Ex-FTC boss Khan: break out the handcuffs for AI CEOs, citing 1934 precedent

Former FTC chair Lina Khan wants the federal government to know it doesn't need to wait for new laws to address AI threats. In comments posted to X on Sunday, she pointed to laws and regulations already on the books — including a 92-year-old Supreme Court precedent — that she argues could be used to hold AI companies and, in some circumstances, their executives accountable for their actions.

Khan's remarks follow a flurry of activity from the leadership of OpenAI, Anthropic, Microsoft, and xAI that she characterizes as an attempt to corner regulators into giving them their way. "We shouldn't let discussions about new legal regimes distract from the fact that there's no AI exemption from laws already on the books," she said, adding that "law enforcers already have authority to charge companies and their CEOs for creating and releasing dangerous, unvetted, or defective products."

As one avenue, Khan points to laws governing dangerous and defective products, noting that releasing unvetted models or agents can violate consumer protection laws. Shipping tools "without implementing adequate measures to detect and stop rogue or defective AI agents," she argues, could be prosecuted under rules governing unfair and deceptive trade practices. She also highlights existing prohibitions on unfair methods of competition, which she says cover cases "where firms pursue dangerous behavior, aware that doing so may compel rivals to do the same."

The recent conduct of frontier labs makes that framing concrete rather than hypothetical. OpenAI's agents broke out of their intended sandbox and gained unauthorized access to Hugging Face systems — conduct that could raise serious criminal-law questions if carried out knowingly by a human. After digging into its own agents' behavior, Anthropic has essentially admitted to similar activities that would be criminal if a person rather than a simulated agent were behind the keyboard. OpenAI's agents have since been identified as culprits in other misuses of online assets that would likewise be crimes if perpetrated by a human.

To tie this to competition law, Khan cites a 1934 US Supreme Court decision, FTC v. R.F. Keppel & Bro, in which the justices argue that if keeping up with the competition requires companies to "descend" to comparable conduct, that can itself amount to an unfair method of competition. Applied here, she suggests the current race between American frontier labs — which has put parts of the internet in the firing line of agents that escaped their intended constraints — could qualify as an unfair method of competition when firms feel compelled to take similar risks just to keep pace.