WASHINGTON. The Federal Trade Commission announced Thursday that it will begin considering new federal rules to expand online privacy protections, targeting online surveillance and lax data security practices by technology companies.
The FTC’s action, a 3-2 vote split along party lines, drew immediate criticism that the agency was taking on a role more suited to Congress. If adopted, the rules could impose significant new obligations on companies that process consumer data, including potentially prohibiting the collection and processing of certain data.
“Firms are now collecting personal data about people on a massive scale and in a staggering array of contexts,” said FTC Chairman Lina Hahn. – it is stated in the announcement of the promotion. “Our goal today is to begin creating a robust public record to inform whether the FTC should issue rules on commercial surveillance and data security practices, and what those rules should potentially look like.”
The move is the latest sign of a more aggressive approach by the five-member commission under Ms. Hahn, a Democrat who has been a vocal critic of big business, especially big technology companies.
While the FTC’s rulemaking process is just beginning, adversaries are already lining up.
“Today’s FTC proposal is another example of the agency thinking it can remake the economy to its liking,” said Jordan Crenshaw, vice president of the U.S. Chamber of Commerce’s Technology Engagement Center. “Congress must first give the FTC authority before it can act. . . . Congress, not unelected bureaucrats, must decide how to develop new data privacy rules.”
NetChoice, an industry group that advocates for a free market on the Internet, suggested that the FTC could be waging a “war on Internet advertising that is out of touch with the average American.”
The Federal Trade Commission has said it will look into a range of online concerns, including the widespread use of algorithms to manipulate and exploit data, security practices that leave data vulnerable to hackers and growing evidence that some platforms can “to cause addiction to children.” and lead to various mental and social damages.”
The FTC is also expected to examine the potential discriminatory effects of algorithms based on legally protected characteristics such as race, gender, religion and age, the agency said. He also suggested investigating the tactics companies use to get consumers to share their data.
The agency said its existing legal powers may not be enough to protect consumers and that the new rules, which set clear requirements for privacy and data security and strengthen the commission’s power to seek fines, “may encourage all companies to invest more consistently in appropriate practices.”
The rulemaking notice was supported by Ms. Hahn and two other Democratic FTC commissioners, Rebecca Kelly Slaughter and Alvaro Bedoya.
Two Republican members of the commission voted against the proposed rulemaking process. Commissioner Christine Wilson said in a statement that the move could give lawmakers a reason to block the privacy law, which recently passed a key House committee.
Ms. Wilson also noted that recent Supreme Court decisions were intended to curb “over-rulemaking” by federal agencies. One such ruling came in June, when the court said the Environmental Protection Agency had overstepped its authority in trying to limit emissions from coal-fired power plants.
In addition, Ms. Wilson said the rulemaking announcement “goes too far” in an area where there is no evidence of harm.
Commissioner Noah Phillips echoed similar sentiments, saying the far-reaching implications of the national privacy law make it a task for Congress, not the FTC.
“Any law passed by our country will have a huge economic impact,” he wrote. “It will affect many thousands of companies, millions of citizens and billions and billions of dollars in trade.”
Congress is considering legislation that would introduce new rules to give Americans more control over their personal data. But it is not clear whether there will be enough votes to pass this session. A group of state attorneys general expressed concern that the bill could preempt stricter privacy standards passed at the state level.
Sen. Roger Wicker (R., Miss.), a leading GOP supporter of the bipartisan legislation, said Thursday that the FTC’s move helps “underscore the urgency for the House to pass the US Privacy and Data Protection Act and for the Senate Commerce Committee to advance it through committee “.
At a news conference, Commissioner Slaughter said she supported the bill but noted that the legislative process is full of uncertainty, adding that she sees the FTC’s efforts as complementary to what lawmakers are doing. Other agency officials said they will proceed carefully to make sure the perceived harmful practices are widespread enough to justify the rules.
The FTC’s action opens a period of public discussion on the issue. Any rule can take years to implement.
Since taking office last year, Ms. Hahn has taken a number of steps to lay the groundwork for potential rulemaking, including two other FTC Democrats voting to change internal procedures to expand her control over the rule-writing process.
Early in his term, President Biden ordered the Federal Trade Commission to consider writing competition rules in a number of areas, including “unfair data collection and surveillance practices that could harm competition, consumer autonomy, and consumer privacy.”
Some privacy advocates called on the agency to ban “surveillance advertising” as an unfair method of competition, citing a Wall Street Journal article about the impact of Instagram, owned by Meta Platforms Inc., on the mental health of teenagers.
Meta said it faces stiff competition and that the magazine mischaracterized an internal study of Instagram’s influence.
The lack of a broad federal law protecting consumer privacy has become an even bigger problem for advocates as online platforms and others have amassed troves of consumer search data and other information. Many privacy advocates are particularly concerned about children, who may be more vulnerable to targeted online advertising and attention-grabbing algorithms.
Even some tech companies, fearing the proliferation of state privacy laws, are urging Congress to act.
Ms Khan and other Democratic commissioners have previously said the agency would pay more attention to how platforms can abuse children’s privacy because many children have spent more time online during the Covid-19 pandemic.
Email John D. McKinnon at John.McKinnon@wsj.com
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