In a statement to Billboard, Baauer said:
"The use of my song in this video obviously comes as a surprise to me as it was just brought to my attention. I want to be clear that it was used completely without my consent or council. My team and I are currently exploring every single avenue available to get it taken down. I support Net Neutrality like the vast majority of this country and am appalled to be associated with its repeal in anyway."
However, this could be seen as "fair use." Fair use means a portion of of a work can be used without obtaining permission from the copyright holder. The section of the FCC's video with "The Harlem Shake" is under 20 seconds long. More than that, the video could be protected by parody laws given how the admittedly un-funny clip is structured. It's all up to how a judge will interpret the case in front of them.
"A parody is a work that ridicules another, usually well-known work, by imitating it in a comic way," Stanford's Rich Stim writes. "Judges understand that, by its nature, parody demands some taking from the original work being parodied. Unlike other forms of fair use, a fairly extensive use of the original work is permitted in a parody in order to 'conjure up' the original." It's how "Weird" Al Yankovic has a career, regardless of the fact that he asks permission before writing his takes on pop songs.
So, while it might be infuriating, there's a chance that Pai didn't do anything wrong here. His actions yesterday are another matter entirely, of course.