The FTC Rethinks Its Role In The New Data Economy

The ad tech industry might soon be facing a more punitive FTC.

While the consumer privacy and protections agency traditionally came down on blatantly fraudulent advertising, like rebilling scams, or improperly targeting children, the influx of data-driven technology has required the FTC to reevaluate its agenda.

With consumer privacy protections becoming a more pressing issue, Europe’s General Data Protection Regulation and the calls for federal regulation in the United States to supplant California’s Consumer Privacy Act, the FTC might have to take on Silicon Valley tech giants.

Commissioner Rohit Chopra, one of five FTC leaders, was interviewed at AdExchanger’s Industry Preview conference in New York City last week about his vision for enforcement in this arena and potential new US privacy laws.

AdExchanger: The FTC has historically been supportive of ad industry self-regulation, but will that change with so much scrutiny now on the industry?

ROHIT CHOPRA: I don’t need to explain to anyone in this room that the impact of big data on the economy is not only reshaping how we work, but how our society is moving forward. Self-regulation always has a role, but it means people face consequences when they go over the line. It can’t just be a cleanup effort to cover over bad conduct. People are demanding more accountability from companies misusing their data.

Does accountability mean a fine?

My worry even about the question is that it assumes that breaking the law should be a cost-benefit analysis. Honest businesses, especially the small ones, are working hard to make sure they’re playing on the right side of the rules. But they don’t necessarily have a way to hire up armies of lawyers. One of my emphases as commissioner is that there needs to be even-handed enforcement across the board. And on top of that you shouldn’t profit from breaking the law, especially for repeat offenders.

After seeing state legislative efforts and the Los Angeles district attorney recently bringing a case against the Weather Channel app, what is the FTC’s position on regional players flexing their muscles on these issues?

We do have some privacy and security laws in specific sectors, or covering advertising to children for instance, but for a developed country strangely we do not have a general privacy law.

Take the Fair Credit Reporting Act, which protects from credit reporting errors. There’s always been a role in that law for states, private plaintiffs and the federal government. I think many states see a big void at the federal level right now and are taking action. We should expect continued interest from the states on wanting to make sure if there aren’t federal-level protections that they’re filling in the gap.

Do you expect a federal privacy law by, say, 2020?

I make it a point to never predict what Congress will do. But there certainly are more hearings and discussions. I’m interested in how the FTC can use existing tools.

We’re known for throwing the hammer down on small-time scammers, but we should be willing and able to confront widespread harm if that company is large.

We also enforce antitrust law, which is becoming a bigger interest at the intersection of data and tech companies. I want us to use our tools, not wait for Congress to act.

Do the antitrust laws we have on the books apply well to online companies?

There’s an increasing concern about whether companies are really able to enter a marketplace or if it's dominated and solidified. I don’t want to live in a country where people cannot start a business in their garage and hit it big. But when you hear from those in the VC space, including those investing in ad tech – and we’ve seen investments go down in that arena – they’re wondering how will new startups challenge incumbents.

But there are flexible laws for antitrust. If they need to change they should, but we can and should use the existing laws.

What do you make of the calls for new regulations on data brokers in the United States, similar to EU data subject requests?

Data brokers have gained some interest because theirs is a marketplace where consumers aren’t the consumer. Consumers are the products. It’s similar in that regard to credit reporting. But in credit reporting consumers have specific laws and protections in place.

 

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