a sweeping $17.1 billion settlement with 47 states, Washington, D.C., and US territories. Meta, which did not admit wrongdoing, agreed to make changes to teens' access to Instagram and Facebook as part of the deal and conditioned $5 billion of the payout on TikTok, Snap and YouTube's adoption of those terms. TikTok has not said anything publicly about the deal.


Australia Steps Up Response to AI after OpenAI Bot Breaches Health System Database

FILE PHOTO: An OpenAI logo is displayed at Moscone Center during the Dreamforce 2026 technology summit in San Francisco, California, US, September 17, 2026. REUTERS/Carlos Barria/File Photo
FILE PHOTO: An OpenAI logo is displayed at Moscone Center during the Dreamforce 2026 technology summit in San Francisco, California, US, September 17, 2026. REUTERS/Carlos Barria/File Photo
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Australia Steps Up Response to AI after OpenAI Bot Breaches Health System Database

FILE PHOTO: An OpenAI logo is displayed at Moscone Center during the Dreamforce 2026 technology summit in San Francisco, California, US, September 17, 2026. REUTERS/Carlos Barria/File Photo
FILE PHOTO: An OpenAI logo is displayed at Moscone Center during the Dreamforce 2026 technology summit in San Francisco, California, US, September 17, 2026. REUTERS/Carlos Barria/File Photo

Even before a rogue OpenAI bot breached the database of Australia's health system, the government was escalating its rhetoric about the need to tighten regulation.

The incursion on one of the country's most used government agencies may prompt a tougher stance as Australia readies AI-specific laws starting in 2027, adding pressure to Australia-US relations already tested by Canberra's teen social media ban, tech policy experts said.

Australia has already frustrated the ChatGPT maker and rival Anthropic by refusing to let them bypass copyright laws for model training - requiring them to negotiate licensing deals with Australian rights-holders first. That refusal will most likely remain, the experts said.

The new regulations may also include mandatory reporting for AI companies if their products engage in security breaches, mirroring new Australian laws that require firms to disclose an intrusion within 72 hours.

The Medicare incident may also raise the importance of "social license" - the question of whether a company benefits the community it is operating in - when Australian planning authorities weigh applications to build data centers.

As the Medicare news broke, OpenAI and Anthropic had partnerships with what would be some of the country's biggest data centers - which are awaiting government clearance.

"I would hope it emboldens the government to take more oversight and control over an industry which needs to ⁠grow up fast," said ⁠Toby Walsh, chief scientist at the University of New South Wales' AI Institute. His university has a sponsorship agreement with OpenAI.
"We would prosecute humans who did such hacking."

Australian leader Anthony Albanese called the breach, which occurred in June and was revealed by OpenAI in September, "unacceptable" and said he voiced "extreme concern" to OpenAI CEO Sam Altman.

He added that the government was considering "possible law-enforcement and legislative responses."

OpenAI says it only learned of the breach - one of at least four of Australian government websites - in August. It says the incident was not intentional and didn't compromise any private information.

An OpenAI spokesperson did not immediately respond to a Reuters question about Albanese's comments.

The fallout brings urgency to a pressure point between the countries: laws keeping under-16s off social media and ⁠levies for platforms which post Australian news content have angered the Trump administration.

New plans by Australia to require companies to take responsibility for user safety, including letting users opt out of algorithms, were decried as "censorship" by Washington.

Canberra, which has two other ongoing inquiries into AI, in addition to two state inquiries, also wants federal laws requiring data centres to supply their own energy and cap water usage, while stopping them from using Australian content for training without paying.

It may now update privacy laws to require AI companies to report breaches they are responsible for. They may also have to contribute to testing of public-facing websites to preserve national security, the policy experts said.

Australia's record of tech regulation in the face of US resistance puts it in position to lead other countries in a campaign for better AI guardrails, said Johanna Weaver, executive director of the Tech Policy Design Institute and Australia's former chief cyber negotiator at the United Nations.

"The question is whether that is the path that we choose and what the US response will be," she said.

Even if the US objects or retaliates, the Australians seem empowered to seize the moment, said Henry Fraser, ⁠a technology law researcher at Queensland ⁠University of Technology.

"I don't think that they would be expecting backlash from the US - or to the extent they are, they've decided that the local politics of people's concerns about these types of risks is in favor of taking action," he said.

The incident raises the practical stakes of a data center buildout that economists estimate will be worth A$150 billion ($105 billion) by 2030.

Since OpenAI teamed with Australia's NextDC in December for a 612-megawatt facility in Sydney, Canberra has said it would impose data center planning restrictions.

The companies have said they will comply but have yet to secure sign-off by New South Wales state authorities, who are awaiting planning documents. After Albanese's Medicare disclosure, NSW Premier Chris Minns said an OpenAI bot had accessed a research database of the state's Bureau of Crime Statistics and Research.

"The buy-in of social license actually has to go up the stack a bit," said Rob Nicholls, a researcher at the University of Sydney's Centre for AI, Trust and Governance.

"Just saying 'we'll knock 200 bucks off the energy bill of everybody who's near our data center' ... should be the minimum."

Anthropic has a local partner for a 2.16-gigawatt data center in Queensland, which needs Foreign Investment Review Board and state government approval. An Anthropic spokesperson declined to comment.

NSW state Greens lawmaker Abigail Boyd, who chairs an inquiry into data centers, said the state "absolutely needs to consider the social harms created by these technologies when considering the planning approvals for these hyperscale data centers."


Google Plans First Test of AI Chips in Space under Project Suncatcher

FILE PHOTO: A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse//File Photo
FILE PHOTO: A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse//File Photo
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Google Plans First Test of AI Chips in Space under Project Suncatcher

FILE PHOTO: A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse//File Photo
FILE PHOTO: A specially designed Google logo, during the opening of Google's new Artificial Intelligence (AI) centre in Berlin, Germany, March 5, 2026. REUTERS/Annegret Hilse//File Photo

Alphabet's Google said on Thursday it will launch a prototype satellite next week in its first in-orbit test of Project Suncatcher, a research effort to explore whether space could potentially host large-scale AI computing infrastructure.

Companies including SpaceX and Starcloud are pursuing plans to deploy data centers in low Earth orbit, aiming to harness near-continuous sunlight to power energy-intensive AI computing and sidestep terrestrial constraints on electricity supplies.

The new mission, scheduled to fly on SpaceX's upcoming Transporter-18 rideshare launch in partnership with satellite company Planet Labs, will assess how Google's AI hardware withstands launch forces, radiation and extreme temperatures in LEO.

After the launch, it will send a prototype satellite carrying Google Tensor Processing Units into low Earth orbit to assess if the AI chips can operate reliably in space, according to Reuters.

Space radiation can disrupt or degrade electronics, including by causing data errors known as bit flips.

Google said it tested its TPUs while running AI workloads in a facility at the University of California, Davis, but that orbital testing was needed to understand how the hardware performs in the real environment.

The company will also evaluate its design to cool the power-intensive chips in the vacuum of space, where conventional airflow cooling is impossible, by combining heat pipes with radiators.

But experts have said that the concept remains years from being commercially viable given high launch costs, engineering constraints and satellite production bottlenecks.

The first Suncatcher mission is designed to gather in-orbit data and identify potential failure points, rather than demonstrate an operational orbital data center, Google said.

It aims to launch two satellites in 2027 to test the high-bandwidth laser links needed to connect future computing clusters.