The Federal Trade Commission (FTC) has developed a long-term plan for protecting consumers’ online privacy. However, it faces multiple challenges, including budget constraints, legal considerations and personnel changes. This effort is primarily due to the rapid increase in data collection by businesses, especially large technology firms.
The FTC has stated that it’s willing to pursue initiatives that will increase consumer privacy on its own, but it may not be possible to do so without congressional support. Its first steps would likely include increasing its scrutiny of online advertising and exploring new rules for the collection and use of consumer data, although the FTC hasn’t yet announced any new rule-making processes. However, FTC chair Lina Khan did state in October 2021 that she plans to explore privacy standards related to the practice of big business collecting consumer information for the purpose of improving their market position.
Congressional budgetary wrangling will shape the FTC’s impact on data privacy, according to many FTC officials. In addition, the Biden administration has already promised that it will hold big business accountable for its use of consumer data. Some observers also advise that writing broad policy rules under the Magnuson-Moss authority could result in successful lawsuits by businesses. This authority does prohibit certain commercial activities and can levy fines for first offenses, but restricting a company’s behavior requires the FTC to argue that the behavior constitutes an unfair or deceptive practice that harms consumers. The problem for the FTC is that little precedent exists for making such an argument about data privacy, making successful legal challenges a strong possibility.
Furthermore, former FTC official James Cooper believes that broad rules supporting data privacy could stifle future innovation involving consumer data. Cooper adds that these regulations could require several years to enact, despite a Congressional commission voting to streamline the Magnuson-Moss process in July 2021.
Consumer advocates argue that the FTC could use its power to restrict digital advertising, since it relies on the exchange of data between friends. Such a restriction would mainly apply to Amazon, Google and Facebook, which collectively control about 90 percent of the global digital advertising market, although none of these companies have commented on this matter. However, Microsoft’s chief privacy officer Julie Brill has stated that new standards for data privacy could improve the public’s trust in high-tech firms by focusing on data brokers that use data in ways the FTC could consider anticompetitive.
Khan has called for moving away from the current “notice-and-consent” approach to consumer privacy, which generally requires companies to explain their data practices and obtain consumers’ permission to collect and use their data. She added that policing unfair or deceptive business practices in this way avoids fundamental questions about whether businesses should be able to process consumer data in the first place.
The FTC has also informed Congress that its inquiries into these practices would begin to include more extensive investigations into digital platforms and stronger enforcement of existing settlements with data brokers. This expansion would require the FTC to at least triple the size of its Division of Privacy and Identity Protection, which currently has about 40 staffers. Lawmakers initially suggested using $1 billion from Biden’s social-policy plan to fund a new bureau for the FTC in September, but the administration reduced this figure to $500 million in October.
The FTC is introducing its new approach to protecting online consumer privacy amid personnel changes that could significantly affect its ability to make new rules in the short term. In particular, the associate director of the Division of Privacy and Identity Protection and the deputy director of the Consumer Protection Bureau left the FTC in October. Both former staffers had overseen the FTC’s work in consumer privacy during recent years.