Lawmakers Welcome Tech Competition Scrutiny From DOJ, FTC
The FTC's antitrust probe of Facebook is “a significant step,” Senate Judiciary Committee Chairman Lindsey Graham, R-S.C., told us last week. Ranking member Dianne Feinstein, D-Calif., lauded the probe, questioning whether Facebook is willing to make changes. For months, lawmakers from both parties have asked whether Silicon Valley competition needs greater scrutiny. Concrete action came last week with DOJ announcing a broad review of the tech industry and the FTC confirming its Facebook investigation (see 1907250049).
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Given the scale of tech companies, which operate zero-price models potentially incompatible with traditional antitrust rules, a review is necessary for determining how to identify anti-competitive behavior, Sen. Thom Tillis, R-N.C., told us. Facebook is no longer free to operate as it did when it acquired Instagram in 2012 and WhatsApp in 2014, Sen. John Kennedy, R-La., said. “I’m not prepared to say that they should be broken up,” but if the social network tries to make other major acquisitions, “they’ll be held up,” he told us. Enforcers must address these “substantial” competition issues, Sen. Ron Wyden, D-Ore., said.
Both Republicans and Democrats bashed the FTC’s data privacy-related settlements last week with Equifax (see 1907220045) and Facebook (see 1907190041). The same lawmakers in interviews questioned whether the agency has the authority and the will to properly police the tech industry. It’s worth asking if the tech industry should remain under FTC jurisdiction, said Sen. Josh Hawley, R-Mo., citing the agency’s “very, very checkered” enforcement record. The agency briefed his office two days before the Facebook announcement.
FTC authority was debated at Judiciary’s first tech task force meeting (see 1907180046), said Chair Marsha Blackburn, R-Tenn.: “We’ll look to see if the agency needs additional authorities.” Asked about DOJ’s industry review, she said, “Everybody is realizing that these social media platforms are sort of out over their skis when it comes to prioritization and some of the competition, antitrust, some of those issues.”
The FTC’s Facebook probe's significance will “depend on how real and effective the investigation is,” said Sen. Richard Blumenthal, D-Conn. “If they’re just doing it for a talking point or a headline, it will be meaningless. They need to be serious and sustained in that effort.” The agency also briefed Blumenthal’s office on the Facebook settlement. FTC Chairman Joe Simons repeatedly urged Congress last week to grant the agency civil penalty authority for first-time offenders, telling reporters of its limited privacy authority.
It’s not “terribly” surprising the FTC wasn’t able to secure a monetary penalty in the Equifax settlement, said Sen. Mark Warner, D-Va. Simons said the agency relied on state enforcers and the Consumer Financial Protection Bureau to secure up to $700 million in the joint settlement. “It’s very disturbing to me that we’re letting these companies who abuse people’s data not take appropriate data protection issues into account, and the agency that is supposed to protect Americans is not doing its job,” Warner said. “Thank goodness the CFPB stepped up.” For an agency that has been “slow to the draw,” the antitrust probe is fairly significant, he said.
“The FTC needs much stronger authority; no question about it,” said Sen. Ed Markey, D-Mass. Sen. Chris Coons, D-Del., told us he’ll advocate for stronger funding, staffing and authorities for FTC privacy enforcement. It’s possible for the agency to become the “most important protector of privacy in our society,” Coons said.