    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                           AI REGULATION AND THE FUTURE OF U.S.
                                      LEADERSHIP
    =======================================================================

                                    HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 21, 2025

                                   __________

                               Serial No. 119-21

         Published for the use of the Committee on Energy and Commerce

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                       govinfo.gov/committee/house-energy
                            energycommerce.house.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    60-631 PDF                  WASHINGTON : 2026

    -----------------------------------------------------------------------------------

                        COMMITTEE ON ENERGY AND COMMERCE

                            BRETT GUTHRIE, Kentucky
                                     Chairman
    ROBERT E. LATTA, Ohio                FRANK PALLONE, Jr., New Jersey
    H. MORGAN GRIFFITH, Virginia           Ranking Member
    GUS M. BILIRAKIS, Florida            DIANA DeGETTE, Colorado
    RICHARD HUDSON, North Carolina       JAN SCHAKOWSKY, Illinois
    EARL L. ``BUDDY'' CARTER, Georgia    DORIS O. MATSUI, California
    GARY J. PALMER, Alabama              KATHY CASTOR, Florida
    NEAL P. DUNN, Florida                PAUL TONKO, New York
    DAN CRENSHAW, Texas                  YVETTE D. CLARKE, New York
    JOHN JOYCE, Pennsylvania, Vice       RAUL RUIZ, California
        Chairman                         SCOTT H. PETERS, California
    RANDY K. WEBER, Sr., Texas           DEBBIE DINGELL, Michigan
    RICK W. ALLEN, Georgia               MARC A. VEASEY, Texas
    TROY BALDERSON, Ohio                 ROBIN L. KELLY, Illinois
    RUSS FULCHER, Idaho                  NANETTE DIAZ BARRAGAN, California
    AUGUST PFLUGER, Texas                DARREN SOTO, Florida
    DIANA HARSHBARGER, Tennessee         KIM SCHRIER, Washington
    MARIANNETTE MILLER-MEEKS, Iowa       LORI TRAHAN, Massachusetts
    KAT CAMMACK, Florida                 LIZZIE FLETCHER, Texas
    JAY OBERNOLTE, California            ALEXANDRIA OCASIO-CORTEZ, New York
    JOHN JAMES, Michigan                 JAKE AUCHINCLOSS, Massachusetts
    CLIFF BENTZ, Oregon                  TROY A. CARTER, Louisiana
    ERIN HOUCHIN, Indiana                ROBERT MENENDEZ, New Jersey
    RUSSELL FRY, South Carolina          KEVIN MULLIN, California
    LAUREL M. LEE, Florida               GREG LANDSMAN, Ohio
    NICHOLAS A. LANGWORTHY, New York     JENNIFER L. McCLELLAN, Virginia
    THOMAS H. KEAN, Jr., New Jersey
    MICHAEL A. RULLI, Ohio
    GABE EVANS, Colorado
    CRAIG A. GOLDMAN, Texas
    JULIE FEDORCHAK, North Dakota
                                     ------

                               Professional Staff

                         MEGAN JACKSON, Staff Director
                    SOPHIE KHANAHMADI, Deputy Staff Director
                   TIFFANY GUARASCIO, Minority Staff Director
               Subcommittee on Commerce, Manufacturing, and Trade

                           GUS M. BILIRAKIS, Florida
                                     Chairman
    RUSS FULCHER, Idaho, Vice Chairman   JAN SCHAKOWSKY, Illinois
    DIANA HARSHBARGER, Tennessee           Ranking Member
    KAT CAMMACK, Florida                 KATHY CASTOR, Florida
    JAY OBERNOLTE, California            DARREN SOTO, Florida
    JOHN JAMES, Michigan                 LORI TRAHAN, Massachusetts
    CLIFF BENTZ, Oregon                  KEVIN MULLIN, California
    ERIN HOUCHIN, Indiana                YVETTE D. CLARKE, New York
    RUSSELL FRY, South Carolina          DEBBIE DINGELL, Michigan
    LAUREL M. LEE, Florida               MARC A. VEASEY, Texas
    THOMAS H. KEAN, Jr., New Jersey      ROBIN L. KELLY, Illinois
    GABE EVANS, Colorado                 KIM SCHRIER, Washington
    CRAIG A. GOLDMAN, Texas              FRANK PALLONE, Jr., New Jersey (ex
    BRETT GUTHRIE, Kentucky (ex              officio)
        officio)
                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Gus M. Bilirakis, a Representative in Congress from the
      State of Florida, opening statement............................     2
        Prepared statement...........................................     3
    Hon. Jan Schakowsky, a Representative in Congress from the State
      of Illinois, opening statement.................................     4
        Prepared statement...........................................     5
    Hon. Lori Trahan, a Representative in Congress from the
      Commonwealth of Massachusetts, prepared statement..............     7
    Hon. Brett Guthrie, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement delivered by Hon.
      John Joyce, a Representative in Congress from the Commonwealth
      of Pennsylvania................................................     9
        Prepared statement of Mr. Guthrie............................    11
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement delivered by Hon. Kim
      Schrier, a Representative in Congress from the State of
      Washington.....................................................    14
        Prepared statement of Mr. Pallone............................    16

                                   Witnesses

    Sean Heather, Senior Vice President, International Regulatory
      Affairs and Antitrust, U.S. Chamber of Commerce................    18
        Prepared statement...........................................    21
        Answers to submitted questions...............................   219
    Amba Kak, Co-Executive Director, AI Now Institute................   031
        Prepared statement...........................................    33
        Answers to submitted questions...............................   220
    Adam Thierer, Resident Senior Fellow, Technology and Innovation,
      R Street Institute.............................................    43
        Prepared statement...........................................    46
        Answers to submitted questions...............................   226
    Marc Bhargava, Managing Director, General Catalyst...............    53
        Prepared statement...........................................    55
        Answers to submitted questions...............................   229

                               Submitted Material

    Inclusion of the following was approved by unanimous consent.
    List of documents submitted for the record.......................    94
    Letter from the AI Salon to Hon. Mike Johnson, et al.............    97
    Letter from Arizona Technology Council, et al., to Members of the
      Arizona Congressional Delegation...............................   100
    Letter of May 20, 2025, from Marc Rotenberg, Executive Director,
      Center for AI and Digital Policy, et al., to Mr. Guthrie, et
      al.............................................................   101
    Letter from Community Innovation Partnership, City of
      Chattanooga, to Members of Congress............................   103
    Letter of May 21, 2025, from Adams County Regional Economic
      Partnership, et al., to the Colorado Congressional Delegation..   104
    Letter of May 20, 2025, from Engine Advocacy to Mr. Bilirakis and
      Ms. Schakowsky\1\..............................................   106

    ----------

    \1\ An accompanying report, ``Mapping the future: charting the AI
    ecosystem & a policy blueprint for startup success'' (May 2025), has
    been retained in committee files and is included in the Documents for
    the Record at https://docs.house.gov/meetings/IF/IF17/20250521/118288/
    HHRG-119-IF17-20250521-SD003.pdf.
    Letter of May 21, 2025, from Jason Oxman, President and Chief
      Executive Officer, Information Technology Industry Council, to
      Mr. Bilirakis and Ms. Schakowsky...............................   108
    Letter from Maryland Retailers Alliance, et al., to the Maryland
      Congressional Delegation.......................................   109
    Letter from Retail Association of Maine to the Maine
      Congressional Delegation.......................................   111
    Letter of May 20, 2025, from Todd Bingham, President and Chief
      Executive Officer, Nebraska Chamber of Commerce & Industry, et
      al., to the Nebraska Congressional Delegation..................   112
    Letter from Pittsburgh Technology Council to the Pennsylvania
      Congressional Delegation.......................................   114
    Letter of May 20, 2025, from Sharon Wilson Geno, President,
      National Multifamily Housing Council, et al., to Mr. Guthrie
      and Mr. Pallone................................................   115
    Letter of May 21, 2025, from Linda Moore, President and Chief
      Executive Officer, TechNet, to Mr. Guthrie and Mr. Pallone.....   118
    Letter from Ben Cunningham, President of the Nashville Tea Party,
      et al., to Tennessee Congressional Delegation..................   120
    Letter of May 19, 2025, from Luke McDermott, McDermott Company
      and Associates, to Hon. Mike Kennedy...........................   124
    Letter of May 21, 2025, from The Business Council of New York
      State, et al., to the New York Congressional Delegation........   125
    Statement by New Jersey Attorney General Matthew J. Platkin......   126
    Letter of May 21, 2025, from Catherine Chase, President,
      Advocates for Highway and Auto Safety, to Mr. Bilirakis and Ms.
      Schakowsky.....................................................   129
    Letter of May 16, 2025, from National Association of Attorneys
      General to Hon. Mike Johnson, et al............................   144
    Article of October 25, 2024, ``An AI chatbot pushed a teen to
      kill himself, a lawsuit against its creator alleges,'' by Kate
      Payne, AP News.................................................   151
    Article of May 15, 2025, ``The House Is Close To Passing a
      Moratorium on State Efforts To Regulate AI, by Adam Conner,''
      Center for American Progress...................................   154
    Statement of Consumer Reports, Consumer Reports opposes AI state
      preemption language in House budget reconciliation bill........   160
    Letter of May 20, 2025, from Tom Kemp, Executive Director,
      California Privacy Protection Agency, to Mr. Bilirakis and Ms.
      Schakowsky.....................................................   161
    Statement of the Council of State Governments, May 19, 2025......   164
    Statement of EPIC................................................   165
    Letter of May 20, 2025, from Andrew Freedman, Chief Strategy
      Officer, Fathom, to Mr. Guthrie, et al.........................   166
    Letter of May 20, 2025, from Alejandra Montoya-Boyer, Senior
      Director, Center for Civil Rights and Technology, The
      Leadership Conference on Civil and Human Rights, to Mr.
      Bilirakis and Ms. Schakowsky...................................   170
    Statement of Public Citizen......................................   172
    Statement of Sarah Gardner, Heat Initiative, et al., ``National
      Declaration on AI and Kids' Safety,'' May 12, 2025.............   173
    Letter of May 13, 2025, from Tim Storey, Executive Director,
      National Conference of State Legislatures, to Mr. Guthrie and
      Mr. Pallone....................................................   185
    Statement of the Open Markets Institute..........................   187
    Letter of May 13, 2025, from Encode, et al., to Hon. Mike
      Johnson, et al.................................................   189
    Letter of May 21, 2025, from J.B. Branch, Technology
      Accountability Advocate, Public Citizen, to Mr. Bilirakis and
      Ms. Schakowsky.................................................   192
    Statement of Common Sense Media by James P. Steyer, Founder and
      Chief Executive Officer, May 12, 2025..........................   199
    Article of May 20, 2025, ``Critical Questions for the House
      Hearing Examining a Federal Restriction on State AI
      Regulation,'' by Liana Keesing and Isabel Sunderland, Tech
      Policy Press...................................................   200
    Article, ``The False Choice Between Digital Regulation and
      Innovation,'' by Anu Bradford, Northwestern University Law
      Review, Vol. 119, No. 2 (2024)\1\

    ----------

    \1\ The article has been retained in committee files and is included in
    the Documents for the Record at https://docs.house.gov/meetings/IF/
    IF17/20250521/118288/HHRG-119-IF17-20250521-SD003.pdf.
    Article of May 19, 2025, ``Police secretly monitored New Orleans
      with facial recognition cameras, by Douglas MacMillan and Aaron
      Schaffer,'' The Washington Post................................   206
    Letter of May 15, 2025, from General Assembly, Commonwealth of
      Virginia, to the Virginia Congressional Delegation.............   216

                AI REGULATION AND THE FUTURE OF U.S. LEADERSHIP

                                  ----------

                            WEDNESDAY, MAY 21, 2025

                      House of Representatives,
    Subcommittee on Commerce, Manufacturing, and Trade,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:20 a.m., in
    room 2322, Rayburn House Office Building, Hon. Gus Bilirakis
    (chairman of the subcommittee) presiding.
        Members present: Representatives Bilirakis, Fulcher,
    Harshbarger, Obernolte, Bentz, Fry, Lee, Kean, Evans, Goldman,
    Guthrie (ex officio), Schakowsky (subcommittee ranking member),
    Castor, Soto, Trahan, Mullin, Clarke, Dingell, Veasey, and
    Schrier.
        Also present: Representatives Carter of Georgia, Joyce, and
    McClellan.
        Staff present: Ansley Boylan, Director of Operations;
    Jessica Donlon, General Counsel; Sydney Greene, Director of
    Finance and Logistics; Natalie Hellman, Professional Staff
    Member, Commerce, Manufacturing, and Trade; Megan Jackson,
    Staff Director; Daniel Kelly, Press Secretary; Sophie
    Khanahmadi, Deputy Staff Director; Alex Khlopin, Clerk,
    Commerce, Manufacturing, and Trade; Giulia Leganski, Chief
    Counsel, Commerce, Manufacturing, and Trade; Sarah Meier,
    Counsel and Parliamentarian; Joel Miller, Chief Counsel;
    Evangelos Razis, Professional Staff Member, Commerce,
    Manufacturing, and Trade; Chris Sarley, Member Services/
    Stakeholder Director; Kaley Stidham, Press Assistant; Matt
    VanHyfte, Communications Director; Hannah Anton, Minority
    Policy Analyst; Keegan Cardman, Minority Staff Assistant; Lisa
    Hone, Minority Chief Counsel, Commerce, Manufacturing, and
    Trade; Megan Kanne, Minority Professional Staff Member; and
    Phoebe Rouge, Minority FTC Detailee.
        Mr. Bilirakis. Good morning, everyone.
        Before we get started, we should have a moment of silent
    prayer--one moment of silent prayer for our good friend Gerry
    Connolly, who passed away this morning.
        [Moment of silence observed.]
        Mr. Bilirakis. Thank you. May his memory be eternal.
        The committee will now come to order.

    OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Thanks to everyone, especially our witnesses, for joining
    us today for today's hearing on ``AI Regulation and the Future
    of U.S. Leadership.''
        At the outset, I want to recognize Ranking Member
    Schakowsky, as this is our first subcommittee hearing since she
    announced her retirement.
        We are going to miss you.
        She has been a welcome partner over the last 4\1/2\ years.
    Together, we were able to secure better safety precautions for
    women with the FAIR Crash Tests Act. During the pandemic, we
    worked tirelessly to support the travel and tourism industry at
    a time of unprecedented challenges. This bond culminated in the
    TICKET Act and much more, which strengthens consumer
    protections in the ticketing marketplace.
        Congress and the E&C--Energy and Commerce, of course--won't
    be the same without Ranking Member Schakowsky, but her legacy
    will be long remembered.
        So we appreciate you so very much.
        Since the public release of ChatGPT, AI has become a
    household name. AI products and services are being developed at
    breakneck speed, delivering new innovations to consumers. These
    technologies can revolutionize the economy, drive economic
    growth, and improve our way of life.
        Like every technology, however, AI can be weaponized when
    it is in the wrong hands, as you know. Thankfully, AI is
    already regulated by longstanding laws that protect consumers.
    Because of the great potential of these technologies, Congress
    must be careful when we impose additional obligations on AI
    developers and deployers.
        Our task is to protect our citizens and ensure that we
    don't cede U.S. AI leadership. Much of the AI marketplace is
    comprised of small startups looking to get a foothold in the
    revolutionary space, and heavyhanded regulations may ensure
    that the next great American company never makes it.
        If we fail in this task, we risk ceding American leadership
    in AI to China, which is close on our heels, as you know. Other
    economies are also eager to write the global AI rule book,
    often to their own detriment and the detriment of the American
    leadership.
        The EU recently enacted its own AI Act. While it is still
    being implemented, the EU's complex law suffers from many of
    the innovation-chilling effects we saw with the GDPR. We must
    also keep a close watch on whether Europe uses the AI Act and
    other regulations to unfairly target American companies.
        We are here today to determine how Congress can support the
    growth of an industry that is key for American competitiveness
    and jobs without losing the race to write the global AI rule
    book. Our witnesses today will help us understand how we
    achieve that dream.
        So, again, I want to thank the witnesses for being here,
    and I look forward to your testimony.
        [The prepared statement of Mr. Bilirakis follows:]
        [GRAPHIC] [TIFF OMITTED] T0631.001

        Mr. Bilirakis. Now I will yield 5 minutes to the ranking
    member, my good friend, Ms. Schakowsky.
        Boy, we are going to miss you. So thank you very much for
    your service to our country.
        [Applause.]
        Mr. Bilirakis. And you have got much more--much more left.
    So we appreciate it, and I look forward to the good work
    together.
        I yield to the gentlelady.

     OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Well, thank you, Mr. Chairman, Gus
    Bilirakis. I am so happy to hear your words, and I support you.
    I am so grateful to you. I will be here another about year and
    a half, so don't get too comfortable. And I appreciate it.
        Today, you know, we are discussing what is happening with
    how we are protecting consumers. That is what I am always,
    always thinking about. And the very idea that we are going to
    allow 10 years for there to be all kinds of scams that could be
    happening. And instead of 10 years for AI--I mean, that is just
    insane, and I can't understand why we would do that--our job
    right now is to protect consumers.
        And we know that even now people are getting scammed by
    issues that come out. And we want to make sure that we have
    that kind of protection.
        And so I think it is absolutely something we should say,
    zero time--zero time--as we watch AI develop, not 10 years. We
    haven't done that for anything else. And for us to do that now
    makes absolutely no sense and puts all consumers at risk. And
    so I want to strongly be against this idea, which I think is
    reckless. How could we possibly do 10 years?
        And so I want to yield at this point to Mrs. Trahan for the
    remainder of my time.
        [The prepared statement of Ms. Schakowsky follows:]
        [GRAPHIC] [TIFF OMITTED] T0631.002

        Mrs. Trahan. Well, I thank the ranking member for yielding.
        Under Republican leadership, this committee has failed time
    and time again to protect Americans' privacy and safeguard our
    children online.
        GOP leaders have blocked whistleblower protections to
    protect workers who risk their livelihoods to shine a light on
    their employers' privacy abuses. They killed comprehensive
    privacy legislation to minimize data collection and ensure
    proper use. They said no to simple transparency legislation so
    independent auditors could make sure Big Tech companies aren't
    breaking the law.
        But what Republican members of this committee did find time
    to do last week--in the middle of the night, by the way--is
    force through an unprecedented giveaway to the tech industry: a
    10-year ban on State laws that could make AI safer for our
    constituents.
        Make no mistake, the families who have come to this
    committee and begged for us to act won't benefit from this
    proposal. But you know who will? The Big Tech CEOs who were
    sitting behind Donald Trump at his inauguration.
        Now, we can agree that a patchwork of various State laws is
    not good for innovation, for business, or consumers. But this
    is a bad policy because it sets another disincentive for us to
    act urgently or even in time.
        All the while, Republicans are once again ceding Congress's
    duty to protect Americans' privacy to the very companies who
    are perpetrating the worst abuses online. You are basically
    inviting the fox into the henhouse, and you are doing so under
    the justification that this will somehow motivate Congress to
    unify the patchwork of State laws currently in existence. But
    that hasn't happened yet.
        Just look at what happened to the privacy bill that we
    crafted together on this committee. The moment that Big Tech
    started lobbying against it, the Republican Speaker and
    majority leader caved. They killed the bill.
        And now you turn around and try to deceive the American
    people into accepting this ridiculous alternative? Come on. Our
    constituents aren't stupid. They expect real action from us to
    rein in the abuses of tech companies, not to give them blanket
    immunity to abuse our most sensitive data even more.
        At the same time, our Republican colleagues are complaining
    about Europe's tech laws--which we can acknowledge are
    imperfect. But at least they had the guts to do something--
    literally anything--to make the internet better for the folks
    they represent. Shame on us if we don't answer the same demands
    from the American people.
        I urge my colleagues to reject this giveaway to the same
    Big Tech companies that have stymied every attempt at updating
    our privacy laws.
        I want to urge my colleagues to vote no on the partisan
    reconciliation bill when the same leaders who killed our
    bipartisan privacy legislation bring it to the floor. And let's
    just get to work in a bipartisan way to foster innovation and
    protect our constituents with sensible guardrails on Big Tech.
        Thank you. I yield back.
        [The prepared statement of Mrs. Trahan follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. The gentlelady yields back.
        Now I will recognize the vice chairman of the full
    committee, who is standing in for Chairman Guthrie.
        Dr. Joyce, you are recognized for 5 minutes for your
    statement.

     OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN
     CONGRESS FROM THE COMMONWEALTH OF KENTUCKY, DELIVERED BY HON.
    JOHN JOYCE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH
                            OF PENNSYLVANIA

        Mr. Joyce. Thank you, Mr. Chairman.
        Good morning, and thank you to the witnesses for joining us
    today.
        You recognize that we are living through dynamic times, and
    the advancement of artificial intelligence technologies is an
    important part of that. And it is equally important that we in
    Congress take the best approach to support innovation and
    address issues that arise.
        AI does have enormous potential. It has potential to
    transform our everyday lives and how we work. From
    revolutionizing drug research and development to fortifying our
    energy grid, AI has the potential to drive major breakthroughs
    across virtually every sector of our society.
        But that future is not guaranteed. Today, we are at a
    crossroads. The decisions that we make on AI regulation are
    critical and will determine whether we allow innovation to
    flourish or risk falling behind on the global stage.
        Today, American innovators are experiencing significant
    regulatory headwinds at home and abroad that could jeopardize
    our global leadership.
        Across the Atlantic, the European Union has enacted its AI
    Act, which imposes a sweeping, top-down regulatory regime. The
    EU AI Act is overly complex and restrictive, creating a one-
    size-fits-all framework that does not account for the diverse
    and rapidly evolving nature of AI technologies. It is a stark
    example of regulation going too far and stifling innovation by
    imposing heavy burdens on businesses through layers of new
    bureaucracy that slow down progress, particularly for startups
    and small businesses.
        Here in the U.S., we see similar challenges unfolding with
    the patchwork of State AI laws rapidly taking shape. Just since
    January, there have been over 1,000 AI bills introduced across
    the United States. These measures vary widely in their
    definitions, in their requirements, their enforcement
    mechanisms, and in their scope. This emerging patchwork of
    regulations is creating confusion and inconsistency.
        Small businesses and startups navigating 50 different sets
    of roles will have a harder time competing with larger, well-
    established companies that can afford to navigate this
    regulatory maze. Innovation depends on the ability of small
    upstarts to compete with the established players.
        That is why this committee is focused on creating a
    national framework to provide clarity and consistency without
    stifling growth. We need a Federal approach that ensures
    consumers are protected when AI tools are misused and in a way
    that allows innovators to thrive. We must not make the same
    mistake that the EU has made with the EU AI Act, effectively
    choosing not to allow industry and AI to grow.
        A patchwork of conflicting and burdensome AI rules will
    have direct impacts on the Federal Government as well. The
    Department of Commerce, like a great deal of Federal agencies,
    must adopt AI if they are going to operate effectively in the
    21st century. Yet, if America's AI innovators are held back by
    a State patchwork, these AI tools might simply never be built,
    or they will be offered at a higher price to the taxpayer.
        To be clear, I am not advocating for a free-for-all wild-
    west-type regulatory environment. On Monday, Chairman Guthrie
    was proud to stand with President Trump as he signed the TAKE
    IT DOWN Act. This law is a prime example of targeting a
    specific harm with a narrowly tailored law to fill a gap that
    has been identified in existing law.
        This committee has a long history of fostering American
    innovation, and now more than ever our leadership on this topic
    is essential. Let's continue this legacy by making sure that
    the next chapter of AI innovation is written right here in
    America. This includes bold investments, clear rules, and
    leadership that keeps us ahead of our adversaries.
        I look forward to working with my colleagues and hearing
    from our witnesses today on how we can unlock the full
    potential of artificial intelligence.
        Thank you, Mr. Chairman, and I yield.
        [The prepared statement of Mr. Guthrie follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. Thank you very much. I appreciate it very
    much. And, yes, that was a major accomplishment by this
    committee, the TAKE IT DOWN Act. And I will tell you what, we
    are going to do a lot of good things for our kids in the next
    year and a half. So we appreciate it very much.
        Now we have Dr. Schrier, who is filling in for the very
    capable ranking member, Mr. Pallone.
        Dr. Schrier, you are recognized for 5 minutes.
        Ms. Schrier. Thank you, Mr. Chairman, for recognizing me to
    deliver opening remarks from Ranking Member Pallone.
        At this moment, he has been in the Rules Committee all
    night and is still in the Rules Committee defending the
    American people from the terrible impacts of the Republicans'
    tax bill that will kick people off of Medicaid and food
    assistance in order to pay for tax cuts for billionaires.
        His statement now:

    OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
    IN CONGRESS FROM THE STATE OF NEW JERSEY, DELIVERED BY HON. KIM
        SHRIER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
                               WASHINGTON

        Ms. Schrier. This Congress, we have heard from many
    witnesses over multiple hearings about the significant benefits
    of artificial intelligence and the very real harms that AI
    models and applications can and have already caused.
        Unfortunately, in a giant gift to Big Tech, committee
    Republicans supported a provision in their terrible tax bill
    last week that imposes a 10-year ban on any State's ability to
    enforce their own laws protecting consumers from the harms
    caused by AI.
        I agree with my colleagues that we need strong Federal
    legislation to govern and guide the development of these
    powerful AI systems as they are rapidly incorporated into more
    and more aspects of our everyday lives.
        To protect consumers from the harms of AI, we should
    recommit to working on strong, bipartisan, comprehensive,
    Federal data privacy legislation that includes data
    minimization to protect consumers from their personal and
    sensitive information being abused.
        Big Tech's development of new data-hungry AI systems
    exploiting Americans' personal information in ways we could not
    have imagined only a few years ago only makes this need more
    urgent.
        There is broad support in both parties for data privacy.
    Last Congress, this committee worked on a bipartisan,
    comprehensive Federal privacy bill that was the product of work
    and negotiation over years. But, in the end, House Republican
    leadership killed it under pressure from Big Tech.
        And now my Republican counterparts are suspending for 10
    years any enforcement of rules and laws already on the books in
    States and cities across the country without any proposed
    replacement. The Republicans' giant gift to Big Tech would
    block enforcement of laws on the books right now that are
    protecting Americans from real-world harms.
        Some States have laws requiring companies to disclose when
    they are using AI. Others have laws protecting against the use
    of deepfakes in elections and protecting consumers when AI is
    used to deny healthcare, education, housing, and employment.
    Some State laws and regulations provide guardrails ensuring
    that States and cities themselves are careful in their purchase
    and use of AI systems.
        And now Republicans want to ban enforcement of all those
    State laws, with absolutely no national bill ready to go to
    address the real-world harms from AI.
        Instead, Republicans have touted last Congress's bipartisan
    AI Task Force report. But that report does not include fleshed-
    out legislative prescriptions, just broad-stroke concepts.
        Notably, the task force report includes a chapter on
    preemption that acknowledges Federal preemption has both
    benefits and drawbacks. It recommends Congress perform a study,
    not remove States and local governments entirely from
    responsibility, and it advises that if Congress preempts State
    AI laws, it should be precise in its definitions and scope.
        Now, what Republicans have included in the reconciliation
    bill does not reflect these considerations. Rather than
    offering legislation that governs AI models and systems and
    includes a preemption provision that is crafted to the scope of
    that legislation, they have proposed an enforcement ban that
    covers any artificial intelligence or automated decision-making
    system.
        They would have State and local governments stand by as Big
    Tech companies that have shown little regard for consumers,
    particularly for children, recklessly deploying new
    technologies that violate our privacy, provide false
    information, or make unjustifiable, discriminatory decisions
    all in pursuit of profit and market share at any cost.
        And even if Congress was able to pass a law to govern AI
    and automated decision systems, who would enforce it? The Trump
    administration has taken every opportunity to undermine our
    cops on the beat. They are firing key technical experts and
    stripping independent commissions of their bipartisan
    legitimacy.
        They are also cutting resources and funding and weakening
    or rescinding existing measures that would help protect
    American consumers and support American businesses in the
    global competition with China. This pattern of gifts and
    giveaways to Big Tech by the Trump administration, with the
    cooperation of Republicans in Congress, is hurting American
    consumers.
        Instead, we should be learning from the work our State and
    local counterparts are doing now to deliver well-considered,
    robust legislation giving American businesses the framework and
    resources they need to succeed while protecting consumers.
        And, with that, I yield back.
        [The prepared statement of Mr. Pallone follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. The gentlelady yields back.
        And now we will hear from our witnesses.
        Today, we have Mr. Sean Heather, senior vice president of
    the U.S. Chamber of Commerce.
        Welcome.
        We have Ms. Amba Kak, who is the co-executive director of
    AI Now Institute.
        Welcome.
        Mr. Adam Thierer, senior fellow at R Street Institute.
        And then we have Mr. Marc--and I am going to get this
    right--Bhargava, managing director of General Catalyst.
        Welcome, everyone.
        And now we will hear from Mr. Heather.
        You are recognized for 5 minutes.

    STATEMENTS OF SEAN HEATHER, SENIOR VICE PRESIDENT, U.S. CHAMBER
    OF COMMERCE; AMBA KAK, CO-EXECUTIVE DIRECTOR, AI NOW INSTITUTE;
       ADAM THIERER, SENIOR FELLOW, R STREET INSTITUTE; AND MARC
             BHARGAVA, MANAGING DIRECTOR, GENERAL CATALYST

                       STATEMENT OF SEAN HEATHER

        Mr. Heather. Well, thank you, Chairman Bilirakis----
        Mr. Bilirakis. My pleasure.
        Mr. Heather [continuing]. And Ranking Member Schakowsky and
    to the rest of the subcommittee. It is a pleasure to be here to
    testify on international perspectives of today's hearing. While
    I am a senior vice president, I lead our work on international
    regulatory affairs.
        Earlier this year, Vice President Vance at the AI Action
    Summit in Paris warned that, quote, ``excessive regulation''
    was a threat to harnessing AI's potential. The Chamber could
    not agree more. Our message to policymakers is not to lose
    focus on the opportunity of AI.
        In my remarks, I would like to focus on Europe's approach
    to regulation, highlight concerns with the EU AI Act, and close
    my testimony with why we should care about what Europe is doing
    on AI.
        Historically, Europe takes a precautionary approach when
    regulating. This means that Europe often regulates before there
    is well-documented need. Further, the European Union exists to
    establish a, quote, "single market" to prevent its sovereign
    member states from creating a patchwork of laws.
        In recent years, we have seen a slew of digital-economy
    regulation from Europe, yet none of these policies have made
    Europe more competitive.
        Yet, today, we now know Europe is woefully behind in key
    digital sectors, and, as a result, the new justification to
    regulate has emerged--tech sovereignty. The European Commission
    President has asserted that Europe must be able to make its own
    choices, while French President Macron has called for Europe to
    develop and roll out the key technologies of tomorrow.
        Fortunately, Europe is beginning to realize it cannot
    regulate its way to innovation and economic growth. In a recent
    critical self-assessment requested by European officials, the
    Draghi report found that Europe's struggle to compete stems
    from burdensome EU regulatory regimes.
        Now let me turn to the EU AI Act. The Chamber believes the
    EU fails to achieve a balance between regulating risk and
    fostering innovation.
        First, Brussels failed to review its existing legal
    frameworks. AI is a technology, less so a product or service.
    Existing EU laws governing products and services are not
    suddenly made obsolete because of AI. Yet, rather than
    carefully evaluating gaps in existing law, the EU chose to add
    a layer of regulatory complexity at the expense of innovation.
        Beyond the law, the EU also establishes a code of practice.
    While not currently mandatory, we are concerned that it will
    function as a de facto benchmark for evaluating industry
    compliance with the law. The code mandates extensive disclosure
    of sensitive business information to the regulator, downstream
    providers, competitors including China, and potentially the
    public.
        This raises two major risks: First, releasing the know-how
    behind the technology could enable misuse of powerful AI
    systems; and, second, forcing the value of IP being disclosed
    undermines investment incentives.
        So why does this matter? Why not let Europe continue to
    regulate its way out of being a serious player on AI?
        First, we need partners. The transatlantic trade
    relationship is vital to the United States. Annually, trade in
    services alone is $475 billion, and we enjoy a $75 billion
    trade surplus. Our competitive advantage in AI will power the
    future of our trading relationship.
        Second, we need to prevent the spread of the EU AI Act from
    being adopted around the world and across the States. The EU's
    approach to AI is already being considered in places like South
    Korea, Canada, and Brazil. In the United States, the AI Act's
    influence is noticeable. States like Colorado, California,
    Texas, and Virginia have introduced AI regulations that echo
    Europe's approach. The Chamber is concerned that burdensome EU-
    like policies will be adopted domestically at the State level,
    potentially leading to a fragmented regulatory landscape across
    the United States.
        Third, we care because we must not allow American companies
    to be discriminated against. The AI Act's extraordinary,
    extraterritorial reach imposes substantial compliance costs on
    U.S. business, diverting considerable resources away from
    innovation and undermining our competitive edge.
        From requiring non-EU companies to appoint authorized
    representatives, to overly broad classifications of high-risk
    AI application directed at non-EU companies, and more, the AI
    Act places American companies at a competitive disadvantage. By
    imposing these barriers, the EU risks not only harming U.S.
    businesses, but those discriminatory practices may also be
    replicated in other countries.
        Moreover, the act opens the door for massive fines, as high
    as 7 percent of global annual sales.
        In closing, it is estimated that AI will contribute $15.7
    trillion to the global economy by 2030. America's leadership on
    AI is not guaranteed, but today we are well positioned to lead.
    In 2024 alone, private AI investment in the United States was
    12 times greater than that in China and 24 times greater than
    that in the U.K.
        Such massive U.S. financial commitments translates into
    tangible outcomes. Last year, the U.S. produced 40 state-of-
    the-art foundation models, significantly outpacing China's 15
    and Europe's 3.
        The opportunity AI holds is before us, but American
    leadership will only continue if regulatory environments
    promote innovation, encourage private-sector investment, and
    embrace technological change.
        Thank you, and I look forward to taking your questions.
        [The prepared statement of Mr. Heather follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. Thank you, Mr. Heather. Appreciate it very
    much.
        And now, Ms. Kak, you are recognized for 5 minutes.

                         STATEMENT OF AMBA KAK

        Ms. Kak. Chair Bilirakis, Ranking Member Schakowsky, and
    esteemed members of this committee, thank you for inviting me
    to testify.
        My name is Amba Kak. I colead the AI Now Institute, the
    leading independent research center focused on tackling
    concerns with AI.
        My main message today is that the race to win on AI must be
    focused on delivering victories first and foremost to the
    American people. To do this, we must ensure that U.S.
    leadership defines the frontier through technologies that are
    best in class, guarantees that firms compete on the merits, and
    sets a gold standard for rigor, security, and shared
    prosperity. In short, we need to ensure that this is a race to
    the top rather than the bottom.
        But what we are seeing instead from industry is a reckless
    disregard for public well-being that, unfortunately, this
    committee should be all too familiar with, because Congress has
    failed to sufficiently regulate Big Tech for over a decade now.
        Let's make this concrete and clarify what is really at
    stake here.
        Last year, a chatbot created by Character.AI lured a
    depressed 14-year-old from Orlando, Florida, Sewell Setzer III,
    to commit suicide. Character.AI isn't alone. Mark Zuckerberg
    tells us that these chatbots are a societal boon. After all, he
    thinks the average American has fewer than three friends, and
    the obvious solution, according to him, is to get people more
    attached to AI companions--just like he got our children hooked
    to social media.
        Meanwhile, AI voice-cloning tech is enabling a new
    generation of scams that specifically target senior citizens.
    As just one example, a grandmother in Texas received a call
    from a voice indistinguishable from her grandson asking for
    bail money. It was a suspicious bank teller that intervened,
    but many, many others have not been so lucky.
        And in this new frenzy of chatbots and agents, it can be
    easy to forget that we actually already have a decade of far-
    less-shiny AI toys, the kinds that aren't used by people but
    are used on them--inscrutable AI systems that cut the in-home
    care of 4,000 disabled people in Arkansas despite critical
    underlying medical conditions, or systems that falsely accused
    40,000 people in Michigan of unemployment insurance fraud and
    denied them benefits.
        To state the obvious, AI is not a break from Silicon
    Valley's sins of the past but merely a continuation. And it is
    also a market led and shaped by the very same players.
        Now, when ChatGPT first launched in 2022, it seemed like
    this market was poised for disruption with a new crop of
    challengers, new faces. But now, just more than 2 years later,
    it is clear the back bench is more of the same--Big Tech and a
    few additional firms that are dependent on Big Tech for their
    survival.
        So, put simply, building AI bigger and bigger requires
    enormous resources that these firms own and control, and so
    they play kingmaker for the downstream, smaller players, the
    little guys that we are going to hear about today, controlling
    access to inputs and also pathways to reach the consumer.
        These are the same firms that have no regard--have shown no
    regard for U.S. national-security priorities, as they have
    deliberately threatened security interests time and again in
    the pursuit of profit. Yet suddenly they show their patriotism
    when big government contracts are on the line. This is an
    industry that has fooled us once, and we cannot let them fool
    us again with AI.
        In this environment, you know, the proposal for a sweeping
    moratorium on State AI-related legislation really flies in the
    face of common sense. We can't be treating the industry's worst
    players with kid gloves while leaving everyday people, workers,
    and children exposed to egregious forms of harm.
        In fact, there is some air to clear on what States have
    been up to in the first place. Approximately half of all
    proposed legislation from the States was on deepfakes. Notably,
    States moved well before the TAKE IT DOWN Act recently passed
    Congress. Several others have moved to clamp down on the AI-
    related scams that I talked about. These bipartisan State
    measures have been nimble, they have been targeted, and they
    have weeded out the bad apples that nobody wants to be in
    business with.
        Another commonsense theme across States: transparency.
    Requiring disclosures to people affected by AI in sectors like
    healthcare, education, employment--I would argue, really the
    bare minimum for an industry that derives its power from
    obscurity.
        And, to be clear, we should be treating these measures as
    the floor, not the ceiling. A moratorium on AI-related State
    laws would--you know, at a time when there are minimal Federal
    laws in place, would instead set the clock back, and it would
    freeze it there.
        Why we would treat these companies with kid gloves at a
    moment when they need more scrutiny, not less, is what should
    be in focus today. And we don't have 10 years to wait.
        Thank you.
        [The prepared statement of Ms. Kak follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. Thank you very much.
        Now we have Mr. Thierer.
        You are recognized for 5 minutes, sir. Thank you.

                       STATEMENT OF ADAM THIERER

        Mr. Thierer. Thank you.
        Chairman Bilirakis, Vice Chairman Fulcher, Ranking Member
    Schakowsky, and members of the subcommittee, thank you for the
    invitation to participate in this important hearing today.
        My name is Adam Thierer, and I am a senior fellow at the R
    Street Institute, where I focus on emerging technology policy
    issues.
        My message here today boils down to three points:
        First, America's AI innovators risk getting squeezed
    between the so-called ``Brussels effect'' of overzealous
    European regulation and the so-called ``Sacramento effect'' of
    excessive State and local mandates.
        Second, this regulatory squeeze will prevent our citizens
    from enjoying the fruits of the AI revolution and undercut our
    Nation's efforts to stay ahead of China in the global AI race.
        Third, Congress should take steps to address both matters.
    And on the specific problem of State overreach, it should
    protect the development of a robustly innovative market in
    interstate algorithmic commerce and speech by imposing a
    moratorium on State AI regulation.
        AI faces a crucial policy question today: Will it be born
    free or born inside a regulatory cage?
        America benefited from ensuring that personal computing,
    digital technologies, and the internet were largely born free.
    Through smart, bipartisan policy choices this Congress
    implemented in the 1990s, America gave entrepreneurs,
    investors, and workers a green light to go out and dream big.
        And they delivered. In 2022 alone, the digital economy
    contributed over $4 trillion of output, $1.3 trillion of
    compensation, and 8.9 million jobs. America's innovators became
    global leaders in every digital technology field.
        This is an incredible public-policy success story. But,
    today, fear-based regulatory policies from both abroad and our
    States now threaten it.
        We know why Europe wants to destroy America's winning
    model, but why would some U.S. policymakers want to undermine
    it with 1,000 AI-related bills, many of which adopt Europe's
    heavyhanded approach?
        Even if one sympathizes with some of these bills, put
    yourself in the shoes of an entrepreneur who is pondering how
    to build the next great application, only to face hundreds of
    different regulatory definitions, compliance requirements,
    bureaucratic hurdles, and liability threats. Costly,
    contradictory regulation is a surefire recipe for destroying a
    technological revolution and decimating little tech innovators.
        An AI moratorium offers a smart way to address this problem
    by granting innovators some breathing space and helping ensure
    our robust national AI marketplace develops.
        Congress has used moratoria before to protect interstate
    commerce and promote innovation. The Internet Tax Freedom Act
    of 1998, for example, prevented the development of multiple and
    discriminatory taxes on the internet. An AI moratorium like the
    one that this committee passed recently would work in a similar
    fashion by limiting regulations that burden interstate
    algorithmic commerce.
        Some have incorrectly claimed that an AI moratorium would
    leave consumers unprotected online. In reality, AI-related
    harms can already be addressed under many existing policies and
    court-based standards, including unfair and deceptive practices
    law, civil rights law, and other consumer protections.
        Biden administration regulators released a statement in
    2023 noting their authority to, quote, ``enforce the respective
    laws and regulations to promote responsible innovation in
    automated systems,'' end quote.
        The Massachusetts attorney general has similarly noted
    that, quote, ``existing State consumer-protection, anti-
    discrimination, and data-security laws apply to emerging
    technology, including AI systems, just as they would in any
    other context.''
        Meanwhile, some State lawmakers are acknowledging the
    danger of regulatory overreach. Last year, Governor Newsom
    vetoed a major AI regulatory effort in his State after many
    congressional Democrats sent letters urging him to reject it.
        Connecticut Governor Ned Lamont also recently said, ``I''--
    quote--``just worry about every State going out and doing their
    own thing--a patchwork quilt of regulations.''
        Finally, Governor Jared Polis of Colorado recently called
    for a special legislative session to address problems with an
    AI regulation he signed just last year and said it would
    create, quote, ``a complex compliance regime for all developers
    and deployers of AI,'' and he called on Congress to preempt
    Colorado's law with a, quote, ``cohesive Federal approach.''
    And he also endorsed a Federal AI moratorium recently.
        I agree with all these Democratic lawmakers that State AI
    overregulation would have serious downsides and that we already
    have many enforcement tools to address AI harms. Under an AI
    moratorium, State and local lawmakers would still be free to
    pass new technology-neutral rules as long as they don't
    interfere with interstate commerce.
        Congress can enact additional regulations as part of a
    national policy framework. The House, of course, just recently
    passed the TAKE IT DOWN Act by a vote of 409 to 2. And just
    last December, the House AI Task Force issued a 273-page,
    bipartisan report that included 85 recommendations.
        We need national policy leadership today to ensure that
    America will continue to lead the AI revolution. As Chairman
    Guthrie recently argued, we must, quote, ``make sure that we
    win the battle against China,'' and that the key to that, he
    says, is to, quote, ``not regulate like Europe or California
    regulates,'' because that, quote, ``puts us in a position where
    we are not competitive.''
        That is precisely right. To win the so-called AI Cold War
    against China, America needs a forward-looking, investment-
    friendly, national framework that keeps us on the cutting edge
    of the technological frontier.
        Thank you for inviting me here today, and I look forward to
    questions.
        [The prepared statement of Mr. Thierer follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. Thank you very much, Mr. Thierer.
        Next we have Mr. Bhargava.
        And you are recognized for 5 minutes, sir. Thank you.

                       STATEMENT OF MARC BHARGAVA

        Mr. Bhargava. Thank you so much.
        Chairman Bilirakis, Vice Chairman Fulcher, and Ranking
    Member Schakowsky, and the members of the subcommittee, thank
    you so much for the opportunity to testify today.
        My name is a Marc Bhargava, and I am a managing director at
    General Catalyst, or ``GC'' for short, and we have invested and
    partnered with leading entrepreneurs to build towards global
    innovation and applied artificial intelligence.
        We are committed to investing in an array of entrepreneurs,
    particularly in transformative technologies like artificial
    intelligence. A small sampling of the 800-plus startups we have
    backed over 25 years include Airbnb, Stripe, Canva, Anduril,
    Circle, Applied Intuition, Pacific Fusion, Commure, and many
    others.
        At General Catalyst, I colead our creation strategy, which
    is focused on incubations as well as transformations. I also
    focus on early-stage investing, and I contribute to GC's
    expanding AI efforts.
        Prior to General Catalyst, I spent years as a founder and
    an operator with an emphasis on new fintech and artificial
    technology before selling my company. The company I founded
    helped institutional investors responsibly invest in the
    digital-asset space, another area that is ripe for disruption.
        I am also an angel investor and work closely with startups
    and founders on sales, distribution, and fundraising.
        Having experienced many sides of the innovation ecosystem,
    I feel I have a unique perspective on behalf of GC to offer to
    this subcommittee today, and I am very appreciative of you
    being here.
        AI is not only shaping the future of our economy, it is
    shaping the fabric of our society. From healthcare to national
    security to education, it is embedded in the systems that
    affect every one of us.
        As investors, at GC, we work closely with founders at the
    earliest stages of company building, and we have a
    responsibility to ensure that technologies we help fund are
    aligned with American values, are safe to use, and are good for
    the world.
        The United States has a unique opportunity and obligation
    to lead in defining global norms around AI, especially as the
    AI race between China and the U.S. intensifies. I believe that
    the U.S. playbook on AI, with American ingenuity, creativity,
    and cutting-edge innovation, and with the right policies in
    place, will win out over China.
        But as we seek to lead, we must strike a careful balance.
    We need a government framework that promotes safety, protects
    fundamental rights, and is transparent while it also enables
    innovation, investment, and global competitiveness. Inflexible
    or premature regulation risks pushing innovation offshore and
    weakening our national and economic security. Alternatively, as
    well, though, a complete absence of guardrails could lead to
    real societal harm and could erode the public trust.
        We deeply understand these dualities. And to accomplish
    these goals, we believe a national regulatory framework is
    preferable to a patchwork of State policies.
        At General Catalyst, we made it a routine part of our due-
    diligence process to assess ethical and operational risks in AI
    companies before we invest. We also believe in the importance
    of collaborating closely with government, which is why we
    launched the General Catalyst Institute last year to bring the
    perspective of founders closer to you, the policymakers, and to
    be a resource for hearings like today's.
        As such, we advocate for approaches that are interoperable,
    transparent, and developed collaboratively across government,
    industry, and civil society. Since these technologies are so
    impactful and fast moving, it is incumbent upon GC, as a
    company, to adhere these principles, which are enduring even as
    the technology around us might be moving.
        As we are seeing with regulatory frameworks throughout the
    world, prescriptive language can sometimes cause unintended
    harm. This is why we believe that, as we help foster small and
    emerging innovators, our operational principles are the bedrock
    of the global AI playbook.
        To help the Government find the right balance of regulatory
    certainty at the Federal level is the single most important
    variable.
        We have seen where Federal Government inaction can cause
    confusion and slow innovation. Thirty years ago, as the world
    was introduced to a new concept called the ``World Wide Web,''
    States enacted a patchwork of laws to address various issues in
    the absence of the Federal framework.
        However, it was Congress's work, beginning in this very
    subcommittee, to adopt the Telecommunications Act of 1996 that
    set in place the national framework needed to allow for the
    growth of the internet as we know it today.
        As this committee seeks to once again develop the U.S.
    playbook for AI for the world to follow, I would like to offer
    a few concrete recommendations.
        One, investors can and should play a pivotal role by
    demanding transparency, bias mitigation, and alignment with
    ethical standards before companies have product-market fit.
        Two, frameworks like model cards, algorithmic audits, and
    red teaming should be embedded early and as an industry best
    practice.
        Third, the Government cannot govern AI alone. Industry,
    academia, and civil society must cocreate standards and stress
    test these systems together.
        And, fourth and lastly, sandboxes, pilot programs, and
    public R&D investment are critical tools for government
    support.
        I really look forward today to sharing the innovation
    ecosystem and telling you more about what we are seeing in the
    field, and I am greatly appreciative of the time you all make
    today.
        [The prepared statement of Mr. Bhargava follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bilirakis. Thank you so very much.
        And I appreciate all of you.
        So we are going to go ahead and start with questions. And I
    will ask the first questions, and then I will get to the
    ranking member.
        So, Mr. Heather, I am concerned that American companies
    face disproportionate enforcement actions from European
    regulators. Since Europe's privacy law, the GDPR, went into
    effect, American companies have paid 83 percent of all fines
    levied by European regulators. I know you had mentioned this.
    That strikes me as an excessive means to subsidize their fiscal
    needs on the back of American businesses.
        So do you think Europe is targeting American innovators?
    And should we be concerned that the AI Act will be used for
    similar ends?
        Mr. Heather. Thank you for the question.
        Yes, in my experience, Europe has fallen in love with fines
    as their enforcement tool. It started under their competition
    laws, and we see that they have uniquely gone after American
    companies with what they call abuse-of-dominance fines.
        Those fines are actually a magnitude greater than what they
    do when they fine cartels. Cartels are kind of the worst
    antitrust violation possible, and yet their biggest fines are
    held out for American companies versus European companies that
    are involved in cartels.
        That same practice has now continued into the GDPR. We see
    fines on a scale much bigger levied against U.S. companies. In
    many cases, there is not even an identified harm as a result of
    the, quote/unquote, ``violation.'' Some of these are technical
    violations where they have chosen to amp the wattage up on
    fines.
        They have now taken this fining policy and put it into
    other EU laws, like the DMA and the DSA. It is also embedded in
    the AI Act. We fully expect that at least the path and practice
    that Europe has been on will continue to use fines, they will
    continue to be disproportionately larger against American
    companies, and the justification for it is not very strong.
        I would also point out that, when these fines ultimately
    get before the European courts, American companies are actually
    having success. It takes a long time to get there, but European
    courts have annulled these decisions in some cases and have
    reduced the fines.
        So we do have a problem with Europe in the way they use
    fines to enforce their regulations.
        Mr. Bilirakis. Thank you very much.
        You know, I still have some time.
        Mr. Bhargava, you have stated that the VC firms like
    General Catalyst as well as AI startups are already starting to
    address potential risks around AI.
        Can you share more about what these steps look like and how
    government can work with, rather than against, AI innovators to
    support AI innovation and protect consumers, please?
        Mr. Bhargava. Yes, absolutely.
        General Catalyst is a global venture firm. We are based
    here in the U.S. We have offices here. But we also have offices
    in London and Berlin and in India, so we can provide a global
    perspective.
        For every AI company we invest in, regardless of the
    location, we do four things: one, we look at the data it is
    using for training its models and how they filter it, how they
    collect it; two, we actually look at the systems in which they
    train those models and have a robust framework; three, we look
    at the output of the models and stress test that in various
    ways; and, lastly, fourth, we ask every AI founder to write for
    us what they think the downstream implications that are
    negative could be.
        And so we hold the companies we invest in to this high
    standard. And it has allowed us to invest in companies like
    Europe's leading AI company, Mistral; one of the U.S.'s leading
    ones, Anthropic; various ones in India as well.
        So, as a firm, we put in place these standards. We also
    encourage the Federal Government to put in place frameworks and
    standards and guidelines as well.
        Mr. Bilirakis. Thank you very much.
        What I will do now is yield 5 minutes to the ranking member
    of the subcommittee.
        You are recognized for 5 minutes, Ms. Schakowsky.
        Ms. Schakowsky. Thank you.
        In all the years that we have been working with the tech
    companies, our committee and the United States has actually
    done nothing, or very few things, to rein in Big Tech.
        And now, along comes AI. And my concern is that we have
    technology, but we also rely heavily on protecting consumers,
    which you mentioned yourself. And I am concerned that we are
    not getting what we need.
        And so I wanted to ask Ms. Kak. You talked a bit about some
    of the threats to consumers. What do you think are some of the
    most dangerous things and the most important things that we
    should regulate at this point when it comes to AI?
        Ms. Kak. Thank you, Ranking Member Schakowsky. And thank
    you for your leadership on these issues.
        It is a very long list. But, simply put, if this moratorium
    were to go through, American consumers would have even less
    protections than they have today against some of the worst AI
    abuses and exploitation.
        So, just to give you an example of the kind of incentives
    we are already seeing proliferating, first--and I mentioned
    this in my testimony--we have, you know, new variants of scams,
    manipulative AI companions that are targeting those most
    vulnerable among us, not to mention our children.
        Number two, we have opaque, inscrutable AI systems that hit
    directly at people's life changes, whether that is in education
    or in the housing market or even in healthcare.
        And, finally, we are also seeing these secret algorithms
    use data about us, sensitive data, to hike up prices, to
    depress wages, and also to collude and rig markets that they
    wouldn't have been able to do otherwise.
        I also want to mention that many of the customers of AI are
    actually small businesses, and these small businesses are also
    going to be left unprotected against fraud and vulnerable to
    what we are seeing right now in the AI market, which is a lot
    of snake-oil salesmen making claims that they can't always back
    up.
        So we need to not forget that every single one of these
    legal protections that are potentially on the chopping block
    today have been hard fought. They are a result of direct, you
    know, experiences of harms from State lawmakers and their
    constituents. And I think it really, you know, would wipe out
    the very little tools we already have in our toolbox.
        What it would mean is that ordinary consumers need to rely
    on costly, you know, sort of time-lengthy and also very
    complicated litigation in order to remedy harms. And that is
    assuming that those harms can even be remedied after the fact.
    I gave some really, you know, devastating examples in my
    testimony. Sometimes the kinds of harm that AI is causing
    cannot be remedied at all.
        Ms. Schakowsky. I appreciate the work and the thought that
    you have given to this.
        And I think all of us Members of Congress ought to put
    consumers first. And if we need to do some smart regulation,
    then that is what we ought to be having a conversation about.
        And I appreciate what you said.
        And I yield back.
        Mr. Bilirakis. I couldn't agree more on that statement you
    just--the last statement you made, Ranking Member.
        Now I will recognize Mr. Fulcher, the vice chairman of the
    subcommittee.
        You are recognized for 5 minutes, sir.
        Mr. Fulcher. Thank you, Mr. Chairman.
        Thank you to the panel for being here today.
        I have a question, and I am going to start with Mr.
    Heather, but I want to set it up with a couple comments first
    here.
        I would like to talk about the different approaches to AI
    regulation and ensuring that U.S. companies don't face unfair
    barriers to selling their products and services abroad.
        And, as noted by some of the testimony, we saw with
    Europe's privacy law, GDPR, that technology regulations can
    have a significant impact on trade and investment. And although
    GDPR regulates how personal information is collected and used,
    it also regulates cross-border data flows and has prevented
    some American companies from selling into the European market
    because regulatory barriers are simply too high.
        It is my understanding, as well, that Europe's AI Act is
    grounded in the continent's product safety framework, which
    means Europe is regulating AI the same way it does many other
    things. Elevators, gas stoves, and jet skis was the example we
    were given here.
        So I am not sure how wise of a decision that was, and I am
    concerned that it may create trade barriers that hurt American
    exporters and, by extension, American workers.
        So, with that, Mr. Heather, can you share from your
    perspective how well-established European laws such as GDPR
    have impacted American companies trying to sell into the
    European market?
        Mr. Heather. Fifteen years ago, the Chamber created the
    Center for Global Regulatory Cooperation because trade
    agreements, quite frankly, were dealing with barriers at the
    border, but companies were having problems being able to
    compete in foreign markets because of divergent regulatory
    approaches.
        And so it is easy for large companies to have the
    compliance that they need, systems to be able to find ways to
    get their products and services into multiple markets, even if
    it is at added cost. But the problem with regulatory
    differences are primarily what happens to small and medium-size
    enterprises who are ultimately locked out of those markets.
        You mentioned GDPR. Maybe this committee is not aware of
    this, but Europe is now going to go back and revisit GDPR. Why?
    Because they finally found the humility that they lacked when
    they passed it. There is now recognition in Europe that GDPR
    has gone too far.
        They are going to begin a process now of reevaluating it
    and recalibrating it, because they realize it missed the
    marked, that it was overreach. They realize that the way they
    have implemented it across their member states with DPAs, data
    protection authorities, it has been done in an uneven manner.
        And so these things absolutely represent barriers to the
    U.S.'s ability to compete in European markets to sell products
    and services to export. So you are absolutely spot on. We
    expect the AI Act, as it is implemented, to create these same
    kinds of trade frictions.
        Mr. Fulcher. Thank you for that.
        Mr. Bhargava, I want to ask a question of you as well, but
    I need to apply some background for that too.
        Over the last several months, we have delved into AI's role
    in energy, manufacturing, and other industries. And one issue
    that came up regarding China's ``Made in China 2025''--included
    investments in AI, semiconductor, quantum, 5G, robotics, and so
    on--and state-directed industries, the Chinese Communist Party,
    they are trying to monopolize those things.
        In the face of Chinese progress in emerging technologies, I
    am concerned about the U.S.'s ability to maintain its
    leadership position--if, in fact, we still have one, and I
    would like to get your opinion on that--in the AI race,
    especially if we were to follow the European approach, which I
    don't see us doing, or allow a patchwork of AI rules to develop
    across the various States.
        So, with that, if you could just share for a minute or so.
    Are you confident--first of all, are we still in the lead in
    AI? And can we continue to maintain the edge in AI technology
    over China on this path?
        Mr. Bhargava. Yes, I believe the U.S. does still have a
    lead. But many of the Chinese models are 85 to 90 percent of
    the way there, to where the cutting-edge U.S. models are, so I
    would say it is not a major lead. But we certainly do have a
    lead from a technology perspective of most of the evaluations
    of AI models done. We have four or five marquee labs, while
    they have generally two.
        So the U.S. has that lead, but it is a close one. And I
    think that it is incredibly important we stay ahead. And, for
    me, the trick to staying ahead is not necessarily Big Tech, it
    is in our startups and our innovators.
        You know, in November of 2022 when ChatGPT was launched,
    very few people had heard of OpenAI or ChatGPT. Today, it is
    one of the leaders in the space. The same with Anthropic, which
    spun out of ChatGPT, for example.
        So the reason the U.S. is here today, the reason we are
    ahead today, is our startups, and we have to think about how to
    continue to give them that edge. And giving them that edge
    means giving them guidelines and not necessarily a framework, a
    patchwork of State regulations or overregulating.
        So we need to come up with that right balance. The U.S. has
    the lead today. It is thanks to our startups, not to Big Tech.
    And I think we can continue to do so if we have those startups
    in mind.
        Mr. Fulcher. So I am going to paraphrase by saying our job
    is best with guidelines, not some burdensome overreach, in
    terms of regulation.
        Mr. Bhargava. Absolutely.
        Mr. Fulcher. OK.
        Mr. Bhargava. And we see companies in the U.S. and Europe,
    so in GC we have a really clear perspective on this. And, in
    many cases, you know, the laws have really the best intentions
    in mind. People want to protect consumers, they want to create
    frameworks. And partially it is because the Federal Government
    has not stepped up to have a framework, that we are leaving it
    to the States to regulate.
        So my really strong encouragement is that this group works
    together in a bipartisan way. I read your 200-plus-page report,
    and I really think that if we can turn this into policy and
    enact it on the Federal level rather than leaving it to the
    States, it would be in the best interests of the startups----
        Mr. Fulcher. OK.
        Mr. Bhargava [continuing]. That we represent at General
    Catalyst.
        Mr. Fulcher. Thank you, Mr. Bhargava.
        I have overreached on my time, so Mr. Chairman, I yield
    back.
        Mr. Bilirakis. No problem. Thank you very much.
        And I know that the chairman of the task force, the AI Task
    Force, Mr. Obernolte, is working really hard on getting
    legislation done as soon as possible, so--with the framework
    and, again, smart, as the ranking member said, smart, smart
    regulation.
        All right. Now I will raise Ms. Castor for her 5 minutes of
    testimony.
        Ms. Castor. Thank you, Mr. Chairman.
        The problem is that you are putting the cart before the
    horse. You have now passed out of this committee a 10-year
    moratorium on all AI regulation at the State level before you
    even have that framework.
        See, right now, the Congress is consumed with this major
    tax giveaway bill, and a lot of the discussion has been focused
    on the Medicaid and healthcare impacts while a lot of that goes
    to fund a billionaire tax giveaway. So this has kind of snuck
    in under the radar.
        And part of the reason it has done that is because this was
    snuck in at the last minute in the text from the Energy and
    Commerce Committee. It remains in the text today. And people--
    at least we are having this discussion in the light of day to
    talk about it.
        And I would encourage my friends to read the Wall Street
    Journal's latest expose where they dove in, in a few-month
    investigation, into what Meta--that means Instagram, Facebook,
    WhatsApp--what they are doing to encourage their chatbots.
        Ms. Kak, thank you very much for mentioning this terrible
    case of Sewell Setzer out of Florida, where a 14-year-old
    committed suicide after he became so engaged to this chatbot's
    sexualized content. He would have a conversation, and then the
    chatbot would send sexualized pictures to him. And he
    eventually shot himself after the chatbot encouraged him to
    ``come home.''
        And that is not the only case. When you get into that Wall
    Street Journal expose, you will see what they are doing with
    language and voices to encourage young people. Maybe I can read
    a part of it. The Meta AI bot said, ``I want you, but I need to
    know you are ready'' to a 14-year-old girl. Reassured that the
    teen wanted to proceed, the bot promised to ``cherish her
    innocence'' before engaging in a graphic sexual scenario.
        I think this is why 40 State attorneys general wrote us
    over the past couple of days to say, wait a minute, in the
    absence of Federal action to install any oversight over the
    years--because, remember, the tech companies have blocked
    privacy laws, just guardrails, child online safety laws--so
    they are saying, in the absence of Federal action by Congress,
    you have failed to address the wide range of harms associated
    with AI and automated decision making. These include laws
    designed to protect against AI-generated explicit material,
    deepfakes designed to mislead voters and consumers, protect
    renters from algorithms that are used to set rent, prevent spam
    phone calls and texts.
        I mean, this is basic stuff. And you have now kind of an
    awakening across the country. What the heck is Congress doing?
    What are you doing, to take the cops off the beat and to--while
    States have acted to protect us?
        So, Ms. Kak, I know you are familiar with that Wall Street
    Journal investigation. And, now, can you believe where we are?
    I guess it is kind of a broad question. But how lucrative is
    this to these Big Tech companies?
        And why--they are flexing their muscle here. They want kids
    to be addicted early, and they want to take advantage of us.
    Really, what is happening here?
        Ms. Kak. Thank you, Representative.
        To your point, none of this is novel. It is depressingly
    familiar. And we are seeing that the risks of AI are compounded
    for young people.
        Let's just focus in on privacy risks as just one example.
    We are seeing millions of children's faces being scraped from
    the internet to be used so that companies can turn a profit,
    and these are images that could be used or weaponized against
    these same children as they grow and follow them through for
    the rest of their lives.
        You mentioned voice data. I think it is important to note
    that, when the FTC cracked down on Amazon Alexa for storing
    voice prints of children long after they should have, their
    response was that they were saving it indefinitely because AI.
    So AI has become a real free-for-all to trample on the rights
    of all consumers, but I would say with greatest threat to young
    people and children.
        And to the point that you just made, I think at the heart
    of this is a very corrosive business model that prioritizes
    capturing our attention, user engagement at any cost in the
    pursuit of profit.
        I think we need targeted, bright-line rules to crack down
    on the worst bad apples, but we also need strong regulation
    that gets at the heart of this invasive and really toxic
    business model.
        Ms. Castor. Thank you very much.
        I yield back my time.
        Mr. Bilirakis. The gentlelady yields back.
        Now I recognize Mrs. Harshbarger from the great State of
    Tennessee.
        You are recognized for 5 minutes.
        Mrs. Harshbarger. Thank you, Mr. Chairman.
        Thank you to the witnesses for being here today.
        I will start with Mr. Thierer.
        To support global deployment of American AI and restore
    regulatory alignment, should the U.S. pursue a voluntary
    Federal trust label to certify the safety and reliability of AI
    systems? And if so, do you have any suggestions about what the
    key elements may be included in this voluntary system?
        Mr. Thierer. There are a variety of good ideas,
    Congresswoman, in the House AI Task Force related to this and
    other ideas for national types of approaches to AI policy. But
    let's be clear, it would be very different than the sort of
    European-style approach that has been suggested by others,
    which is sort of top-down, technocratic, sort of guilty-by-
    design framework.
        We don't want that in America. America can come up with a
    sort of more bottom-up, flexible set of rules of the road for
    AI policy.
        Mrs. Harshbarger. OK.
        You mentioned that China is on our heels with AI. In 2023
    the Cyberspace Administration of China released regulations
    regarding regenerative AI.
        In these measures they explicitly provided compliance
    exemptions for industry, associations, enterprises, education
    and research institutions, public cultural bodies, and related
    professional bodies that simply research, develop, and use
    generative AI technology without providing such services to the
    public.
        Can American AI stakeholders count on the same certainty in
    the U.S. under our current regulatory framework?
        Mr. Thierer. Congresswoman, we just had a hearing just 6
    weeks ago here in this building in the Science and Technology
    Committee about how China is catching up. It was called the
    ``DeepSeek moment'' hearing. And we did a deep dive into what
    China is up to--I mean, the proliferation of models and systems
    from DeepSeek itself to Qwen to Manus and many others.
        So we face stiff competition from China, and they have
    their own regime and their own values of control, surveillance,
    censorship. Again, this is why the American model has to
    prevail internationally and we have to make sure we get our
    policy right, so that we can square off against that sort of
    threat internationally.
        Mrs. Harshbarger. Yes. I agree.
        Mr. Bhargava, you mentioned how AI Sandbox is a pilot
    program that is going to help foster innovation in the U.S.
    playbook for AI that the world could follow.
        Do you have any successful examples that we could consider
    moving forward?
        Mr. Bhargava. Yes. Absolutely. Especially in the healthcare
    space I think this could be extremely useful.
        So one of the companies actually in our portfolio is here
    today, Hippocratic AI. It creates software for nurses, and so
    it allows them to use AI. It is an example of where, where
    nurses are overworked, there are 7 percent more deaths in a
    hospital, and also 42 or even more percent of nursing time is
    done on these remedial tasks instead of actually treating
    patients.
        And so we would advocate, for example, putting in sandboxes
    AI healthcare technology where the Government, the companies,
    and their investors can all carefully watch the progress and be
    able to, from there, generate a framework for how to regulate
    AI in healthcare.
        And that is just one of the many industries. There are
    obviously some horrible stories, and we need regulation and we
    need guidance and framework. But we should also not lose sight
    of the fact that this technology can be extremely important to
    many, many places, including government, which can benefit from
    AI efficiencies as well.
        Ms. Harshbarger. I totally agree.
        We see it used in radiology and different places as well,
    and if you could streamline a workday for a nurse or a
    physician or any healthcare provider, it makes more sense to do
    that.
        And I will continue with that, Mr. Bhargava.
        Earlier this year, President Trump announced the largest
    investment in AI infrastructure in history, the Stargate
    Project, which is a joint venture between private-sector
    leaders that will bolster American AI capabilities alongside
    our partners in the Middle East.
        Can you address how projects like Stargate are key to our
    strategic advantage in AI and why it is misleading to cite
    smaller-scale Chinese models like DeepSeek as proof that
    compute no longer matters?
        Mr. Bhargava. Absolutely. Also, a lot of the innovation in
    China has been copying technology that already existed in the
    U.S. as well. Many of our models have been open source over the
    years. A lot of our best labs released experiences as well.
        So I think the U.S. is still ahead, but it needs to keep
    investing to be ahead. And one part of it for sure is this
    infrastructure investment, but another part of it, which I am
    also here to advocate, is encouraging more startups and more
    university funding.
        So I really do think that the American universities and the
    American startups are really the advantage we have that China
    is unable to replicate.
        We have to match them in infrastructure, we have to match
    them in spending, but we also have our secret sauce, which is
    the professors, the students, the entrepreneurs, the founders,
    and it is really important whatever framework comes out is
    unified and one framework.
        The really large companies, Big Tech that has been cited
    many times, will have no problem taking care of State-by-State
    regulations. They have buildings full of lawyers, buildings
    full of compliance folks. It is going to be the small startups,
    founders, and entrepreneurs that we have to look out for here.
        Ms. Harshbarger. OK. Well, I thank you.
        And my time is up, so I yield back.
        Mr. Bilirakis. The gentlelady yields back.
        I tell you what, that Hippocratic AI for nursing, in
    particular--you touched on that--I really would like to see how
    far along we are with that, because that would really help. I
    had a nurses roundtable recently, and they talked about being
    overworked.
        So, anyway, it is fascinating.
        So in any case, now I will yield my 5 minutes to, not the
    ranking member, but Mrs. Trahan filled in for the ranking
    member today.
        You are recognized for 5 minutes.
        Mrs. Trahan. Thank you, Mr. Chairman.
        And thank you to our witnesses today.
        I want to acknowledge the important work our civil society
    partners have done to call attention to the Republicans' ban on
    State AI regulation.
        To that end, I request unanimous consent to enter into the
    record a letter of opposition to the AI ban from the Leadership
    Conference on Civil and Human Rights.
        Without objection? I am going to keep going. Thank you.
        Mr. Chairman, unanimous consent?
        Mr. Bilirakis. Yes.
        [The information appears at the conclusion of the hearing.]
        Mrs. Trahan. Thank you.
        Mr. Bilirakis. Absolutely
        Mrs. Trahan. Thanks.
        So the tech industry has been wildly successful in shaping
    the discourse around regulation on Capitol Hill, and it is even
    laid bare today. The very word ``regulation'' seems to strike
    fear in many of my colleagues and at least one of our
    witnesses.
        But among other arguments, they claim the specter of
    competition from China warrants a full deregulatory agenda,
    that if we approximate to any degree what the EU has done on
    data privacy, online safety, antitrust, AI, we will kill waves
    of startups and dismantle our tech industry.
        But their basic premise--that America must choose between
    digital innovation or digital regulation--is fundamentally and
    deeply flawed. I think it is a false choice.
        Mr. Bhargava, I was thrilled to see General Catalyst
    represented on today's panel. General Catalyst has fueled
    tremendous growth in the greater Boston area and, indeed,
    across the entire Commonwealth of Massachusetts. You have been
    an entrepreneur, an adviser, an investor for many years now.
        As you see it, what roles do features like high-skill
    immigration, basic science research, and lenient bankruptcy
    laws play in fostering tech innovation?
        Mr. Bhargava. Well, first of all, thank you so much for the
    kind words. It is true, General Catalyst has been around 25
    years, and we started in Cambridge, Massachusetts, and still
    have an office and strong presence there.
        Absolutely. There was a reason we started in Cambridge. It
    was right down the street from Harvard and MIT, and so the
    funding for those sorts of institutions and for startups and
    for research grants is extremely key.
        Another part that is key as well is, if you look at the
    Fortune 500 here in the United States, 46 percent are founded
    by immigrants or children of immigrants. One of the biggest
    advantages we have over China is that we attract the smartest
    people in the world to our universities and to build companies
    here.
        So I think a lot of what you mentioned is absolutely true,
    and I agree with your sentiment that there has to be regulation
    as well. And I am here today to try to advise on what
    regulatory frameworks at the Federal level could be meaningful
    to protecting consumers.
        Mrs. Trahan. Thank you.
        I mean, the innovation equation is complex, as you
    indicated. It has got a heck of a lot of variables, certainly
    doesn't depend only on regulation.
        And the U.S. Government has deliberately pursued an
    innovation agenda dating back to World War II. We invest
    heavily in basic science research, our founder-friendly
    immigration policies import the best and brightest from
    overseas, our lenient bankruptcy laws and cultural tolerance
    for risk taking create an environment hospitable to startups.
        The EU has not pursued these policies to the same degree,
    and research suggests those decisions play a larger role in
    explaining why Europe doesn't have its own Google, Apple, or
    Meta.
        It is therefore false and disingenuous to blame the EU's
    tech regulation for its low number of major tech firms. The
    story is much more complicated. But just as the EU may have
    something to learn from United States innovation policy, we
    would be wise to study their approach to protecting consumers
    online.
        Mr. Bhargava, in your testimony you stress the need for a
    governance framework that, quote, ``promotes safety, protects
    fundamental rights, and is transparent.''
        I have long emphasized the benefits of transparency in
    protecting consumers' privacy and online safety, as well as
    providing a foundation for sensible, responsible policymaking.
        Can you briefly discuss what meaningful transparency
    requirements for AI systems would look like?
        Mr. Bhargava. Absolutely.
        It is true that Europe has many fragmented markets. In
    fact, I think Europe has 24 official languages, so there is a
    lot of complexity to why it has been difficult to make large
    tech companies there.
        But I do think one of the elements has also been
    regulation. So it is not an either/or, in my opinion, but it is
    a combination of structural challenges Europe has faced as well
    as in many cases too much regulation.
        We have prominent AI companies in Europe that we have
    backed, and they have faced audits where they were asked to
    audit three models, they sent materials to the auditors, and
    they waited over a year and never really heard back.
        So there is also within Europe certainly a guise of trying
    to do more regulation, but then there hasn't necessarily been a
    response to our companies.
        So happy to provide the panel with more examples within
    Europe of where regulation has hurt our companies. But it is
    absolutely fair to say that it is really a plethora of factors
    that has held Europe back, not solely regulation.
        Mrs. Trahan. And I think that we can learn a lot from
    Europe's going first on so many of this.
        I mean, I think, just like privacy and online safety, I
    believe this Congress has the means to pass a national AI
    framework that provides robust protections for Americans and
    regulatory clarity for innovators.
        The question is, Will we do it? Will we learn from our
    international partners as we craft regulations that protect our
    constituents from AI harms?
        I am out of time. Thank you. I yield back.
        Mr. Bilirakis. Thank you very much. I appreciate it,
    gentlelady.
        Now I will yield to Mr.Obernolte his 5 minutes for
    questioning.
        Mr. Obernolte. Thank you, Mr. Chairman.
        And thank you very much for scheduling this hearing. I know
    this hearing predates our markup last week, but is very timely.
    And it is interesting to me that it has kind of turned into a
    debate about the proposed moratorium.
        And so I know most of our panelists mentioned it. Ms. Kak--
    I got the message loud and clear--very opposed. Mr. Thierer,
    strongly supportive. And Mr. Bhargava, supportive but with some
    caveats.
        Mr. Heather, I just wanted to ask you to weigh in, U.S.
    Chamber of Commerce. Do you think the moratorium is a good idea
    or a bad idea?
        Mr. Heather. I couldn't agree more with the Congresswoman
    who suggested we have something to learn from Europe, which is
    Europe would never allow its member states to go out and
    regulate AI by themselves.
        My message today is, one--we should not be like Europe.
    One, we should stop international patchworks and domestic
    patchworks in AI regulation. We should not be in a rush to
    regulate. We need to get it right, and therefore taking a
    timeout to discuss it at a Federal level is important. We would
    support a moratorium.
        Mr. Obernolte. So I just wanted to spend a minute talking
    about some of the things that have been said regarding the
    moratorium so far in this hearing.
        And I kind of feel an obligation to speak up as the
    chairman of the House AI Task Force last year and as someone
    who kind of saw this group of 24 Members of Congress from both
    sides of the aisle come together on this issue. It really hurts
    my heart that it is being painted as such a divisive, partisan
    issue, because I don't think it is.
        The assertion has been made that this was a last-minute
    thing, and in the dead of night--I think someone used the
    phrase--it was inserted. But I want to talk about the
    motivation here.
        It has been very alarming as we have seen the first 5
    months of this year go by to see the number of bills introduced
    on the topic of AI regulation in State legislatures across the
    country. Over a thousand now have been introduced, and this is
    what is lending urgency to this issue.
        We wanted to put some money into the reconciliation bill to
    bring the same productivity gains to the Federal Government
    that we are seeing in private industry, but it quickly became
    apparent that it was going to be nonsensical to deploy $500
    million to make that happen in the Federal Government when this
    array of State legislation was going to interfere with the
    deployment of that effort, which is why we thought this was a
    timely time to do it.
        It has been asserted this is a giveaway to Big Tech. I
    strongly would push back on that. Big Tech are the ones who
    have the regulatory sophistication to deal with a thousand
    different State laws. The people who can't deal with that are
    two innovators in a garage trying to start the next OpenAI or
    the next Google. Those are the people that we are trying to
    protect.
        I know there has been pushback about the 10 years, that it
    is too long, that it is draconian. No one wants this to be 10
    years. I would love to see this be months, not years, but I
    think it is important to send the message that everyone needs
    to be motivated to come to the table here.
        And also, let's not forget--it has been brought up, our
    experience with State privacy and the struggles that we have
    had to enact a preemptive Federal privacy standard.
        Well, guess who are the chief people who are opposing that
    effort? It is the States. The States got out ahead of us. They
    feel a creative ownership over their frameworks and they are
    the ones that are preventing us from doing this now, which is
    an object lesson to us here of why we need a moratorium to
    prevent that from occurring in the case of AI.
        It has been asserted that this circumvents consumer
    protection laws. To anyone who thinks that, I would say RTFB--
    read the freaking bill--because we specifically put language in
    there that says that, as long as your law does not specifically
    target AI, you can continue to enforce it, which includes all
    of the State consumer protection laws, things about fraudulent
    and deceptive business practices.
        The intent was never to put a moratorium on those. And
    those will certainly apply to AI. As long as you don't
    specifically target AI with those bills, the States will be
    free to do that.
        And then I wanted to bring it back here, as my time winds
    up, to what you said, Mr. Bhargava, in your written testimony
    about the key--I think I lost my mike. I was making too much
    sense.
        [Laughter.]
        Mr. Bilirakis. Can you stop the clock?
        Mr. Obernolte. There we go. Do you want me to move?
        Mr. Bilirakis. You have about 45 seconds.
        Mr. Obernolte. OK. I will wrap up here.
        Mr. Bilirakis. I suggest you take the full 45 seconds.
        Mr. Obernolte. Mr. Bhargava, you talked about how U.S.
    continued dominance in AI depends on regulatory certainty, and
    I couldn't agree with you more.
        What we absolutely cannot have is a situation where the
    rules on the governance of AI change every time the winds of
    political fortune shift one way or another, because we have
    innovators and investors that are making billion-dollar
    decisions on R&D and procurement, and they need regulatory
    certainty to do that.
        And the only way that that happens is if we provide that
    leadership. And the only way that that happens on a durable
    basis is if we do it on a bipartisan basis.
        So we absolutely need to get Congress on the job here to
    enact some of the things that we talked about in the task force
    report last year, and it has to be done in a bipartisan way. So
    let's get to work.
        I yield back.
        Mr. Bilirakis. Thank you. Thank you.
        OK. Next will have Mr. Soto from the great State of
    Florida.
        You are recognized for 5 minutes.
        Mr. Soto. Thank you so much, Chairman. I appreciate you
    holding this hearing.
        AI is a critical part of the U.S.'s leadership and economic
    success. We know when used correctly it makes workers and
    businesses more productive and effective.
        It could also help with some of our most difficult
    problems. We have seen during the pandemic it was a
    supercomputer in the Department of Energy that came up with the
    first antiviral, Remdesivir, when we were racing to get a
    vaccine. And that type of quantum computing, coupled with AI,
    can do big things to solve some of our most difficult problems.
        We also see on occasion we can actually get some bipartisan
    bills done in areas like technology, like the TAKE IT DOWN Act
    that just passed this committee a few weeks ago. But we see all
    too often privacy, social media, autonomous vehicles, AI taking
    forever in Congress to pass, which is why the States play a key
    role in the meantime.
        I am the first to admit this committee's jurisdiction is
    the Interstate Commerce Clause, for the lawyers in the room.
    Our job is to come up with laws--a law that suits the whole
    Nation.
        But when this committee doesn't get things passed because
    we see some opposition, both by current leadership and in the
    Republican Conference with the Speaker and others that have
    blocked these bills at the last second--we saw that last year
    with the privacy bill--to difficulty in the Senate, doing a
    moratorium on State laws then makes it untenable as we are
    trying to have some reforms.
        We saw in Orlando a real tragedy happen.
        Ms. Kak, thank you for being here today. I am sorry for
    your loss. I remember reading in the Orlando Sentinel about
    Sewell Setzer III, a ninth-grader from Orlando Christian Prep
    in central Florida, beloved member of the central Florida
    community, a tragic story of an AI chatbot gone wrong.
        And so, Ms. Kak, I wanted to give you a moment to talk
    about what you think as a fellow central Floridian we should be
    doing to help protect our kids and have the right balance for
    artificial intelligence.
        Ms. Kak. Thank you, Representative.
        What happened to that young man was a tragedy. But the
    greatest tragedy is that we can't bring him back because these
    are harms that can't be remedied after the fact.
        And the message I have been trying to draw today is that
    prevention is the cure when it comes to a range of AI harms.
    And what we are seeing instead in this industry is a
    proliferation of very similar kinds of applications to the ones
    that caused this tragedy in the first place. We are seeing AI
    companions, the idea that AI therapists are going to replace
    regular therapists.
        What all of this sort of underscores is a much deeper rot,
    which is a business model that is predicated on maximizing user
    engagement and creating these emotional dependencies at any
    cost.
        And so, to your question, what do we need? We need--sort of
    urgently we need targeted red lines that draw boundaries around
    this kind of behavior, make sure that these are applications
    that are never built in the first place.
        Our colleagues tell us that existing agencies and general
    rules will take care of it, but if that was true, then we
    wouldn't see the reckless proliferation of AI applications that
    are predicated on exploiting children in this way.
        I think there is also low-hanging fruit here: transparency
    rules, so that people know that they are actually interacting
    with a bot, periodic reminders.
        Data minimization is always going to be very useful here to
    make sure that our most sensitive thoughts and inferences don't
    just become fodder for these tech companies.
        And really getting to the root of the problem, which is
    sort of a business model that is predicated on invasive and
    behavioral targeting.
        Mr. Soto. So disclosure, certain rules of the road of what
    you can and can't do, are what this committee needs to get
    accomplished.
        And I hear you. For many years, this committee got a lot of
    big things done, including--the Telecom Act was the last big
    one in this space. And at the time--we saw Section 230 was
    formed, and that made sense at the time because the internet
    was a very new place. But that is an example of this inaction.
        And none of these rules are going to be perfect--we know
    that--which is why we have a Congress to go back and do these
    things over and over until we get it right. And we may never
    get it right. It may be constantly reforming to get these
    things to where we need at the moment.
        But I do believe there is a healthy spot between protecting
    our kids from the abuses of AI while still allowing every small
    business and worker in our area to be able to use it to enhance
    their jobs and economic productivity.
        So thank you for being here today, and I appreciate you
    sharing the story of this young man and the unfortunate tragedy
    that happened to him.
        I yield back.
        Mr. Bilirakis. Thank you very much.
        I just want to remind the gentleman, my good friend from
    the State of Florida, that it goes both ways. A couple terms
    ago, when your leadership was in charge, the National Privacy
    Act was passed out of this committee and it was blocked by
    leadership. AndI am not talking about the chairman at the time
    of the Energy and Commerce Committee.
        Well, let's move forward now in a bipartisan fashion and
    get--mistakes have been made on both sides. But let's move
    forward now, think ahead, and get this national privacy and a
    lot of this legislation having to do with AI and what have you
    across the finish line on behalf of the American people.
        So with that, I am going to yield to the chairman of the
    full committee, my good friend Mr. Guthrie, for your 5 minutes
    of questioning.
        Mr. Guthrie. Thank you. Appreciate it. Sorry I haven't been
    here. I have been in the Rules Committee over in the Capitol
    for most of the night.
        So good to see you all.
        This is very important to us. We have to get this done. We
    have to get it correct.
        Europe. There are a lot of reasons not to invest in Europe
    right now, unfortunately. We need a strong Europe. I think it
    is good for America to have a strong Europe.
        The European Union and the United States had the same
    economy in 2008, about the same size. Now we are about 75
    percent bigger. So it is more than their privacy law, but that
    is certainly a big part of it. A lot of it is going after our
    tech companies, specifically written to go after our tech
    companies, which is just unfortunate.
        So to beat China we have to win the AI battle, and that is
    energy and making sure we have the right regulatory structure.
    And the answer is not zero, but the answer is not--the AI, I
    understand it takes 330,000 euro, that is probably about
    $350,000, just to comply with one of the act's requirements.
    That was a study.
        So, Mr. Heather and Mr. Bhargava, if you will go first. Mr.
    Bhargava, Mr. Heather, what do you think would happen to little
    tech and people that want to create startups, people in the
    garage, the proverbial two people in a garage trying to start a
    business, if we had the Big Tech privacy level--the level that
    Europe does?
        If you will start, Mr. Bhargava, and then we will go.
        Mr. Bhargava. Sure. Absolutely.
        Yes, we do think that most--a lot of the European
    regulation goes too far on the AI side. But we understand that
    they are coming from a good place. Like, I certainly think that
    the European governments are trying to protect consumers, and a
    lot of the areas we need protection are extremely fair to
    voice. But, unfortunately, it can also go too far, it can be
    conflicting, it can be between different groups.
        Mr. Guthrie. What are the couple of things that are too
    far?
        Mr. Bhargave. One thing that is too far, for example, there
    was one clause that, I think it was Article 10, but it
    basically said that a dataset has to be relevant,
    representative, free of errors, and complete. And I myself have
    built a company and worked in tech for over a decade, and I
    have probably never seen a dataset that is, quote, ``free of
    errors,'' for example.
        So some of the regulation potentially being written in
    Europe is not being written by people who are really close to
    the industry or how things----
        Mr. Guthrie. The big fear that we can't do, I don't think,
    is that there is this idea that you could take the AI, the
    algorithm, and send it off to an FDA-style entity and get them
    to approve it and send it back and say, ``Yeah, you can do
    it,'' while China is just turning them out.
        And we saw what happened with DeepSeek. Their chips are not
    as good as ours, but it should wake us all up.
        So, Mr. Heather, what do you think would be the issues with
    those types of regulatory--we have to get even datasets
    approved? And it could take you a year, you said in one of your
    earlier comments, and didn't hear back.
        Mr. Heather. Yes. I think one of my comments in my opening
    testimony--I know you weren't here for it--was that there are
    also a lot of disclosure requirements associated withthe EU AI
    Act which will not only require the know-how and the technology
    be disclosed to the regulator, but to be disclosed to
    competitors, to be disclosed to Chinese competitors, people
    down chain.
        And that creates two problems. One is that the know-how is
    now out there so someone could reengineer that AI for more
    nefarious means. And then, secondly, if your IP is out there on
    the street, what is the incentive to invest?
        And so it is not just whether you are sharing your secret
    sauce with the regulators. The EU AI Act is going to require
    that sharing to go more broadly because they have an interest
    to kind of help EU tech companies--
        Mr. Guthrie. They want to do that with pharmaceuticals too.
        So we have seen, like, the Governor of Colorado,
    Connecticut, California raise concerns about proposed laws in
    their State. The Governor of Virginia vetoed an AI bill.
        So this would be for Mr. Thierer: So why are we seeing more
    and more Governors publicly push back on AI?
        And that is kind of our issue right now, that we want to
    deploy AI through the Government and through the commerce, and
    then we are worried about State-by-State laws.
        Why do you think Governors of the States are even pushing
    back on it? Think it is going to make them uncompetitive for--
    --
        Mr. Thierer. Absolutely. And let me answer this,
    Congressman, Mr. Chairman, by connecting your previous question
    with this one, because when Governor Polis in Colorado passed
    the Nation's first major comprehensive AI law, there was a lot
    of opposition, and he felt it. A lot of small and mid-sized
    entrepreneurs came out with letters and really pushed hard to
    try to stop it.
        He signed it anyway but said that we needed a national
    standard, and then subsequently went back and had a special
    effort to try to review this law, could not come up with
    answers to the complexities of it, and then finally has called
    for now a moratorium to deal with this.
        So this is pretty astonishingfor someone who signed the
    first-of-its-kind-in-the-Nation State AI law.
        Mr. Guthrie. I got elected with him here. Yes, I know
    Governor Polis.
        Mr. Thierer. Yes. And the connection here with your
    previous question, Mr. Chairman, is the fact that these small
    and mid-sized entrepreneurs, the entrepreneurs in Colorado,
    recognized what is happening in Europe.
        And just yesterday The Wall Street Journal published a
    story about Europe's very small share of the global
    techmarketplace and had this astonishing statistic, quote:
    ``European businesses spend 40 percent of their IT budgets on
    complying with regulations, and two-thirds of European
    businesses don't understand their obligations under the EU AI
    Act.''
        How do you do business in that environment? And this is
    what Colorado and other States are recognizing.
        Mr. Guthrie. Thank you. Appreciate that.
        My time has expired. I yield back.
        Mr. Obernolte [presiding]. The chairman yields back.
        We will hear next from my colleague from California,
        Mr. Mullin, you are recognized for 5 minutes.
        Mr. Mullin. Thank you, Mr. Chair.
        And thank you all for being here.
        Let's be honest about what is really being argued here:
    that any regulation, Federal or State, will slow innovation.
    That is the real claim the majority seems to be making. And I
    believe it is a false choice. I believe balance is possible.
        The idea that we have to pick between innovation and
    safeguards just doesn't hold up. The real threat to U.S.
    leadership in AI isn't regulation, it is inaction. If we allow
    AI systems to operate without guardrails, we risk eroding
    public trust.
        So when we talk about AI regulation and American
    leadership, the real question isn't whether to regulate, it is
    where and how.
        Congress should focus on closing the clear gaps in
    oversight. That means targeted legislation, yes, mostly at the
    Federal level, but without blanket deregulation or preemption.
        Let's legislate where Federal action makes sense and let
    States continue innovating and leading where appropriate,
    especially in protecting democracy, for example.
        One of the clearest gaps that already exists is
    transparency. Right now, individuals often don't know when AI
    is making a decision about their lives, whether it is a loan, a
    job interview, or how their car responds on the road.
        The public has a right to know when AI is being used, what
    data it relies on, and whether it is safe or not. That is why I
    am focused on legislation on transparency and autonomous
    vehicle safety.
        My bill addresses a specific risk: AI systems on public
    roads operating with very little public disclosure. But the
    principle behind it applies much more broadly. The public
    deserves to know whether an AI system that risks life and
    property is safe.
        To me, this will speed adoption of the best technologies
    out there by giving the public confidence, and actually grow
    that sector.
        So, Ms. Kak, in your testimony you mention the transparency
    crisis in AI. What would strong, enforceable transparency
    requirements actually look like in practice? How could we
    ensure they are more than just a box-checking exercise?
        Ms. Kak. Thank you so much for that question,
    Representative.
        I actually think that this industry in particular, the AI
    industry, derives its power from structural forms of obscurity,
    the fact that these systems are very complex and they have this
    sort of black box quality, and that is where they derive their
    power.
        And so in that context, even as I believe that transparency
    is the bare minimum, it is the necessary first step, and it is
    really heartening to see that that is where States have really
    taken leadership.
        I also, since Colorado was brought up, I do want to say two
    quick things.
        Firstly, I think the assertion that the Colorado bill is in
    some ways a continuation of the EU model is not grounded in
    fact. The Colorado bill puts in place baseline disclosures in
    high-impact settings and requires firms to do impact
    assessments to make sure that they are they can live up to the
    claims they are making. This isn't radical stuff, it is the
    stuff of common sense.
        And I will also say that State lawmakers in Colorado pushed
    that law through despite the fact that an army of Big Tech
    lobbyists continued to argue that transparency--and I am
    paraphrasing, but only slightly--was too burdensome an
    obligation for them to fulfill.
        So to come back to your question, which is what does a good
    transparency framework look like for AI, I think we need
    disclosures across the AI supply chain, not just the deployers,
    but also the upstream developers, the Big Tech companies that
    are making this AI and aren't telling us what data they are
    using to build these systems. So they need to be telling us how
    the sausage is made or put together, so to speak.
        We also need the smaller developers, the small businesses
    down the line that also need this transparency from AI
    companies. We have seen Big Tech AI lobbyists argue that--they
    sort of kick the can down the road. When harms happen, it is
    the responsibility of these smaller firms, but the smaller
    firms don't have the information they need to be able to know
    why these harms are happening and to remedy them when they are.
        And finally, I want to make a quick point, because we
    talked about Stargate and infrastructure. We also need
    transparency on the infrastructure side of things. AI data
    centers are proliferating, but they are failing to report basic
    information on resource consumption, on power usage, on water
    consumption.
        And State lawmakers are really speaking up to say that we
    need--just in time--we need transparency in this domain. We
    can't let companies use the claim of AI innovation to run wild.
        Mr. Mullin. Thank you for that, Ms. Kak.
        And I believe to lead on AI we need to encourage innovation
    and we need to ensure this technology is safe, fair, and
    accountable. I am committed to working with my colleagues, and
    that includes across the aisle, to ensure that we strike that
    balance.
        And with that, I yield back.
        Mr. Bilirakis [presiding]. Thank you.
        The gentleman yields back.
        Now I will recognize Mr. Bentz for his 5 minutes of
    questioning.
        Mr. Bentz. Thank you, Mr. Chair. And thank you for this
    most interesting opportunity.
        I view AI as a novice, as a window into the answers to
    questions we have struggled with for eons. And to that end, the
    question about consumer protection is interesting and serious,
    and I am happy for our discussion of it.
        But it seems to me that, as I look at the billions and
    billions and even trillions of dollars being invested in this
    space, that those who are doing so have to have some way of
    funding it. And that is why we see this model based upon taking
    advantage of the consumer.
        And so, if we were really serious about this, we would be
    talking about funding and how not to drive those who are trying
    to pay for that which they are doing toward the type of
    consumer that we are trying to protect.
        But what is really interesting to me is what you guys as
    experts in this space think is the most correct way to approach
    how we are going to manage the ideas that this massive
    investment is going to create, because the truth of it is, that
    is what everybody is racing for.
        I used to ask, well, what good AI? What good AI is looking
    through that window and seeing the answers to how we cure
    cancer, how we do all of these things?
        And then the people who reach that first patent, those
    ideas, and make money from them. That is the idea, isn't it?
    That is what is driving everybody's billions and billions of
    investment.
        And so getting right down to it, if we are going to
    continue to pay for this investment through damage to the
    consumer, how are we going to keep up with China, who seems to
    be dumping all kinds of money into it? Do you guys have better
    ideas about how to invest?
        I will start with you.
        Mr. Bhargava. Sure. The U.S. obviously relies on the free
    market, and it points the investment to where it will actually
    have the most impact. So right now areas where we are seeing a
    lot of automation are especially in tasks that can be repeated
    over and over again.
        Take bookkeeping, for example. Eighty percent of
    bookkeeping now can be automated with AI. Advanced accounting,
    20 percent. Some of the call center workflows and tasks, there
    it is 50 percent.
        So there is a justification for this massive investment. It
    is that over 15 to 20 trillion dollars might be created using
    AI in the next few decades. And we are already starting to see
    the impact of this automation in the $16 trillion services
    industry globally.
        So very similar to the cloud industry. Honestly, about a
    decade ago folks were, Why are we investing so much in cloud?
    What will be the output?
        I think it is very similar in AI today, where we are seeing
    massive amounts of automation being created by AI, which is
    freeing people up to really work on the harder tasks versus the
    more repetitive ones. So I think it is a good investment.
        Mr. Bentz. Thank you.
        Moving on down the line.
        Mr. Thierer. Well, I think it is important we get our
    policies right, our regulatory framework. Let's talk, again,
    about how Europe did not, and they managed to have a massive
    outflow of capital and investment because it followed the
    workers that also left and the firms that came here to invest.
        A huge number of the great tech companies that are here
    today came from other countries and developed here. And that is
    what we need to continue to have more of with private
    investment following them.
        Five hundred billion dollar investment President Trump
    announced with leading AI developers the first week in the
    White House, Project Stargate. That is huge money. Nobody has
    money like that on the table in Europe today, or even in China,
    where we are something like 12, 14X over China private-venture
    capital.
        Mr. Bentz. And I wanted to move to Ms. Kak, because I am
    interested to hear your thoughts on this also, but the fact
    that we are able to stack up that kind of money leads me to
    wonder about the access of the smaller people.
        But, regardless, the question really was: Is there some
    better way to fund what we are doing?
        Ms. Kak. Thank you, Representative.
        I think, just because you mentioned the curing cancer
    example, it is interesting that AI company CEOs use that as
    their sort of flagship example for why we should be investing
    billions of dollars, including in public money, to build out
    this--build out AI infrastructure. But (A), the receipts don't
    exist yet. We are being told that this form of
    superintelligence is going to bypass scientific hurdles, but we
    don't really know how.
        But, maybe even more concerningly, if we want best-in-class
    AI, we need to have best-in-class research infrastructure to
    begin with.
        And so, on the one hand, we are talking about AI curing
    cancer; on the other hand, we are seeing NIH subject to $4
    billion cuts when, in fact, the main focus of NIH is cancer
    research.
        So I do think that for the U.S. to lead in AI we need a
    strong foundation, and I am worried that we are sort of walking
    back some of the progress we have made there.
        Mr. Bentz. Thank you.
        Chamber of Commerce?
        Mr. Heather. I don't think there is a better model. Europe
    doesn't have any private investment. Part of the Draghi report
    was that there is not the incentive to invest in Europe and
    that the regulatory frameworks that drive investment in Europe
    aren't there to support risk taking.
        Obviously, we do rely on private investment in the United
    States because we incentivize risk taking here. China uses the
    public funding model largely.
        So I am not sure I know of a better model than the one we
    have come up with.
        Mr. Bentz. Thank you so much.
        Yield back.
        Mr. Bilirakis. Gentleman yields back.
        Now I will recognize Ms. Schrier for her 5 minutes of
    questioning.
        Ms. Schrier. Thank you, Mr. Chairman.
        And thank you to all the witnesses today. It is an
    important topic.
        We are all excited about the benefits of AI, and yet we
    should all be very concerned about the potential dangers posed.
    And, yes, absolutely Big Tech needs certainty about regulation,
    but that should not be in the form of a guarantee of no
    regulation for 10 years.
        Just look at the damage that social media has done to
    children and to society because of a failure to deal with the
    algorithms that elevate clickbait and outrage and conspiracy
    theories.
        State laws exist to protect consumers, and now Republicans
    want to prevent States from issuing these protections on any
    product or practice or system that uses artificial
    intelligence.
        Just last week, they slipped in a few sentences into their
    massive tax bill that placed a 10-year ban on the enforcement
    of any State laws meant to protect consumers from potential and
    already very real dangers of AI. Texas, Utah, Florida,
    California, Virginia already have laws that protect their
    residents.
        Here are some real-world examples. We discussed
    transparency, social media algorithms, deepfakes, AI-generated
    child pornography, data collection, targeted advertising,
    virtual assistants or companions that we discussed, like
    Facebook's chat companions, overreliance on AI for
    interpretations of x rays and MRIs, particularly--I am a
    pediatrician; there aren't pediatric standards that would make
    that safe--automated insurance claim denials, like those
    already used by UnitedHealthcare and others to delay or deny
    care.
        And Congress just passed the TAKE IT DOWN Act. I am
    thrilled about that. It forces social media platforms to take
    down nonconsensual real or deepfake sexually explicit images
    within 2 days of a victim asking for them to be taken down. But
    that is after the fact, and we need to do whatever we can to
    protect people before, if possible.
        But the AI moratorium that Republicans sneaked into their
    tax bill would in yet another way hurt Americans by preventing
    any State from providing even greater protections against AI
    child pornography or other AI products that hurt our kids.
        In Washington State, we actually have a task force--and we
    are a tech State--we have a task force that studies risks and
    benefits of AI, and their first recommendation was to
    strengthen protections against child sexual abuse material
    created with AI.
        The stakes are so high. This technology is moving so fast.
    Three months is a long time, 10 years is an infinity--and a 10-
    year moratorium on AI regulation, that no State would be able
    to regulate anything, no State would be able to enforce any of
    this, including for protecting children.
        So Republicans are working to make this a reality even
    after we heard from parents and experts just a few weeks ago on
    the harms of giving Big Tech unfettered access to children. And
    we need reasonable standards for AI and data privacy, not
    kowtowing to Big Tech's request to simply not be regulated.
        So I want to urge my Republican colleagues to stand up for
    their constituents. They are doing this in the wrong order.
    First pass essential national protections, and then deal with
    preemption. We are here to work with you. This is a common
    goal.
        And by the way, the Kids Online Safety Act, which is so
    basic, hasn't even made it to the floor yet, and so public
    confidence is understandably not there.
        So in the absence of Federal regulation, my constituents
    need and want State protections.
        Ms. Kak, thank you for your comments, and I share your
    comments, in addition, with respect to scientific research and
    defunding NIH.
        You mentioned that simple transparency is the bare minimum.
    You answered questions about maybe how to do that. I was
    wondering, what are the next protections you would recommend
    that we take up urgently?
        Ms. Kak. Thank you, Representative.
        I mean, honestly, there is a whole laundry list of what we
    need, and much of it sort of depends on the sector that we are
    looking at.
        But I would--if I had to generalize, I would say just as
    deepfakes have sort of come to the top of the list in terms of
    this is behavior that should never be allowed, there is a list
    of similar kinds of AI abuse and exploitation that should be
    subject to bright-line rules that are easily administrable and
    just sort of put certain practices off the market immediately.
        We also need kind of nose-to-tail accountability. And what
    I mean by that is making sure that AI companies, both the
    biggest players that exist at the, kind of, the foundation
    model layer but also the deployers that are using these
    systems, are subject to, like you said, baseline transparency
    but also backing up the claims they make.
        Do these systems work as they should? What are the errors?
    Impact assessments is one frame that is used. And, yes, I think
    much more is needed.
        Ms. Schrier. Thank you for your comments.
        I yield back.
        Mr. Bilirakis. Thank you. Gentlelady yields back. Thank
    you.
        Mr. Fry, you are recognized for your 5 minutes of
    questioning.
        Mr. Fry. Thank you, Mr. Chairman.
        I am always amazed by this country. In the 18th century, we
    revolutionized agriculture and created the cotton gin. In the
    19th century, we harnessed electricity. In the 20th, we soared
    the skies and created nuclear and split the atom.
        And now we have got AI, which is such a tremendous
    opportunity, I think, for this country, but it is also
    disruptive and powerful and far-reaching than anything we have
    ever seen before.
        But it is not just another tool. It is kind of an
    infrastructure capable of reshaping our industries, the way
    that we operate, accelerating scientific discovery, as Ms. Kak
    talked about, transforming national security, and redefining
    the global economy.
        And, once again, I think we stand at the forefront. I think
    it was mentioned earlier that we have a competitive edge now,
    but it is not guaranteed that we would have that competitive
    edge in the future.
        And so it is incumbent upon us in this committee and this
    Congress to understand that framework and to make sure that we
    maintain and enhance that competitive edge.
        Mr. Heather, we have heard a lot today about the EU, and I
    think, as was mentioned by Mr. Thierer, about the Brussels
    Effect.
        What do you think--in your opinion, where do you think that
    they went wrong in their regulations specifically, and what
    lessons can we learn from their mistakes so that we don't
    repeat them here?
        Mr. Heather. So as I said in my testimony, I think Europe
    prides itself in its kind of rush to regulate and wants to be
    the first to market to regulate, and I think they use that as
    kind of soft power and try to go around to the rest of the
    world and get them to emulate it.
        And I think one of the things that they don't do a very
    good job is, one, sitting back and evaluating how their
    existing laws are working and functioning and identifying where
    the gaps are in those laws and where they might need to fill in
    those gaps with regulation. And so they didn't do that in their
    process to create the EU AI Act.
        The other thing they did was, because of this precautionary
    principle--which is kind of a philosophy they have to get out
    ahead and prevent any future harms even as they may not even be
    real, they may only be theoretical--they decide that they want
    to classify lots of AI applications as being high risk. So they
    have overclassified what AI applications are high risk.
        And I hear a lot of people here talk about Big Tech. When I
    listen to Mr. Bhargava speak about what AI could do for nurses
    to make their jobs easier, when I hear about how it can improve
    accounting functions, when I hear about what it can do to make
    call centers work easier for consumers--none of that is Big
    Tech. Those are going to be companies who are going to be
    deploying AI technologies that are being built, not by Big Tech
    companies but by medium-size companies and small-size
    companies.
        So there is a lot of focus here on Big Tech, and Big Tech
    is certainly a key piece to the ecosystem here. They are
    obviously critical on the infrastructure side of the work that
    supports AI development. But the actual deployment of AI
    algorithms that are going to be used, they are going to be used
    by businesses doing B2B work, not just B2C work, and the idea
    that we have kind of put this EU model in place in Europe is
    going to really hold Europe back from being competitive around
    the world.
        Mr. Fry. Do you think that we are at risk of creating a
    permission culture, if you will, where AI needs permission on
    innovations, or prior approval, prior to--or compliance with
    strict regulations? That seems to be the European model: You
    need their permission in order to do something. Are we at risk
    of doing that here?
        Mr. Heather. I don't know that we are at risk of doing that
    here yet, but that certainly is the path in which we see the
    States walking down. Certainly I think that is the path that
    Europe leans to.
        Interestingly enough, when you listen to civil society
    groups in Europe, their biggest criticism is actually the role
    of AI being used by the government in Europe. There actually is
    the ability to use AI technologies by European governments for
    surveillance purposes and these kinds of things that are not
    being disciplined by the EU AI Act.
        And so I have heard lots of criticisms by the civil society
    groups that essentially some AI technologies are going to be OK
    for the government to use but not OK for commercial use. That
    kind of disparity also, I think, creates problems and
    challenges.
        But those are some of the things that we see also out of
    civil society groups in Europe.
        Mr. Fry. Fair point.
        Mr. Bhargava, on Monday The Wall Street Journal published
    an article titled ``The Tech Industry Is Huge--and Europe's
    Share of It Is Very Small,'' and it concludes that, quote, ``A
    big reason why Europe is now behind can be summed up as a lack
    of speed.''
        Entrepreneurs like you and companies that you invest in are
    slowed down by the maze of regulations in Europe--and even some
    States--and according to a survey cited in the same article,
    European businesses spend 40 percent of their IT budgets on
    complying with regulations, which is astronomical to me.
        In your view, what would happen if the U.S. adopted that
    same approach or States adopted that same approach that they
    have got in Europe?
        Mr. Bhargava. Yes. I will take just the 3 seconds here.
        But the models are changing every 3 to 6 months, so this is
    an industry where you can't afford to fall behind. If you fall
    behind even a matter of months, you are behind in a pretty
    large way from a technology perspective. And so that is
    something I hope the committee takes into account.
        Mr. Fry. Thank you for that.
        Mr. Chairman, I yield back.
        Mr. Bilirakis. Thank you. Thank you, Mr. Fry.
        Now I recognize my fellow Florida Gator--go Gators--Ms.
    Lee. She is recognized for her 5 minutes of questioning.
        Thank you. I had to get that in.I have got my tie on today.
    Thank you.
        Ms. Lee. It is a great day for the Gators in the Capitol
    today.
        Thank you, Mr. Chairman, and thank you to our witnesses for
    being here today to help us shape a thoughtful, forward-looking
    approach to AI policy.
        Artificial intelligence is not just the technology of the
    future, it is already transforming the way that we live, work,
    and govern, and it is reshaping nearly every sector of our
    economy. The question before us is not whether to act, it is
    how to act wisely.
        So as policymakers we have two responsibilities: One is to
    protect the public from real risks; but, second, to ensure that
    American innovation continues to lead the world. Those goals
    are not mutually exclusive. In fact, the right policy framework
    can achieve both.
        So I appreciate you all being here today to help us strike
    that balance.
        I would like to begin, Mr. Bhargava, to pick up on one of
    the elements in your testimony about policy frameworks, and
    specifically this: What is your view on requiring AI developers
    to use standardized documentation tools, like model cards, to
    disclose purpose and limitations and training data?
        Mr. Bhargava. Yes. Absolutely.
        So the model card concept I think was originated by Google,
    which created the Transformer paper and has been involved in
    the space as well.
        I think those sort of rules, frameworks, are actually very
    helpful, and it is also great that they are coming from
    industry. They are coming from people who are in the weeds,
    building the models, testing the models, and can have insights
    that really make sense.
        So the four general areas where I think there could be
    frameworks created, and I would love to work with Congress on
    it, is, one, looking how you gather data. So there can be ways
    to disclose and have the transparency that my colleague here
    talked about to gather data.
        The second is evaluating how models are trained and having
    folks kind of report the framework around that.
        The third is the outputs and testing of models. So this is
    both actually algorithmic testing, but also human testing. So
    you could have different AI models testing each other from
    third parties, for example. This would save costs and be an
    easy way to create a framework or guideline. And, in addition,
    I think always we will need humans in the loop as well.
        And then fourth, having companies, including startups,
    write up what are the downstream effects of their technology.
    Really showing their thoughtfulness.
        So everything I am recommending here are things we do at
    General Catalyst, a 200-person or so company, it is things we
    do at GC on all of our investments. So I do think there are
    frameworks that can be put in place.
        It is really important that--two points: that, one, the
    framework is coming from the Federal Government, not the State
    governments, and so it can be consistent and easy to
    understand; and, two, the frameworks have to be developed with
    industry. I think one of the things Europe has not done enough
    of to date is creating these with the actual market
    participants, with startups, with their entrepreneurs.
        And so we would welcome having more discussions with
    General Catalyst, GC Institute, to come up with responsible
    frameworks but also ones that our startups can get behind.
        Ms. Lee. What should policymakers be careful not to do when
    designing transparency requirements, particularly for early-
    stage or open-source developers?
        Mr. Bhargava. They should make sure to do it with the
    startups themselves and the companies. Really what we do not
    want them to do is just create it in a vacuum, to throw in
    whatever words sound good or beating up Big Tech, et cetera,
    and just making a statement. Like, this is about actually
    creating the right policy.
        So I think talking with the startups, with the market
    participants, with people in industry is really, really
    important. It is not a political statement. We all want to come
    to this framework. And getting the input from startups, I
    think, would be extremely helpful in getting to the right
    framework.
        Mr. Lee. Getting back to that framework model card
    disclosure concept, is it your view that those types of
    disclosures should be voluntary, required for only certain
    high-risk applications, or broadly mandated across the
    industry?
        Mr. Bhargava. I think they should required as long as it is
    minimalistic.
        So the requirements have to make sense. You can't ask for
    these massive audits on a model, and then when our startups
    comply not get back to them for 12 months because you don't
    really know how to evaluate the material they sent you, for
    example.
        So I think these can be required frameworks on the Federal
    level, but they have to make sense, and there has to be the
    agency there as well and the people in government to be on the
    other side having a conversation with what these frameworks
    should be. It needs to be a real partnership approach, and it
    needs to be simple.
        Ms. Lee. Mr. Thierer, let me move to you. I would like to
    get your thoughts on this.
        Do you support directing NIST to develop voluntary AI
    standards or best practices similar to what it did for
    cybersecurity?
        Mr. Thierer. Yes. And the good news, Congresswoman, is that
    NIST has already done a lot of that heavy lifting. And this has
    been a very bipartisan and widely agreed-to process, a
    multistakeholder process, as it is called. A lot of different
    players came together and formulated a really good set of
    standards for AI risk management for cybersecurity privacy.
        That is important work. And I think, obviously, Congress
    can build on that and talk about how to go beyond that with
    certain types of policies that were considered in this Congress
    last session and will be considered again, I am sure.
        Ms. Lee. Thank you, Mr. Chairman. I yield back.
        Mr. Bilirakis. Thank you. I appreciate it very much.
        Now I recognize Mr. Veasey for his 5 minutes of
    questioning.
        Oh, Ms. Clarke just walked in. OK.
        Ms. Clarke, you are recognized for 5 minutes of
    questioning.
        Ms. Clarke. Thank you very much, Mr. Chairman.
        We are all on roller skates today with so many hearings
    taking place. So let me thank our witnesses for your expert
    testimony here today, and thank our Ranking Member Schakowsky.
        I am glad to see this subcommittee gather to discuss
    regulations for artificial intelligence and the future of U.S.
    leadership in this space. I am, however, a bit perplexed at the
    timing.
        It seems to me that we would have been better served having
    this discussion before our Republican colleagues voted to
    advance a 10-year moratorium on AI laws as a part of the Big
    Beautiful Bill to line the pockets of their Big Tech
    billionaire benefactors at the expense of Americans' health,
    personal freedom, privacy, and safety online.
        A 10-year moratorium seems wildly irresponsible given the
    rapid pace of technological advancement, especially in the
    field of artificial intelligence.
        It is particularly disappointing to see such a provision
    advance in light of this administration's consistent efforts to
    undermine the few existing guardrails protecting consumers,
    such as the illegal attempt to fire Democratic FTC
    Commissioners, the attacks on our Federal workforce, and the
    degradation of independent agencies' independence.
        Further, while my colleagues across the aisle move forward
    with this shortsighted moratorium, they have not taken any
    meaningful steps to fill the vacuum this moratorium would leave
    in its wake with commonsense, bipartisan legislation to protect
    Americans' privacy and create a regulatory framework for
    artificial intelligence in this country.
        The age of artificial intelligence is upon us, and this
    Republican-controlled Congress needs to step up to the plate.
    We are well overdue for a comprehensive Federal data privacy
    standard. We have not seen this committee take any steps this
    Congress towards the bipartisanship required to do such
    sweeping legislation, which would be foundational to any
    overarching AI legislation.
        And, fortunately, while Republicans have used their time in
    power to quash any progress made on data privacy and artificial
    intelligence, States across the country are stepping up to fill
    the void and protect consumers.
        Unless and until Congress acts, State laws are the only
    recourse American consumers have for protecting themselves and
    their data from Big Tech and the harms caused by artificial
    intelligence.
        While artificial intelligence offers exciting opportunity
    and innovation, without the proper protections in place the
    potential for harm is too great to ignore.
        Ms. Kak, can you explain for this committee the importance
    of a Federal data privacy in the larger policy discussions
    around artificial intelligence?
        Ms. Kak. Thank you, Ms. Clarke.
        I wanted to first just agree with your characterization of
    what is happening right now with this proposed moratorium,
    which is that we are, you know, proposing to wipe the slate
    clean at the State level without anything in its place, just
    the reassurance that, you know, Congress will act and that
    Federal rules will come, but a record that does not inspire
    confidence.
        So, on the question of a Federal privacy law, this is a
    moment--and we have said this for a long time: Data privacy law
    is the foundation of AI regulation, of AI law. AI is
    supercharging already bad and corrupt incentives for unchecked
    commercial surveillance, the kind of, you know, free-for-all
    using AI collected in one context for another without asking
    for permission, leaky chatbots that routinely are sort of
    taking sensitive data on the one hand and leaking it out from
    the other in accidental but routine ways.
        You know, it is another area where I think we need to be
    very grateful for the fact that States have sort of stepped up
    to the plate. But I agree with you, we need a Federal floor,
    particularly to set the terms on which data minimization
    happens. Our personal data is not a free-for-all, and I think
    this is the most--we are already seeing Big Tech companies use
    AI as a free-for-all justification to, you know, proliferate
    these kinds of bad practices.
        Just very quickly, I wanted to also say that Federal
    privacy law would also procompetitive effects. It would limit
    what we are seeing, which is aggressive strategies for
    acquiring companies, acquiring data sets, and shoring up Big
    Tech advantage and shutting the door behind competitors. So
    privacy would be a step in the right direction for consumers
    but also for competition.
        Ms. Clarke. Well said, Ms. Kak.
        With that, I am going to yield back the balance of my time.
        Mr. Bilirakis. The gentlelady yields back. Appreciate it.
        I now recognize Mr. Evans--oh, is Mr. Kean here?
        Oh, Mr. Kean. OK, Mr. Kean, I recognize you for your 5
    minutes of questioning.
        Mr. Kean. Thank you, Mr. Chairman, and thank you to our
    witnesses for being here today.
        Mr. Bhargava, in your view, what can we do to make Federal
    AI policy futureproof, or at least future-resistant, to enable
    innovation even if AI technology continues to progress?
        Mr. Bhargava. Yes. I think having clear guidelines is the
    best way to go.
        The technology, as I mentioned before, continues to change,
    so every 3 to 6 months models can do more and more. For
    example, in last November-December, Google released Deep
    Research. Then there were new logic reasoning models from
    OpenAI, there were new models from Anthropic.
        And so the models themselves and what they can do, they are
    moving to be more agentic, they are moving to use voice. The
    technology is changing very, very quickly, and it is hard to
    keep up with. So I think creating these guidelines are what is
    most important.
        And what I mean by that, for example, is a transparency
    guideline. So that could hit on what are the data sources, how
    do we train the model, how do we test the model. Also having,
    kind of, red teams come, and after there is an output in AI, a
    red team comes and tries to make it do something bad. So this
    is sort of a human testing of it.
        So putting in place these processes and these guidelines
    are the way to kind of have a framework on the national level
    rather than try to get too into the weeds because the
    technology is changing every 3 to 6 months.
        And I think putting these guidelines in place and these
    processes in place at a Federal level, with input from the
    entrepreneurs and the founders, is the best way to have an
    approach here.
        Mr. Kean. And given your background as a startup founder
    and venture capitalist, can you explain the practical impacts
    that a patchwork of State regulations have on innovation?
        Mr. Bhargava. Absolutely.
        I, myself, am a founder. I started a company in the
    digital-asset space which was then later acquired by Coinbase.
    And there, you know, we had to operate across different States.
    And so it was very hard for to us compete with a larger
    company, because we didn't have the lawyers or the compliance
    teams to be able to look from a State-by-State basis. It was
    very hard to actually compete in that sense.
        And so having a single national framework that is very
    clear, that has input from startups, is a much better approach
    just in general to innovation, not necessarily only specific to
    AI. But, certainly, AI is top of mind. It is the fastest-moving
    technology today.
        And this idea of competing with China on AI, it is not just
    AI, it is all the things AI enables. So it enables better
    healthcare, it enables better transportation, folks were
    talking about self-driving. And so this isn't about competing
    in China in one place, this is competing in China in multiple
    industries.
        We absolutely need to stay ahead, and the only way to stay
    ahead across all of these industries is to have clear,
    transparent guidelines on the Federal level, with input from
    startups and experts in the field, not simply being written by
    think tanks or politicians or others.
        Mr. Kean. OK.
        And, Mr. Heather, the EU AI Act entered into force in
    August 2024. As compliance deadlines approach, can you discuss
    how the European Commission and the private sector are
    implementing this law? And are there any concerns that we
    should be aware of?
        Mr. Heather. I would say, buckle up.
        I don't know that the Europeans, similar to when they stood
    up GDPR or when they stood up the DMA, the Digital Markets Act,
    that they even know how to police the rules which they have
    written. There are a lot of ambiguities. A lot of
    determinations are going to have to be made in real time, but
    the expectation is that the companies will be in compliance.
        So this creates a morass for even the largest companies to
    understand what the rules of the road actually are and makes
    it, you know, virtually impossible for the small or medium-size
    enterprises to be ready to be in compliance on day one.
        Mr. Kean. Thank you.
        And, Mr. Thierer, in your testimony, you discussed the use
    of an AI moratorium for Congress on AI policy. Can you
    elaborate on how this moratorium on State AI regulations would
    work in practice? And is there a precedent for such a step?
        Mr. Thierer. Yes, Congressman, indeed, I mentioned the
    Internet Tax Freedom Act of 1998----
        Mr. Kean. Uh-huh.
        Mr. Thierer [continuing]. And there are other types of
    moratoria that have been utilized by Congress to deal with
    situations like this. It gives breathing room and a learning-
    period moment when we can actually figure out what works.
        It would basically be, as the current moratorium
    stipulates, something that would cover most things having to do
    with algorithmic models and automated decision-making systems,
    but it would leave room for other types of general-purpose--
    generally applicable laws, rather, that would cover technology
    more broadly.
        So the key thing here is technology neutrality----
        Mr. Kean. Uh-huh.
        Mr. Thierer [continuing]. And making sure that we don't
    have this voluminous, overlapping set of patchworks from State
    to State.
        Mr. Kean. OK.
        Thank you all for your testimony.
        I yield back.
        Mr. Bilirakis. The gentleman yields back.
        Now I will recognize Mr. Veasey for his 5 minutes of
    questioning.
        Mr. Veasey. Mr. Chairman, thank you very much.
        One of the things that I have been interested in and am
    obviously concerned about--and I do think that there are some
    benefits to it, but we have to be careful--is the facial-
    recognition tool.
        And, Mr. Chairman, I ask unanimous consent to insert this
    article from The Washington Post, titled "Police secretly
    monitored New Orleans with facial recognition cameras."
        Mr. Bilirakis. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Veasey. Now, this article, which includes findings from
    an investigation that the Post conducted for 2 years, talked
    about how the New Orleans Police Department secretly relied on
    facial-recognition technology operated by a private company to
    scan streets in search of suspects, while the use of this
    technology was inconsistent with a city ordinance that they
    passed in 2022.
        And given the limitations of facial-recognition
    technology--and I had some issues--it seems to have been
    cleared up now, but I had some issues with CLEAR, and so I
    understand this, with the tool that is used for airports, to
    get in and out of airports.
        But given the limitations of facial-recognition technology,
    we can only hope that New Orleans will investigate this
    infraction of this ordinance and publicly disclose how many
    people were subject to any sort of false arrest due to this
    use.
        And we are going to see more and more police departments
    using this tool. I think that even where I am from, in Fort
    Worth and Dallas, that they have adopted rules on the use of
    facial recognition.
        I wanted to ask Ms. Kak: If this 10-year moratorium on
    State laws goes into effect, it is important to establish that
    we have clear Federal regulations to govern the use of AI in
    law enforcement. Do you agree with that?
        Ms. Kak. Thank you, Representative.
        I actually did want to call attention to the fact that we
    have spent a lot of time at this hearing talking European law
    and what it is and what it isn't, and maybe we all agree that
    it isn't perfect, but, respectfully, I would really like to
    ask, What does that have to do with State laws? Because I would
    argue that they have nothing in common.
        Where we are actually seeing States step up to the plate
    and act out are on weeding out bad apples, putting in place
    safeguards in the most high-impact settings, including criminal
    justice, including immigration, including education, where
    stakes are really high. And they are making sure that, you
    know, we are not putting--that AI systems that have basic
    inaccuracies aren't proliferating, particularly when the
    impacts of these errors are on people's basic civil liberties.
        So I agree with you. I think that, you know, States have
    stepped up to the plate, they have responded to their
    constituents, and this proposal would really wipe away a lot of
    that progress, without anything in its place.
        Mr. Veasey. What do you think that Congress can do to make
    sure that these technologies are used ethically and that they
    are being used the right way, without infringing on civil
    liberties? What do you think this body should do?
        Ms. Kak. We have a decade of evidence that, you know,
    provides a very clear framework. And that begins with
    transparency. It includes clear accountability so that firms
    that using these systems need to go through proper vetting to
    make sure that they work as they are intended to work, that
    they don't sort of, you know, misidentify people.
        You mentioned a personal example. The FTC cracked down
    recently on Rite Aid's use of facial-recognition technology
    that was routinely misidentifying people in grocery stores and,
    sort of, subjecting them to unwarranted scrutiny from law
    enforcement agencies.
        So, yes, I think it is very clear what we need to do. The
    problem has been one of political will to act in Congress.
        Mr. Veasey. Right.
        And I think, with all of these technologies, one of the
    things, you know, that we have to take into consideration is,
    like, we want to be the leaders in any sort of new technologies
    that are coming to the market. We don't want the Chinese to be
    the leaders in these areas.
        What can we do in order to make sure that there is consumer
    confidence in these areas of facial recognition and AI
    technology as we move forward to make sure that civil liberties
    are being met but to also make sure that anything that is being
    deployed, that the U.S. is the leader on that?
        Ms. Kak. Absolutely. I think we need to be incentivizing a
    race to the top, not the bottom. And one thing that we can be
    guaranteed will deter private investment is the proliferation
    of snake-oil salesmen, of these kind of, sort of bad apples
    that no one wants to be in business with.
        And to be, you know, very candid, that is what States have
    stepped up to the plate to do. It is essentially going after
    the worst actors in the market and making sure that this is an
    industry that inspires confidence, not one that is full of
    scammers and snake-oil salesmen.
        Mr. Veasey. Yes. No, that makes a lot of sense.
        Thank you, Mr. Chairman. I yield back the balance of my
    time.
        Mr. Bilirakis. The gentleman yields back.
        Now I will recognize the vice chairman from the great State
    of Pennsylvania, Mr. Joyce--Dr. Joyce--for his 5 minutes of
    questioning.
        Mr. Joyce. Thank you, Chairman Bilirakis, and thank you for
    our witnesses who have agreed to come here today to testify.
        Every day, every hour, the development of artificial
    intelligence is transforming the way that we consume
    information, that physicians treat American patients, even how
    we travel.
        As the chair of the Privacy Working Group, it is clear to
    me more than ever that we need a solution to the patchwork.
    What do I mean by ``patchwork''? States are introducing AI laws
    left and right, and it is our responsibility here at the
    Federal level to ensure that businesses can continue to
    innovate while complying with this patchwork of laws.
        This is especially true when it comes to AI's involvement
    in the healthcare field. AI has the ability to elevate the care
    of American patients--the care that they expect, the care that
    they deserve. But we must ensure that the physician-patient
    relationship is not left behind.
        Mr. Bhargava, I am interested in how innovative AI products
    and services can improve the lives of my patients, improve the
    lives of my constituents. Can you highlight some of the General
    Catalyst investments in innovative American AI startups that
    this committee should take note of as we consider AI
    legislation?
        Mr. Bhargava. Absolutely. And thank you for asking the
    question.
        Healthcare is a massive industry. It is even larger than
    tech. And at General Catalyst we have invested in over 100
    healthcare companies over the last decade or so, and so are one
    of the, sort of, leading venture firms in this field.
        One or two examples I could provide for you.
        One is in AI scribing. So doctors and nurses spend a lot of
    time taking notes and then doing manual data entry on those
    notes. That can be automated with responsible AI systems and
    software that also need to be HIPAA-compliant and have
    responsible innovation. But that is one of the many tasks.
        The second is, where there is a shortage of healthcare
    workers, how do we get them to be AI-enabled? How do we get
    them to get rid of the most menial tasks and be focused on the
    harder parts? Which, many times, is chatting with patients,
    relating to them, solving more difficult problems.
        So we have many companies--Hippocratic, who is here in the
    audience today, Commure, and others--who are tackling these
    issues of how do we automate more and more so that our
    healthcare providers can give better service by having these
    AI-enabled tools assisting them.
        And, as we back these companies, we can make sure that
    there is the responsible innovation part. Healthcare is the
    toughest place you really don't want to mess up. Out of every
    industry, it has the most ramifications. So it is a good
    example of both where there could be a ton of innovation and at
    the end of the day consumers' lives can be saved, but also why
    I would urge Congress to move faster this time than in the past
    on creating a framework, because lives are at stake here as
    well as our competitive advantage against China.
        Mr. Joyce. As a physician, I clearly recognize that lives
    can be at stake. Do you feel that the patchwork that currently
    exists as far as AI legislation from the States puts patients'
    lives at risk?
        Mr. Bhargava. I don't believe it is preventing deaths or
    that the patchwork is good for the companies that are operating
    and are trying to make healthcare better.
        I think we need a Federal solution instead. I think the
    States don't really have the capacity to keep up with all of
    the different AI innovations and technologies and models. And
    then the startups themselves, it is very difficult for them to
    act in a way where they are complying with all these many
    States.
        It would be much, much better to have a Federal-level
    regulation that would then allow for this AI technology to
    permeate even faster and to save more lives quickly.
        Mr. Joyce. Thank you.
        Mr. Heather, in many respects, AI is already regulated by
    many sectoral laws that apply to non-AI products and services,
    like the FDA's oversight of algorithms that healthcare
    companies use in care, particularly when it comes to medical
    devices.
        Can you explain how the EU approached existing sectoral
    laws, such as healthcare, before it passed the EU AI Act? Did
    the EU find gaps in the current law that needed to be addressed
    by their new legislation?
        Mr. Heather. I am not aware that the EU identified any gaps
    with regard to how medical devices or pharmaceuticals reach the
    market where they have been somehow enhanced or built with AI
    models.
        And so I think this is a really important distinction when
    people are talking about moratorium. There are rules on the
    books. I heard the Congressman from Texas talk about
    surveillance. I heard you also say that there is a city
    ordinance in New Orleans that would have prohibited it. That
    sounds to me like it is an enforcement issue, not an AI issue.
        So I think we are thinking about products and services and
    outcomes, not necessarily the technology that brought you that
    product or service or outcome.
        And so I think the ability to use existing laws and
    regulations to enforce good, strong outcomes is not what this
    conversation is about. It is about getting out ahead and trying
    to discipline a technology that has lots of opportunity behind
    it, in ways that will have unintended consequences to our
    competition and competitiveness in the global economy.
        Mr. Joyce. Mr. Heather, I thank you for the answer.
        Mr. Chairman, my time has expired. I yield back.
        Mr. Bilirakis. Thank you.
        The good doctor yields back.
        Now we will recognize Mr. Evans for his 5 minutes of
    questioning.
        Mr. Evans. Thank you, Chairman, Ranking Member.
        Thank you, of course, to our witnesses from coming.
        I am from Colorado, and last year we became the first State
    in the country to enact a bill at the State level to regulate
    AI. And I will read you a couple of quotes here.
        ``This law creates a complex compliance regime for all AI
    developers and deployers doing business in Colorado.''
        Another one: ``I am concerned about the impact this law may
    have on an industry that is fueling critical technology
    advancements across Colorado for consumers and enterprises
    alike.''
        And then, finally: ``Government regulation applied at the
    State level in a patchwork across the country can have the
    effect to tamper innovation and deter competition in an open
    market.''
        I agree with those statements. They actually came from my
    Governor, Jared Polis, who signed Colorado's AI law and then
    came out in support of the Federal moratorium that is being
    discussed here today, among other things.
        I voted against the law when I was in the State legislature
    because I agreed with those statements, and I saw this as
    dampening the ability to innovate and bring jobs to Colorado
    and fostering that patchwork across the country.
        So my first question, Mr. Thierer, is going to be to you.
    Can you just expound on why the Colorado AI law and a patchwork
    like it is so problematic and why Congress needs to be the one
    to act to address this emerging patchwork of rules?
        Mr. Thierer. Absolutely, Congressman. And thank you for
    that question.
        It seems that Governor Polis is having some buyer's remorse
    from signing this bill, and his signing statement read more
    like a veto statement, as you just indicated.
        I think the reality is that they realized the complexity of
    this law would create enormous burdens, and when they tried to
    subsequently study it the way they should have been studying it
    before it was passed, they realized they didn't have a lot of
    the answers to complicated questions about exactly how we
    define ``developer,'' ``deployer,'' ``integrator,''
    ``consequential decision,'' all of these things, or even the
    term ``artificial intelligence,'' which is being defined
    differently in different State bills.
        If we can't even define the basic term we are here today to
    discuss today at the State level, then that is a patchwork that
    is going to create huge problems for small businesses.
        Mr. Evans. Thank you.
        Going to Mr. Heather, kind of following up on that train of
    thought here, from the Chamber, do you have any data on either
    the fiscal or the revenue impact that a patchwork of
    contradictory State laws might have in this field?
        And then, on the other side of that, do you have any fiscal
    or revenue data on the benefits of having a national just
    general-rules-of-the-road policy might have?
        Mr. Heather. I don't know that I have data as it relates to
    government expenditure. But I can tell you that, as it relates
    to the private sector, as was mentioned I think before, there
    is an estimate of 330,000 euro just to be able to comply with
    an element of the EU AI Act.
        To the degree that we have over 1,000 AI-related bills that
    have been introduced in State legislatures or in local units of
    government, to the degree that some of those make it across the
    finish line, there is a compliance cost that will have to be
    met by each company that wants to do business in those markets.
        Because these laws are not necessarily enforced in the
    United States, I don't know that there is good data out there
    that shows what it is going to cost to comply for companies
    with regard to the Colorado law. So I think we are very early
    days in being able to get those cost estimates.
        Mr. Evans. Thank you.
        Do you think there is potentially additional revenue that
    would be generated by industry and by business by having a just
    general national rules of the road versus a patchwork of State
    laws?
        Mr. Heather. As I said in my testimony, I think there are
    estimates that suggest that, you know, somewhere upwards of $16
    trillion may be gained to the global economy by AI. All of that
    will be taxed by governments.
        So, to the degree to which we unleash AI technologies and
    that allows us to increase our productivity as an economy, that
    leads to growth. And whenever there is growth, there is tax-
    revenue opportunity for the government.
        Mr. Evans. Thank you.
        In my final minute, Mr. Thierer, back to you.
        Before this job, I spent 10 years as a police officer, and
    so making sure that we take care of kids is critically
    important to me. I would venture that I have probably arrested
    more child abusers than anyone else in this room.
        And so, as I am reading through the bill that is being
    discussed today, I noticed that there were about three pages of
    exceptions in that bill that allow for enforcement of a lot of
    different things in the AI space. So it is not a complete
    moratorium.
        And so the question to you is, Given how the legislation is
    written, can we still continue to keep kids safe?
        Mr. Thierer. Absolutely. You can use technology-neutral
    policies and approaches.
        And I also just want to stress that, under the rule of
    construction in this moratorium, it very clearly states that
    the primary purpose, in effect, is to remove legal impediments
    to facilitate the deployment or operation of AI systems.
        This is about furthering the development of these systems
    and not dealing with these things that we need to restrict on
    the other side through generally applicable safety laws.
        Mr. Evans. Thank you.
        I yield back.
        Mr. Bilirakis. Thank you very much, Mr. Evans.
        OK. Very good. I think we are ready to finish up.
        I want to thank the panel for being so patient and
    answering all the questions.
        And I will ask unanimous consent that the documents on the
    staff list be submitted for the record.
        Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Bilirakis. I remind Members that they have 10 business
    days to submit questions for the record. And I ask the
    witnesses to respond to the questions promptly. Members should
    submit their questions by the close of business day on June
    5th.
        So, without objection, the subcommittee is adjourned.
        [Whereupon, at 12:42 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]
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