WASHINGTON—FTC Chair Lina Khan on Monday said her agency would protect competition in the nascent market for artificial-intelligence tools, warning that big-tech companies could “start to panic” and try to block new entrants through unlawful tactics. Speaking at an antitrust conference, Ms. Khan said the Federal Trade Commission would be watching to ensure startups can compete in the AI industry. “As you have machine learning that depends on huge amounts of data and also depends on huge amounts of storage, we need to be very vigilant to make sure that this is not just another site for the big companies becoming bigger and really squelching rivals,” Ms. Khan said.