FTC's Holyoak says agency will avoid 'excessive regulation' of AI development

Federal Trade Commission member Melissa Holyoak says that the agency’s enforcement of data privacy rules should not stifle the ability of companies to develop artificial intelligence technologies. 

Under the leadership of current Chairman Andrew Ferguson, “the commission will promote AI growth and innovation, not hamper it with misguided enforcement actions or excessive regulation,” Holyoak said in remarks at the International Association of Privacy Professionals’ annual conference on Tuesday evening.

Under Lina Khan, the Biden administration’s FTC chair, the agency had signaled that it would take an aggressive approach to regulating companies’ data privacy practices for AI model training. 

Holyoak, a Republican, said that the FTC needs to understand “how regulatory and enforcement efforts in privacy may impact a firm's ability to access and train data, and, importantly, how they impact the firm's abilities to compete.”

Requiring companies to receive affirmative consent from individuals to use their data to train AI could disadvantage smaller firms because consumers are more familiar with well-known brands, Holyoak said.

Holyoak also pointed to concerns over how regulatory enforcement “burdens” in specific jurisdictions will impact companies competing worldwide and said protecting innovation is critical. 

The FTC must consider whether there are ways to limit excessive restrictions on companies’ accessing data to fuel AI, she said.

“Are there alternatives to such regulations that are better suited to balancing privacy concerns with interest in fostering innovation and competition?” she said.

Holyoak cited economic competition and growth at several points during her speech focused on data privacy, saying that American leadership in digital technologies, including artificial intelligence, is “critical to securing our economic and national security.” 

The FTC must create what Holyoak called a “predictable” regulatory and enforcement ecosystem that promotes innovation.

Highlighting a comment that Vice President JD Vance made in February, Holyoak said that the AI revolution is on par with the invention of the steam engine and “will never come to pass if over regulation deters innovation from taking the risks necessary to advance the ball.”

Khan’s FTC took a different approach. In February 2024, she told tech executives that the FTC planned to strictly regulate artificial intelligence tools in order to safeguard consumer privacy. 

At the time, Khan emphasized that companies using data to build AI models must tell consumers if they sought to use already collected data, gathered for different purposes, for AI training and ensure that sensitive health data, geolocation data and browsing data is “simply off limits for model training.”

“Firms cannot use claims of innovation as cover for law breaking,” Khan said. She added that 

AI model training is “emerging as another feature that could further incentivize surveillance.”

Separately, the FTC will continue to focus privacy enforcement efforts on data brokers selling Americans’ location data, Holyoak suggested, with a particular emphasis on those peddling the data to foreign adversaries.

Under Khan the FTC brought enforcement actions against several location data brokers.