Big Data, Mobile Technology Among Uphill Challenges at FTC, Say Former FTC Officials
Following accomplishments in its enforcement and consumer protection missions, the FTC faces challenges as big data and the mobile market proliferate, current and former commissioners and staff said Friday at an event marking the commission's 100th anniversary (see 1411070054">1411070054). The FTC is quickly becoming more technology-focused than any other agency, they said.
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With Congress' failure to enact laws and regulate the digital market, the FTC has stepped in in a variety of ways, said Ed Mierzwinski, a Consumer Reports board member. The FTC faces many challenges in how it approaches emerging technologies, he said. The agency has to figure out some new ways to protect consumers from a number of unfair consumer practices, he said. Large companies dealing with big data is a concern, he said: “All companies are using data in ways that may harm consumers.” As the digital marketplace becomes more of a mobile marketplace, the threats to traditional consumer protection paradigms have increased, he said.
The bureau took action against large companies and focused on general deterrence to send a message that couldn't be conveyed through policymaking, said David Vladeck, former director of the FTC Bureau of Consumer Protection. The bureau has brought some novel litigation in deceptive advertising, privacy and advertising with respect to health benefit claims, said Vladeck, a law professor at Georgetown University Law Center. Forming the FTC's mobile unit was significant in how the commission approaches technology and privacy, he said. “The privacy work done before 2009 served as a platform for a lot of the litigation we did.”
Consumer injury is key in deciding to take enforcement action against a company, said Lydia Parnes, former bureau director. The bureau brought the first adware and spyware cases in 2004, she said. It also brought the first data security case based on unfairness, and the largest civil penalty case on a data breach incident, she said. “The satisfying thing was getting money back for consumers who have been scammed,” said Parnes, a Wilson Sonsini attorney. The FTC could consider being more transparent, she said. But compared with other agencies, the commission is better at transparency, she added.
Looking for areas of significant consumer spending has to figure into enforcement decisions, said William Baer, assistant attorney general for the Justice Department's Antitrust Division. As markets evolve, the commission must think about new patterns of behavior and standards-setting processes, he said.
The former FTC staff agreed that the commission has become the "federal technology agency," they said. That started when the agency began engaging with industry in the 1990s and held workshops on technology issues, said Parnes. “A tremendous amount of learning took place.” The agency developed an agenda in terms of dealing with technology and put its money where its mouth is, she said. An ongoing challenge to litigation is the FTC's wanting to avoid having a negative impact on competition, she said. The FTC did “extremely well” when it reviewed the Google-DoubleClick transaction in 2007, she said. The FTC was able to look at the issues of concern around that, while it announced the proposed framework for online behavioral ads, she added: This has had a “tremendous impact on the online advertising community.”
The antitrust agencies are equipped to handle technology issues, said Kevin Arquit, a Simpson Thacher attorney and former Bureau of Competition director. The problem from an antitrust perspective is that missing a sales cycle can be enough to knock a tech company out of the market, he said. Technology is often given to network effects, he said. “If you're going to bring an effective case, you can't wait until the exclusionary conduct has occurred.”
The rapid change in the business cycle of the mobile data market poses a challenge to the commission, Mierzwinski said. There also is a political element, he added: As companies get larger, “the more political power they're amassing.” Any agency trying to protect the consumer “is going to face tough times down the street at the Capitol,” he said.
Keeping up with the “technology of litigation” will be difficult, said Vladeck. “We're going to have to beat up on our appropriators to give us the money to continue to fight battles the way our adversaries are fighting them.” Vladek agreed that the FTC will need to take big data to task. It must ensure that litigation and enforcement frameworks “protect consumers in a vibrant marketplace without impeding useful innovation,” he said.
The FTC will need to maintain its commitment to bringing cases under Section 5 of the FTC Act, which enforces consumer protection, said Baer. The FTC has exercised its responsibility well, he said. The commission must have a willingness to change as markets change, he said. This willingness characterizes the FTC today and must continue to characterize how it approaches its mission going forward, he said.
The FTC has evolved into a tech regulator, said Lee Peeler, former deputy director of the Consumer Protection Bureau. Its enforcement mission and advocacy and data studies missions come together in the efforts around technology, he said. The FTC held hearings on technology, he said. The hearings resulted in the industry's investment to push out a program to give consumers better notice about online data collection preferences and a better opportunity to opt out, he said.