apt to emerging technologies, the FTC will likely continue utilizing its Section 6(g) authority to promulgate more robust enforcement tools as it learns more about how generative AI impacts competition.Given these considerations, firms in the generative AI space should be proactive and hire experienced counsel to assist with agency outreach and establish guardrails for compliance. Moreover, stakeholders should work together to foster competition, innovation, and consumer welfare while ensuring the development of effective regulatory frameworks that adapt to the evolving generative AI landscape. By doing so, they can unlock the full potential of generative AI while maintaining a fair and competitive marketplace. Fed. Trade Comm’n, Generative AI Raises Competition Concerns (June 29, 2023). Fed. Trade Comm’n, Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act (Nov. 10, 2022) (Policy Statement).Non-Compete Clause Rule, 88 Fed. Reg. 3482 (Jan. 19, 2023) (to be codified at 16 CFR 910) (Non-Compete Clause Rule). Merger Guidelines (Draft for Public Comment), U.S. Dep’t of Justice & Fed. Trade Comm’n (July 19, 2023) (Proposed Guidelines). Policy Statement at 8.Id. at 12. Proposed Guidelines at 3. Non-Compete Clause Rule at 3496. Policy Statement at 12. Policy Statement at 13.Id. at 12.Id. at 13.

n-Recent-Ruling-Limiting-Severance-Agreements-3-24-2023.3See Michael A. Pavlick & Taylor J. Arluck, NLRB Imposes Broad Restrictions on Severance Agreements, K&L GATES HUB (Feb. 24, 2023), https://www.klgates.com/NLRB-Imposes-Broad-Restrictions-on-Severance-Agreements-2-24-2023.4See General Counsel’s March 7, 2022 Brief to the Board, Stericycle, Inc., Cases 04-CA-137660 et al.5 See 29 U.S.C. § 152(3). A “supervisor” is defined under the NLRA as “any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.” Id. § 152(11).6 National Labor Relations Board Memorandum GC 23-08 (May 30, 2023).7 Non-Compete Clause Rule, 88 Fed. Reg. 3482, 3504; see Lauren Norris Donahue et al., FTC Proposes Sweeping Ban on Employee Noncompete Clauses: What Employers Need to Know, Proposed Alternatives, and Opportunity for Public Comment, K&L GATES HUB (Jan. 6, 2023), https://www.klgates.com/FTC-Proposes-Sweeping-Ban-on-Employee-Noncompete-Clauses-What-Employers-Need-to-Know-Proposed-Alternatives-and-Opportunity-for-Public-Comment-1-6-2023; see also K&L Gates Legal Alert, What Does President Biden’s Executive Order on Promoting Competition in the American Economy Mean for Employer Noncompete Clauses?, K&L GATES HUB (July 12, 2021), https://www.klgates.com/What-Does-President-Bidens-Executive-Order-on-Promoting-Competition-in-the-American-Economy-Mean-for-Employer-Noncompete-Clauses-7-12-2021.8 These states include Illinois, 820 ILL. COMP. STAT. 90/1; Maine, ME. REV. STAT. ANN. tit. 26, §§ 599-A, 599-B; Maryland, MD. CODE ANN., LAB. & EMPL. § 3-716; Massachusetts, MASS. GEN. LAWS ch. 149, § 24L(c); New Hampshire, N.H. REV. STAT. ANN. § 275:70

firm in the absence of noncompetes hopefully should be seen as a benefit to all personnel who are committed to the franchise.Accordingly, while the use of noncompetes by private equity sponsors is common, there are alternatives that will allow the firm to comply with the Proposed Rule when adopted without sacrificing legitimate protective considerations. Indeed, noncompete provisions are already prohibited in some states such as California, and the ease of enforceability of these covenants in other states vary. Moreover, the fact remains that while noncompetes serve important purposes, the sheer monetary, human resources, and reputational costs of judicially enforcing such covenants is high. Adopting and improving alternative methods to protect the private equity franchise will allow private equity sponsors to achieve the same goals once the Proposed Rule is adopted.We acknowledge the contributions to this publication from our associate Shaun Goodfriend.1See, Non-Compete Clause Rule, 88 Fed. Reg. 3482 (proposed Jan. 19, 2023) (to be codified at 16 C.F.R. pt. 86).2FTC Proposes Sweeping Ban on Employee Noncompete Clauses: What Employers Need to Know, Proposed Alternatives, and Opportunity for Public Comment | HUB | K&L Gates (klgates.com)3The sole carve-out in the Proposed Rule allows for non-compete clauses for individuals who have at least a 25% ownership interest in the entity (a Substantial Owner) and are looking to sell their interest. This exception is intended to protect the value of acquiring a business from a former Substantial Owner, and thus it may not apply to some instances when a founder chooses to leave employment at a firm to start his or her own competing business.4See supra note 1 at Part II.C.5See, Investment Advisor Association, Comment Letter on Proposed Rule to Non-Compete Clause (Apr. 17, 2023), https://investmentadviser.org/wp-content/uploads/2023/04/Investment-Adviser-Association-FTC-Non-Compete-Comment-Letter-Filed-Version.pdf.