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Policy / DCN perspectives on policy, law, and legislative news surrounding digital content

The FTC is about to enter a new era

May 26, 2022 | By Chris Pedigo, SVP Government Affairs – DCN @Pedigo_Chris

Nominated by President Biden, and recently confirmed by the Senate, Alvaro Bedoya was sworn in as the 5th Commissioner of the Federal Trade Commission (FTC) this month. As a result, Chair Lina Khan now has a majority of Democratic-nominee votes with which she intends to move quickly to implement a promised progressive agenda. Let’s dig deeper into what issues Chair Khan and the FTC are likely to move forward and how this might play out.

Privacy rulemaking

In February, the FTC gave the required advance notice to the relevant Congressional committees that it intended move forward with a rulemaking “to curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.”

Now that Commissioner Bedoya is confirmed, it is widely expected that the FTC will move forward in the very near future. Historically, an FTC rulemaking of this kind can take years to process. However, in 2021, the FTC streamlined the process including by removing the requirement for a staff report and analysis. So, while it is not clear exactly how long it will take, the intent is to move quickly.

One of the wild cards in this process is a petition filed last year by Accountable Tech, which urged the FTC to ban “surveillance advertising” under its authority to prosecute “unfair or deceptive” acts. The petition suggested the FTC could act in one of two ways:

  • Prohibit platforms from using personal data for targeting ads, or;
  • Prohibit businesses from “sharing user data, for the purposes of advertising, to any business line, website, advertising technology, or tracker other than the business or service with which a user intentionally interacts” AND prohibit platforms over a certain threshold from using consumer data to target ads.

As hinted at in the second option, Accountable Tech’s petition notes that “any rule should make clear that it does not ban all advertising or even all targeting of advertising.” Indeed, they specifically call out search, contextual, and first-party targeted advertising as acceptable practices in line with consumer expectations. All that said, it is unclear whether and how much the FTC will follow the suggestions of the petition.

Ramping up COPPA enforcement

In 2019, the FTC initiated a mandatory review of their regulations concerning the Children’s Online Privacy Protection Act (COPPA), but we have heard very little since. Consumer groups have been calling on the FTC to modernize the COPPA rules, which have not been updated since 2013. Now that Chair Khan has a majority, we are likely to see revised draft regulations sometime before the end of this year.

In the meantime, on May 19, the FTC issued a policy statement indicating that they intend to closely examine whether ed tech providers are fully complying with COPPA. Specifically, they will focus on whether these companies have sufficient “limitations on collection, use, and retention, along with security.” Enforcement action in the ed tech space could provide clues as to how the FTC wants to update the COPPA rules.

Merger reviews

The Biden Administration has publicly announced that it will closely scrutinize any and all acquisitions by big tech companies. To that end, the Department of Justice and FTC are working on updating the merger guidelines.

As part of a series of “listening forums” to gather feedback, Chair Khan voiced concerns about mergers in the media sector, noting that there were $200 billion worth of mergers in 2021. She disclosed that “we are working to ensure that our analytical methods are keeping up with new market realities.” Specifically, she wants to avoid consolidation that leads to firms having “outsized power over how information is distributed.” At the same forum, DOJ Assistant Attorney General Jonathan Kanter expressed concerns that consolidation in the media sector has led to a decrease in the amount and diversity of content.

From my perspective, there are two big takeaways from this listening forum. First: The Administration is doubling down on its efforts to stop big tech platforms from developing (via acquisition) a dominant position in the content industry. To that end, they are looking for new ways to identify and quantify harms to content creators and the market in general. And Second: While we can expect the Administration to remain hyper-focused on big tech mergers and acquisitions, publishers should also understand that the FTC and DOJ will be closely scrutinizing deals between publishers.

Dark patterns

Last year, the FTC issued a policy statement to curb the use of “dark patterns” to trap consumers in subscriptions. Since then, the FTC has followed up with enforcement action against various companies and we expect that action to continue going forward. Many have observed that Amazon may be in the Commission’s sights. While that may be true, the FTC’s enforcement record indicates it is looking at the industry more broadly.

A bold era begins

Lina Khan has been heralded as a bold thinker, ready to lead the FTC into a new, modern era. Yet, for most of her tenure, she has been hampered by the lack of a working majority. With that constraint removed, we can expect more and aggressive action from the FTC on privacy and competition. Indeed, the era of Lina Khan is about to begin in earnest.