October 23, 2023

FTC’s Effort to Strengthen Online Privacy Protections Faces Hurdles

In a move to protect online privacy, the Federal Trade Commission is implementing new rules that would strengthen current agency practices. However, these changes have been met with pushback from companies and regulators alike.

The “protecting consumer privacy hearing” is an effort by the FTC to strengthen online privacy protections. The hearing will take place on May 23rd, 2018.

The Federal Trade Commission has laid out a broad vision for safeguarding customers’ internet privacy, but it confronts obstacles such as financial restrictions, staff changes, and possible legal challenges.

Critics of major digital corporations have applauded the FTC’s efforts, which come after years of silence in Congress on the subject, despite the fact that businesses have increased data collecting. The FTC has committed to go it alone, stepping up its examination of digital advertising and looking into new guidelines for how businesses may gather and use consumer data.

The EPA has not yet declared the commencement of a comprehensive rule-making process. However, the FTC’s new chairwoman, Lina Khan, a Democrat who has been critical of big business, stated in an October statement on the agency’s data strategy that she intends to look into privacy standards as she investigates emerging technologies, discriminatory data practices, and companies’ amassing of consumer data to strengthen their market power.

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The effect of the FTC on data privacy is likely to be determined by Congress.

Pavlo Gonchar/Zuma Press/Zuma Press/Zuma Press/Zuma Press/Zuma Press/Z

Budgetary bickering in Congress, according to current and former FTC employees, will influence the agency’s final effect on data privacy. Some experts also worry that drafting extensive privacy regulations using the infrequently utilized Magnuson-Moss power may lead the agency into legal quagmires that might result in successful industry litigation.

“It’s an uphill road for people who say Congress hasn’t moved, so let’s have the FTC do it,” said Jessica Rich, who stepped down as head of the FTC’s Bureau of Consumer Protection in 2017 and now works for Kelley Drye & Warren LLP.

Last week, the agency issued an amendment to a rule requiring financial institutions to safeguard consumer data, as part of its examination of fragmented data requirements permitted by particular legislation.

Some Democrats have also asked the FTC to exercise its Magnuson-Moss jurisdiction, which was created in 1975, to develop more comprehensive data-use standards. The FTC might use this power to restrict particular activities and punish corporations for the first infraction.

According to Justin Brookman, a former FTC official who is now head of consumer privacy and technology policy for advocacy organization Consumer Reports, to ban a conduct under a Magnuson-Moss regulation, the agency would have to establish that it is an unfair or deceptive practice that hurts consumers. Mr. Brookman said such claims regarding privacy have limited precedence and may be disputed in court: “We’re off the map here.”

According to consumer activists, the agency might use this authority to limit digital advertising, which depends on an opaque interchange of data among corporations to target consumers with relevant material. Facebook parent Meta Platforms Inc., Alphabet Inc.’s Google, and Amazon.com Inc., which together dominate roughly 90% of the digital advertising industry, did not reply to requests for comment.

Members of Congress have compared Facebook’s and Instagram’s strategies to the tobacco industry’s. Joanna Stern of the Wall Street Journal examines both sessions to see what lessons tobacco regulation may teach us about what may be ahead for Big Tech. Adele Morgan/The Wall Street Journal photo illustration

New privacy regulations, according to Julie Brill, Microsoft Corp.’s chief privacy officer, might boost confidence in the technology industry by focusing on data brokers or “gatekeepers” who conduct potentially anticompetitive acts via security or privacy measures.

Ms. Brill, a former FTC commissioner, did not mention any specific corporations in her statement. Google has received a lot of flak for its decision to stop using third-party cookies, which competing firms use to target adverts. Companies that claim they have to pay a lot more money to acquire new consumers have criticized Apple Inc.’s recent effort to limit how users are monitored on mobile devices. An Apple spokesperson did not reply to a request for comment.

While the Biden administration has promised to hold big tech companies accountable, broad rules could prevent businesses from using consumer data in novel ways in the future, according to James Cooper, a former FTC official who is now an associate professor at George Mason University’s Antonin Scalia Law School. Mr. Cooper stated that despite Democratic commissioners deciding in July to shorten the Magnuson-Moss process, such rules might take many years to implement.

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Ms. Khan, who took over as FTC chairperson in June, advocated for a change away from the “notice-and-consent” framework for privacy, in which corporations explain their data practices and seek for consumers’ permission to collect and use their information, in a recent statement on the agency’s data strategy. According to Ms. Khan, investigating unfair or deceptive tactics via this lens might avoid “more basic considerations about whether certain sorts of data gathering and processing should be allowed in the first place.”

The agency told Congress that it will conduct more active investigations of digital platforms and enforce current agreements with corporations like Facebook, which is now known as Meta.

According to the FTC, the increase would require at least increasing the size of its Division of Privacy and Identity Protection, which now employs about 40 people.

In September, Democratic legislators proposed establishing a new FTC privacy bureau with $1 billion from President Biden’s social-policy package. However, in its most recent design for the package, the administration reduced the amount to $500 million.

According to current and former officials, Ms. Khan’s approach was introduced during a personnel shake-up that might impact prospective rule-making.

The deputy director of the Consumer Protection Bureau and the assistant director of the Division of Privacy and Identity Protection, who oversaw the FTC’s privacy work in recent years, both resigned in October to join law firms. A request for comment on the departures was not returned by an agency spokesman.

FTC Commissioner Noah Phillips is a Republican.

(Bloomberg News/Stefani Reynolds)

Separately, President Biden selected Alvaro Bedoya, a Georgetown University privacy scholar, to fill an available position on the committee. Mr. Bedoya’s nomination, if accepted by the Senate, would restore Democrats to a majority on the five-member body. There are two Democrats and two Republicans on the commission right now.

Divergent opinions on FTC regulations, according to Noah Phillips, a Republican commissioner, demonstrate why Congress, rather than the panel on which he may soon be in the minority, is best placed to establish guardrails.

“Elected authorities are considerably better at resolving that issue than, possibly, simply three individuals,” he added.

David Uberti can be reached at [email protected].