AI, Privacy, and Foreign Investment: Top Congressional Investigation Trends for Technology Companies

June 04, 2024

The technology industry is squarely under Congress’s spotlight these days. Rapid advances in artificial intelligence (AI), electric vehicles, and green energy, as well as concerns over data security and privacy, foreign investment, and competition have technology companies facing an anticipated uptick in inquiries and investigations from Capitol Hill. As congressional scrutiny of technology companies intensifies, proactive preparation and strategic response planning are essential.

Trends in Congressional Investigations

1. AI and Machine Learning

As AI and machine learning technologies become more widespread, Congress is keen to understand their implications, including ethical considerations, bias, and decision-making transparency. Concerns range from privacy and data security to AI's impact on employment and workplace-related issues.

Recent executive and legislative actions include President Joseph Biden’s Executive Order 14110, the Bipartisan Senate AI Working Group legislative roadmap and the Blumenthal-Hawley framework for the US AI Act. Notably, the Bipartisan Senate AI Working Group “roadmap” lays out an early framework for a number or issues Congress could address with a degree of bipartisan cooperation.

However, companies developing and deploying AI should note that the roadmap largely favors applying current law, where feasible, and developing legislation to fill any regulatory gaps. While many gaps may be identified proactively, developers and deployers should be cautious that operating within regulatory gaps could draw attention in the future. If companies experience incidents that call into doubt the fairness, accountability, or transparency of their AI systems, congressional scrutiny is possible.

2. Electric Vehicles and Green Technology

The global shift towards sustainable energy solutions has placed electric vehicles and green technology at the forefront of legislative and executive actions. For example, the Inflation Reduction Act's Clean Vehicle Credit, which aims to promote electric vehicle adoption, also includes national security provisions.

Differing views within Congress about how to balance environmental considerations against national security considerations may result in some technology companies facing questions on their outgoing and incoming investments by foreign countries.

3. Data Security, Privacy, and Regulation

The American Privacy Rights Act is a legislative effort aimed at establishing enhanced consumer protections, potential bans on harmful data practices, and clearer rules around collecting, using, and monetizing individuals' personal information. The act addresses data minimization, opt-outs for data transfers, and targeted advertising, and creates new data minimization rules and allows the US Federal Trade Commission and state attorneys general to enforce violations.

With a patchwork of state regulations filling the federal void, technology companies must navigate varying requirements and prepare for potential federal legislation. Social media companies may also receive inquiries into their content moderation policies, data usage, and efforts to combat misinformation—transparency reports and user protection measures will be scrutinized. If Congress does take up comprehensive data privacy legislation, that could include investigations into companies’ current practices.

4. National Security and Foreign Investments

Executive Order 14105, as well as multiple legislative efforts, including the National Critical Capabilities Defense Act and the Outbound Investment Transparency Act, aim to regulate outbound investments to prevent US funds from supporting foreign companies that could pose a national security threat or critical competition.

Investors, as well as technology companies with ties to foreign investors and countries, especially in strategic technologies such as semiconductors and quantum computing, have already faced congressional inquiries and may continue to do so as Congress continues to grapple with these issues.

Responding to Congressional Inquiries

Fielding inquiries or subpoenas from congressional probes requires a nuanced approach emphasizing cooperation, coordination, and preparation. When receiving a congressional letter or subpoena, the immediate steps involve assessing the nature of the response required and the potential burdens it imposes. Confidentiality considerations are paramount, as leaks can and do happen.

If called to testify, understanding the format of the hearing, the scope of the testimony, and the potential implications for privilege and proprietary information is crucial. Parallel investigations present unique challenges, running alongside civil litigation, administrative proceedings, or criminal investigations.

Legal counsel with blended congressional investigations acumen and deep technology sector insight, offering strategic advice on compliance, risk mitigation, and the management of legal and reputational risks, will be invaluable in navigating these waters.