The U.S. Federal Trade Commission has initiated an investigation into OpenAI, the Microsoft-backed startup behind the generative AI chatbot ChatGPT.

The FTC is citing potential violations of consumer protection laws and the compromise of personal reputations and data.

This regulatory scrutiny poses the most significant threat to OpenAI thus far.

In a 20-page document, the FTC requested records from OpenAI regarding the company’s approach to mitigating risks associated with its AI models. The agency aims to determine if OpenAI has engaged in unfair practices that have resulted in reputational harm to consumers.

This investigation comes as FTC Chair Lina Khan, known for her progressive stance, continues to take steps to rein in technology companies. The move follows a recent setback for the FTC in its attempt to block Microsoft’s acquisition of Activision Blizzard, with the agency planning to appeal the court decision.

The FTC’s information request to OpenAI includes inquiries about the measures taken by the company to address the potential generation of false, misleading, or disparaging statements about real individuals by its products.

The Washington Post initially reported on this investigation, but both the FTC and OpenAI declined to provide further comments at this time.

OpenAI launched ChatGPT in November, capturing the attention of consumers and sparking competition among large tech companies to showcase the transformative potential of AI-infused products in various societal and business contexts.

As the AI race intensifies, concerns about risks and the need for regulatory oversight have become widespread. Global regulators are working to apply existing regulations, including copyright and data privacy laws, to address two critical aspects: the data used to train AI models and the content they generate.

In the United States, Senate Majority Leader Chuck Schumer has called for comprehensive legislation to advance and establish safeguards for AI. He plans to hold a series of forums later this year to explore the topic.

OpenAI also faced regulatory issues in Italy earlier this year when the country’s regulator temporarily took ChatGPT offline, alleging that OpenAI had violated the European Union’s General Data Protection Regulation (GDPR), a comprehensive privacy framework enacted in 2018.