The Federal Trade Commission has outlined a far-reaching vision for protecting consumer privacy online, but the plan faces challenges, including budget constraints, personnel changes and possible legal opposition.
Federal Trade Commission
Critics of the big tech companies praised the Federal Trade Commission’s efforts, which come after years of congressional inaction on the issue, even as businesses have increased data collection. The FTC has vowed to act on its own, strengthening scrutiny of digital advertising and exploring new rules for how companies can collect and use consumer informations.
The agency has not announced the start of any broad rulemaking process. But its new chairwoman, Lina Hahn, a Democrat who has been critical of big business, said in an October statement on the FTC’s data strategy that she intends to examine privacy standards, examining new technologies, discriminatory data practices and companies’ hoarding of consumer information to bolster their market power. .
Current and former FTC officials say budget disputes in Congress will determine the agency’s ultimate impact on data privacy. Some observers also warn that writing broadly defined privacy rules under a seldom-used authority known as Magnuson-Moss could expose the agency to legal gray areas that could lead to successful lawsuits.
“For those who say Congress hasn’t done anything, so let’s do it to the FTC, that’s a tall order,” said Jessica Rich, who retired as director of the FTC’s Bureau of Consumer Protection in 2017 and now works at a law firm. Kelley Drye & Warren LLP.
The agency is revising the partial data provisions allowed in separate laws, publishing an update to a rule last week that requires financial institutions to protect customer data.
Some Democratic lawmakers have also called on the FTC to use its Magnuson-Moss authority, created in 1975, to write more general data-use rules. Under this authority, the FTC can prohibit certain activities and potentially fine companies for the first violation.
To restrict conduct under the rule created by Magnuson-Moss, the agency would have to allege that it is an unfair or deceptive practice that harms consumers, said Justin Brookman, a former Federal Trade Commission official who is now director of consumer privacy protections and technological policy for advocacy. Consumer Reports group. There is little precedent for such privacy arguments and they could be challenged in court, Mr. Brookman said: “We’re not on the map here.”
Consumer advocates say the agency could use such powers to limit digital advertising, which relies on the opaque exchange of data between companies to target users with content. Representatives of Facebook’s parent company, Meta Platforms Inc., Alphabet Inc
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which together control about 90% of the digital advertising market, did not respond to requests for comment.
Julie Brill, Microsoft Corp
The chief privacy officer said the new privacy standards could boost trust in the tech sector by targeting data brokers or “gatekeepers” who engage in potentially anti-competitive practices with security or privacy-related measures.
Ms. Brill, a former FTC commissioner, did not name specific companies. Google has drawn such criticism for its decision to eliminate third-party cookies that rival companies use to target ads. Apple Inc
The recent move to limit user tracking on mobile devices has also drawn criticism from companies who say they have to spend a lot more money to find new customers. An Apple representative did not respond to a request for comment.
While the Biden administration has promised to hold big tech companies accountable, the broad rules could prevent companies from using consumer data in an innovative way in the future, said James Cooper, a former official at the FTC’s Bureau of Consumer Protection who is now an associate professor at George Mason University’s Antonin Scalia School of Law. Such rules could take several years to pass, even though Democrats voted in July to simplify the Magnuson-Moss process, Mr. Cooper added.
Ms Khan, who became head of the FTC in June, in her recent statement on the agency’s data strategy called for an end to the “notice and consent” privacy principle, in which companies explain their data practices and ask consumers for permission to collect and use their information. Ms. Khan wrote that examining unfair or deceptive practices through that lens could sidestep “more fundamental questions about whether certain types of data collection and processing should be allowed at all.”
The agency has told Congress that its investigation into such behavior will include more aggressive investigations into digital platforms and enforcement of existing agreements with companies such as Facebook, now called Meta.
The Federal Trade Commission said the expansion would depend on at least tripling the size of the privacy and identity protection division, which has about 40 employees.
In September, Democratic lawmakers proposed creating a new FTC privacy office with $1 billion in funding from President Biden’s social policy plan. But last week, the administration cut the amount to $500 million in its latest package plan.
Ms. Khan presented her approach amid personnel changes that could affect potential rulemaking, current and former officials say.
Two staffers who oversaw the Federal Trade Commission’s privacy efforts in recent years, the deputy director of the Bureau of Consumer Protection and the deputy director of the Privacy and Privacy Division, left in October to join law firms. A spokeswoman for the agency did not respond to a request for comment on the departures.
Separately, President Biden nominated Alvaro Bedoya, a privacy researcher at Georgetown University, for an open seat on the commission. If approved by the Senate, Mr. Bedoya’s appointment would return Democrats to a majority on the five-member panel. There are currently two Democrats and two Republicans on the commission.
Noah Phillips, the GOP commissioner, said the differing views on the Federal Trade Commission’s rules show why Congress is best placed to define the fences, rather than a group in which he may soon find himself in the minority.
“It’s much better for elected officials to resolve this than, potentially, just three people,” he said