During a House Energy and Commerce Committee hearing prior to the Congressional recess, Rep. Gus Bilirakis (R-FL) questioned Sean Heather, Senior Vice President of the U.S. Chamber of Commerce, about European fines to American companies.
00:00Thank you so very much, and I appreciate all of you, so we're going to go ahead and start with questions, and I'll ask the first questions, and then I'll get to the ranking member.
00:13So, Mr. Heather, I'm concerned that American companies face disproportionate enforcement actions from European regulators.
00:25Since Europe's privacy law, the GDPR, went into effect, American companies have paid 83% of all fines levied by European regulators.
00:39I know you had mentioned this.
00:41That strikes me as an excessive means to subsidize their fiscal needs on the back of American businesses.
00:49So, do you think Europe is targeting American innovators, and should we be concerned that the AI Act will be used for similar ends?
01:03Thank you for the question.
01:06Yes, in my experience, Europe has fallen in love with fines as their enforcement tool.
01:11It started under their competition laws, and we see that they've uniquely gone after American companies with what they call abuse of dominance fines.
01:20Those fines are actually a magnitude greater than what they do when they fine cartels.
01:24Cartels are kind of the worst antitrust violation possible, and yet their biggest fines are held out for American companies versus European companies.
01:32They're involved in cartels.
01:33That same practice has now continued into the GDPR.
01:36We see fines on a scale much bigger levied against U.S. companies.
01:40In many cases, there's not even an identified harm as a result of the quote-unquote violation.
01:45Some of these are technical violations where they've chosen to amp the wattage up on fines.
01:50They've now taken this fining policy and put it into other EU laws like the DMA and the DSA.
01:55It is also embedded in the AI Act.
01:57We fully expect that at least the path and practice that Europe has been on will continue to use fines.
02:02They will continue to be disproportionately larger against American companies, and the justification for it is not very strong.
02:08I would also point out that when these fines ultimately get before the European courts, American companies are actually having success.
02:14It takes a long time to get there, but the European courts have annulled these decisions in some cases and have reduced the fines.
02:20So we do have a problem with Europe and the way they use fines to enforce their regulations.
02:25Thank you very much.
02:26I've still got some time.
02:28Mr. Bhargava, you've stated that the VC firms like General Catalyst, as well as AI startups, are already starting to address potential risks around AI.
02:42Can 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?
02:55Yes, absolutely.
02:55General Catalyst is a global venture firm.
02:58We're based here in the U.S.
03:00We have offices here, but we also have offices in London and Berlin and in India, so we can provide a global perspective.
03:06For every AI company we invest in, regardless of the location, we do four things.
03:11One, we look at the data it's using for training its models and how they filter it, how they collect it.
03:16Two, we actually look at the systems in which they train those models and have a robust framework.
03:20Three, we look at the output of the models and stress test that in various ways.
03:24And lastly, fourth, we ask every AI founder to write for us what they think the downstream implications that are negative could be.
03:32And so we hold the companies we invest in in this high standard, and it's allowed us to invest in companies like Europe's leading AI company, Mistrales, one of U.S.'s leading ones, Anthropic, various ones in India, as well.
03:42So as a firm, we put in place these standards.
03:45We also encourage the federal government to put in place frameworks and standards and guidelines as well.
03:51Thank you very much.
03:52What I'll do now is yield five minutes to the ranking member of the subcommittee.
03:58You're recognized for five minutes, Mr. Schakowsky.
