FTC kicks off major effort to craft data privacy rules

SOURCE: Axios

The Federal Trade Commission on Thursday began an effort to regulate data privacy practices, the first major regulatory undertaking by FTC chair and Big Tech antagonist Lina Khan.

Why it matters: The FTC rulemaking could lead to strict regulations on how firms collect and use people’s personal information online — a threat to the Big Tech business model that relies on targeted advertising.

Driving the news: The FTC voted 3-2 along party lines to seek feedback on “the harms stemming from commercial surveillance and whether new rules are needed to protect people’s privacy and information.”

– The FTC, which has taken action in the past against companies for lax data security or misleading privacy promises, says it needs more regulatory firepower to fully protect consumers’ privacy in the digital age.

– “Rules that establish clear privacy and data security requirements across the board and provide the Commission the authority to seek financial penalties for first-time violations could incentivize all companies to invest more consistently in compliant practices,” the agency said in a press release.

Yes, but: The FTC’s ability to pass regulations is legally fraught, and the recent Supreme Court decision in an emissions case indicates the federal judiciary will be hostile to what it views as agency overreach.

– The FTC’s Republican commissioners, Noah Phillips and Christine Wilson both pointed to the need for a federal privacy law to protect consumers.

– “What the (advance notice of proposed rulemaking) does accomplish is to recast the commission as a legislature, with virtually limitless rulemaking authority where personal data are concerned,” Phillips wrote in his dissent.

What they’re saying: “The growing digitization of our economy—coupled with business models that can incentivize endless hoovering up of sensitive user data and a vast expansion of how this data is used—means that potentially unlawful practices may be prevalent,” Khan said in a statement.

– “Our goal today is to begin building a robust public record to inform whether the FTC should issue rules to address commercial surveillance and data security practices and what those rules should potentially look like.”

– Democratic Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya also highlighted the need for a federal privacy law, with Bedoya saying, “There are no grounds to point to this process as reason to delay passage of that legislation.”

Meanwhile, a bipartisan privacy bill has advanced farther than similar proposals but still faces obstacles in its path to becoming law.