House Subcommittee Vets New FTC (update)

The House Subcommittee on Digital Commerce and Consumer Protection, in the first oversight hearing for the new slate of Federal Trade Commission members, probed the commissioners on issues like data security, the Internet of Things, privacy, deceptive advertising, and more. Chairman Bob Latta (R-OH) said the subcommittee is sending letters to location data aggregators Location Smart, Securus, and 3C Interactive "to probe their data handling and use." The letters are a follow-up to letters it sent to Apple and Google asking them to explain how smart phone user data is protected when it is compiled and shared. Full Commerce Committee Chairman Gred Walden (R-OR)  said the FTC needs to go after bad actors, and named some names: Facebook, Equifax and Uber. Chairman Walden said data security incidents are a significant threat and the committee was "laser focused" on the issue. He again named names: Facebook and Cambridge Analytica. "Particularly with Facebook being under a consent order with the FTC, we are closely evaluating the tools being used by the Federal Trade Commission" as that investigation of the consent order and whether Facebook violated it moves forward, he added. Chairman Walden said the committee would look into whether there were ways to improve privacy regulation that could help consumers better understand how data flows support the global economy.

While Republicans are concerned about data-sharing issues, they also are concerned that too strict a regime, say opt-in for all data sharing, could undermine the basic economics of the web, something that concerns edge providers as well. Full Committee Ranking member Frank Pallone (D-NJ) put in a pitch for giving the FTC fining authority for first-time violations. Under the FTC Act, the agency can only seek an injunction for such a violation or strike a settlement. Subcommittee Ranking Member Jan Schakowsky (D-IL) suggested the commission needs more tech resources, including tools to protect consumer online privacy, such as civil penalty authority.

New FTC Chairman Joseph Simons said that the agency is "very interested" in learning more about the European Union’s record fine of Google. "We’re going to read what the EU put out very closely," said FTC Chairman Joseph Simons, while noting the US and EU have different antitrust regimes. He said he had discussed the issue with EU Competition Commissioner Margrethe Vestager. Chairman Simons said the mobile operating system market dominated by Android and Apple Inc.’s iOS is "concentrated." "In the antitrust world, most of the problematic conduct occurs where firms are big and have market power," Simons said. "This is one of the places we would focus." He added Google and Apple do "compete pretty heavily against each other."

Update from Politico:

FTC HEARING OUTTAKES — There was a fair amount of talk at Wednesday's FTC oversight hearing about the EU's antitrust fine against Google (see here and here). But MT has some other highlights you may have missed. Simons told lawmakers his agency is "affirmatively evaluating whether to create a Bureau of Technology" rather than simply have technologists embedded in existing bureaus. He also said he believes the recent Supreme Court decision in Ohio v. American Express (which some feared may have gutted the government's antitrust powers against Silicon Valley) is "extremely narrow" and not likely to interfere with FTC matters like enforcing net neutrality.

— Privacy pitfalls: Simons and other FTC commissioners suggested the agency could benefit from more authority. But the chairman also warned that "if you do privacy in the wrong way ... you might end up reducing competition" and "entrench the large tech platforms." He noted fears in Europe that more advertising dollars will flow to tech giants like Google following the General Data Protection Regulation, because those companies have the resources to pay legal fees and fines. House Energy and Commerce leader Greg Walden (R-Ore.) said that's the "conundrum" they face: "You don't want to do something that enhances their dominance."

— Beating around the Facebook bush: While Simons declined to get into specifics about the FTC's investigation into whether Facebook violated its 2011 consent decree in its dealings with Cambridge Analytica, he said in general terms, "We look at everything, what they say in public documents, advertising, the website, the whole range." FTC Democrat Rohit Chopra, meanwhile, talked about applying the law evenly to big and small companies. With small-time scammers, the FTC "lays down with the hammer," going as far as seeking bans of top executives, he said, adding that he wants the agency to do the same for big corporations. "The market needs to see we're willing to do that," Chopra said.

— Blooper reel: Simons spent hours with lawmakers referring to him as "Simmons" during the hearing before finally correcting the faulty pronunciation. At another point, when Rep. Jan Schakowsky (D-Ill.) brought up the EU's record-breaking fine against Google, Simons told her he had just spoken to Europe's competition commissioner, Margrethe Vestager, the day before. "I'm sorry, who is that person?" Schakowsky asked. Apparently she didn't recognize the name of the antitrust chief who is well known in tech circles.