FTC Could Follow Facebook Formula With Recent Big Tech Privacy Orders
The FTC’s recent inquiry into social media company data collection practices could likely result in enforcement action, much like the agency’s 6(b) study that led to its antitrust case against Facebook, an ex-official and attorneys said in interviews. Some said to expect the social media companies to negotiate with the agency over the scope of the latest 6(b) study, which seeks details on how data practices affect younger users and others (see 2012150005).
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The FTC sent orders to Facebook, YouTube, WhatsApp, Amazon, Twitter, ByteDance, Reddit, Snap and Discord earlier this month. The agency previously issued 6b orders on Big Tech acquisitions in February (see 2002110023), months before bringing its recent antitrust case against Facebook.
The inquiry is “so sweeping and involves practices that are so much at the core of the modern, digital economy that it would be surprising if we did not see some enforcement action involving some issue related to these orders during the Biden FTC,” said ex-FTC General Counsel Stephen Calkins, now a Wayne State University law professor. But 6(b) orders aren’t “principally about enforcement; it’s about learning,” he said. The original intent of such studies was to help the agency get informed and report to Congress about what’s going on in the economy, he said, though on occasion it leads to enforcement action.
It’s “likely” to result in enforcement action due to all the tech industry activity and bipartisan support for investigating companies, said Rothwell Figg’s Jennifer Maisel. Privacy practices are under scrutiny, but with a change of administration, it’s unclear what enforcement action would involve, she said. The orders will help the agency establish a baseline and compare activities with privacy policies, said Maisel’s law firm partner Christopher Ott: “It’s going to be a target-rich environment, because a lot of the data collection that’s going on with the biggest players is very poorly understood by people outside of the industry.” Streaming services for children are “fruitful targets,” said Maisel, noting the agency’s authority under the Children's Online Privacy Protection Act.
The study isn’t connected to enforcement action, but it could inform enforcement, said Hinch Newman's Richard Newman: “There is a regulatory focus on data privacy on a state and federal level. Section 6(b) of the FTC Act allows the FTC to pursue studies separate from law enforcement.”
“I don’t know that anyone who receives a 6(b) order says, ‘Oh boy, glad this wasn’t a subpoena,” said Bradley’s Ty Howard. It “functionally is a subpoena, and they’re incredibly burdensome.” The orders are nothing less than “sweeping,” seeking broadly defined pieces of information from nine different companies, he said. Howard expects the companies will resist and seek to narrow the inquiry’s scope. He noted Commissioner Noah Phillips’ dissent and characterization that the inquiry is too broad and not valuable. Companies could seek to settle the negotiation in federal court, but it’s more likely things will play out behind the scenes informally, he said.
Womble Bond’s Ted Claypoole agreed with Phillips there’s no logical or regulatory basis for the inquiry. He called it a politically motivated “fishing expedition” led by a vindictive White House, with President Donald Trump taking one last shot at Big Tech. It’s fair to look into these practices, but this isn’t the correct mechanism if the agency is seeking enforcement action, he said: “When you ask somebody for all of your plans and strategies, that’s not targeted enough to get at something that the FTC is even able to regulate.” He expects companies to file statements with the agency saying they will adhere to the orders, but with pushback on the scope. The strategy for Facebook and the others should be to delay, argue the scope and see if the inquiry can be narrowed, he said.