President-elect Joe Biden's transition to the White House is in full swing, and tech and telecom industry watchers believe the incoming administration has an opportunity to usher in a new era of consumer privacy and antitrust enforcement.
This is Part 1 of a two-part series on how the Biden administration could change regulation in the technology and telecom sectors. Part 2 will be posted Dec. 8, 2020.
In recent years, consumer privacy and antitrust have emerged as issues with bipartisan support. While a slew of antitrust investigations is underway, little progress has been made on privacy protection at the federal level, as lawmakers have been slow to coalesce around a nationwide privacy bill and regulators have been stymied by legal limitations on their authority.
Giving the FTC more teeth
Christine Bannan, policy counsel at New America's Open Technology Institute, who focuses on privacy and platform accountability, said in an interview that she sees new leadership at the FTC as an opportunity for the agency to "re-evaluate its strategy for privacy enforcement and come up with solutions that will change company behavior going forward."
While the current Republican-led FTC has brought privacy cases against Facebook Inc. and Google LLC's YouTube LLC that resulted in a $5 billion fine and $170 million fine, respectively, Bannan says that the enforcements have not significantly improved consumer privacy or led to a change in behavior.
One reason the FTC has not been more aggressive on privacy enforcement, according to FTC Chairman Joseph Simons, is that the agency is currently hamstrung because it does not have civil penalty authority for first time offenders of consumer data privacy rules.
That is because the FTC has recently conducted investigations under the authority of Section 5 of the Federal Trade Commission Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce." This prohibition applies to all persons engaged in commerce, including banks. However, the act does not give the agency the authority to issue civil penalties for first-time offenders, in most instances. Typically, the agency can only issue them against entities already under an agency order, as was the case with Facebook when the FTC issued its $5 billion fine.
The Republican majority on the commission reaffirmed this view in a 2020 report on the agency's use of authorities to protect consumer privacy, and Simons has repeatedly called on Congress to give the agency expanded privacy authority under new comprehensive legislation.
However, Bannan says that the agency does not need Congress to act before they can be more aggressive in cracking down on privacy violations.
"The agency has stuck to using the Section 5 authority for privacy, and under that they don't have the ability to fine on the first offense," she said, arguing that the agency has other tools to pursue enforcement that it is not using.
"A big part of it will be having new leadership at the agency and the political will to use those tools more effectively," she said.
This point was also made by Democratic FTC Commissioner Rohit Chopra in a June statement.
"Contrary to what many believe, the FTC has several relevant rulemaking authorities when it comes to data protection, but simply chooses not to use them," said Chopra. "The FTC should inventory and publish its existing rulemaking authorities ... and take steps to deploy unused authorities that would address critical data protection concerns."
He also went on to say that Congress has given the agency the ability to create new rules to define unfair and deceptive practices, and to then seek civil penalties against violators of those rules.
"The Commission could rely on this ... authority to get started on developing data protection rules to codify existing legal precedents and enforcement policy. Even if this process proves to be time-consuming, it is worthwhile given the pressing problems we face," he said
A new age of antitrust
Scrutiny towards large online platforms has been building in both parties in recent years — and we should expect that to continue and possibly expand — in the Biden administration, according to Avery Gardiner, a former U.S. Department of Justice lawyer who worked in the Antitrust Division.
While the U.S. Justice Department filed an antitrust lawsuit against Alphabet Inc.'s Google earlier this year, multiple antitrust investigations around Google and other tech firms remain ongoing — and reports suggest further action could be imminent at the federal and state level.
"I would expect the emphasis on tech to continue. I hope it broadens, because we shouldn't just be looking at four companies — we should probably be looking at a whole bunch more," said Gardiner, who now works as a senior fellow for Competition, Data, and Power at the Center for Democracy & Technology, a nonpartisan, nonprofit organization focused on digital rights policy, in an interview.
In 2019, the FTC and DOJ reportedly reached a series of agreements assigning jurisdiction over investigations into companies including Facebook Inc., Apple Inc., Amazon.com Inc. and Google. While the FTC retained jurisdiction over Facebook and Amazon, the DOJ was expected to lead any inquiries into Google and Apple.
All eyes on Google
The DOJ's current lawsuit against Google alleges the company unlawfully maintained monopolies in the general search, search advertising, and general search text advertising markets through "anticompetitive and exclusionary practices." It also accuses Google of paying "billions of dollars each year" to device makers such as Apple, as well as to major U.S. wireless carriers including AT&T Inc., T-Mobile US, Inc. and Verizon Communications Inc., to secure default status for its general search engine.
Eleven states with Republican attorneys general signed on to the suit.
While Gardner said she does not expect a drastic change to the current approach to the Google case in the Biden administration, there is a question of whether the administration could amend the number of claims, and whether additional states will join the suit in a new administration or bring their own case.
The Wall Street Journal reported Nov. 30 that U.S. federal and state officials are preparing up to four new antitrust lawsuits against Facebook and Google by the end of January 2021.
Gardiner also believes the Google case presents a harbinger of how antitrust enforcement could change going forward. She noted the case takes the position that being set as the default - if a company has significant market power, is abusive in and of itself.
"That's new. I haven't seen that in any other case. And if that's a theme that the next administration carries forward, then we're going to see some big changes in how companies have to set defaults, and that only becomes more important in an era of connected devices smart homes and the Internet of Things," she added.