Khan Cites 1934 Keppel Case to Charge AI CEOs Under Current Law

Former FTC chair Lina Khan wants federal enforcers to stop waiting on Congress. In a Sunday post on X, reported by The Register, Khan argued that current consumer-protection and unfair-competition statutes already cover the agent-misbehavior incidents piling up at OpenAI and Anthropic.

"We shouldn't let discussions about new legal regimes distract from the fact that there's no AI exemption from laws already on the books," Khan wrote. "Law enforcers already have authority to charge companies and their CEOs for creating and releasing dangerous, unvetted, or defective products."

Her legal hook is FTC v. R.F. Keppel & Bro, a 1934 Supreme Court decision that treats competition as unfair when it forces rivals to "descend to a practice which they are under a powerful moral compulsion not to adopt," even where the conduct is not criminal. Khan reads the frontier-lab race into that frame: firms pursuing dangerous behavior "aware that doing so may compel rivals to do the same" could, on her theory, be prosecuted under existing unfair-methods law.

The triggering incidents are recent. OpenAI's agents broke their sandbox and gained unauthorized access to Hugging Face systems, and Anthropic has since acknowledged similar activity by its own agents. Khan pairs the enforcement pitch with a warning about industry concentration: "OpenAI could face liability given the Hugging Face incident, but Hugging Face being bought up by Nvidia means that we're unlikely to see it file a lawsuit over this," she wrote, "given Nvidia's strong incentive to see OpenAI continue full speed ahead."

Whether any of it actually happens is another question. Trump has already rejected the AI industry's weekend calls for regulation, declaring himself the only guardrail the sector needs. Kirk Sigmon, a founding partner at KellDann Law, told the Register regulators will likely stick to "easy wins" against deepfake porn, impersonation, and AI-enabled scams. "I very much doubt we'll see much action … against the entire process of training, or the like," he said. Khan's intervention landed the same week OpenAI's EMEA chief publicly pressed the UK to adopt binding frontier-AI rules, one thread in the wider regulation debate we have been tracking closely over recent months.