Welcome back to Squawk Box. AI is upending almost every aspect of corporate America and life as we know it, but rapidly changing technology is also raising all kinds of legal issues. For example, what happens when a bot steals and misuses personal information? Joining us right now is Jay Clayton, U.S. Attorney for the Southern District of New York and former SEC Chair. Good morning to you. I was just with a bunch of researchers, AI researchers last week who were showing me how Clawbot, which is now, I think, called OpenClaw, works, which effectively is this sort of ability to basically just have your computer go off, you give it passwords and to all of your stuff, and it can literally act on your behalf. This is still a little hobbyist at the moment, but you could see 12 months from now what this could look like, and therefore, to me, raises all sorts of questions about how I just introduced this segment, because these computers are going to be operating on my behalf and doing things some good and maybe some very, very bad.
I think that's the question we should all be asking ourselves about these bots. In America, we have a great deal of consumer protection. You guys were talking about free markets and the like. We try to have markets as free as possible with guardrails to protect consumers, right? One thing is when you give your information to somebody, whether it's your broker, your doctor, somebody like that, they have a duty to you under law to only do with that information in a lot of cases what's good for you, right? You give it to a bot and the bot sells it to somebody else. The bot uses it against you. Where's your recourse? If your broker steals your information and does something, you can go to court. If your doctor does something wrong, you can go to court. We have all sorts of things. We have the Federal Trade Commission, we have all these. And so.
So where do you think the liability ultimately lies? Does it lie with the large language model companies? Does it lie with the individual who's operating the bot or who's permissioning the bot?
This is one of the most profound legal and regulatory questions we have right now. Are we going to go with the DeFi folks, the decentralized, like, you know what, caveat emptor. You give your information to a bot, you're on your own. Good luck to you. We're not going to do that. We may experiment with that. The American consumer will not accept that. You will not accept a situation where a bot takes your information and sells it to somebody to use against you, right? Like, that's not acceptable, right? So are we going to do it through the courts? And are we at the, you know, the DOJ, the Southern District going to go and sue people? That's a very inefficient way on its own to deal with this.
We do need Congress to engage on this issue. Now, I'm not saying they failed. Let's go with the platforms. How do we start regulating the platforms? We looked at the platforms and said they're just like the town square. You know what, super. They provide a forum for people to get together and exchange ideas. The platforms are not the town square anymore. The platforms, they own the car dealership, they own the brokerage, they own all of these things and they direct you there. They're no longer the town square. It's time. It's time to recognize the functions that they play and regulate them accordingly.
You got to remember the Trump administration and the previous one, the FCC, in the view of some people, is being weaponized by the Trump administration to silence, I guess, a point of view and to actually mold broadcast. Whatever, what late night shows, a 60 Minutes CBS at this point is compromised and can't do what it wants to do because it is trying to signal to Trump that it's playing ball. Are you worried about First Amendment freedom, given what happened with Stephen Colbert?
You should quit this administration. Is that what you would suggest for him?
I'm not suggesting anything.
Okay, but how do you think this is really egregious and serious?
No, I think it's a, I think what's happening right now is there are television companies and media companies and other companies in the country that are trying to signal to this administration that they are playing ball or not playing ball or this or that in ways that they haven't before. And you could argue, I know you like to go back in time, that during the Biden administration, Facebook and others.
I'm just not a hypocrite.
Well, here's the hypocritical part. If you believe that Biden should not have been pressuring the tech companies, which he was and did, so, I would argue it incorrectly and unfairly, you should also believe that this administration shouldn't be pressuring companies over the same types of things just on the other side. And so where do you land there? We were talking about the Colbert situation as of last night, but there's a whole bunch of things in this space.
Well, I'm glad. I'm glad you brought up the pressuring because the argument people make when they don't want government interference of any kind is all these platforms are deregulated. You know, don't get the government, didn't interfere and that was bad. Okay. Like we all look back at that and say, oh no, take that down.
We forget that we're in the present. Now, you're going back in time and you're doing what? Whataboutism. What about now?
Good for you, Joe Kernen. Keep going.
Okay. And also, channeling you. I mean, when you take AI, right? And you are a broadcast network or you splice.
Yep. To clearly mislead. That's why we have an FCC. And we've had that too. We have had, we have had like what the BBC did in terms of splicing.
Yeah. Inappropriate. Like I agree.
Like because we need to have, I have great trust in this network. Like I love what happens here.
But do broadcast networks have, is it their responsibility to book both sides on a late night TV show, or can they book 90 liberals and zero?
Let's, there's a free market. Allow them to program late night TV the way they have.
We are now evolving. The regulation was built up when you had, what, three networks and public broadcasting, and there was a real fear that what you would have was that kind of bias. And we did have regulation to deal with that. What we're doing now is saying, you know, how do we administer that in today's world? And I think it's, I love this debate, because if you do look at the media, and I would say traditional media, and you say what's their political affiliation? You know, this is a free market thing for me to say. It is way skewed to one side, right? And we should be asking ourselves, is that okay?
Well, but here's the question. The idea of is that okay is an interesting question. And the question is whether the government is supposed to have a role in is that okay versus the marketplace deciding is that okay.
Did the government, here's the question, right? Did, what happened to the marketplace? Was this a choice that just consumers want 90/10 or was, I'm just, look, these.
That's a fundamental question. But I think part of, what was the great quote when Ronald Reagan says, you know, the worst 11 words in the world. You know.
I'm the government and I'm here to help you.
instance is whether you want the government either putting any kind of pressure on that, right, on that frame. That's the question.
Okay. Well, we saw, right, we saw a tremendous amount of pressure on social media, you know, directly from the White House in the Biden administration, right? Breathtaking, right?
So, but I don't recall a time when the Justice Department has been used or individuals of the administration have been used to sue journalists and media companies and the like. And that's the question in this moment, especially in light of this Netflix.
We do, and we do have a civil system. One thing that is also Americans should recognize and why it's appropriate for the government to look at this holistically is when you're a public figure, the media gets a huge break in how they treat you, right? Like, I'm a public figure. You know what? As long as you're not intentionally trying to harm me. But you can say all sorts of terrible things about.
