F.T.C. Commissioners Back Privacy Law to Regulate Tech Companies
Joseph Simons, the chairman of the Federal Trade Commission, on Wednesday during a House subcommittee hearing on internet privacy.Anna Moneymaker for The New York Times
Joseph Simons, the chairman of the Federal Trade Commission, on Wednesday during a House subcommittee hearing on internet privacy.Anna Moneymaker for The New York Times
Members of the Federal Trade Commission on Wednesday renewed their calls for Congress to create a national privacy law that would regulate how big tech companies like Facebook and Google collect and handle user data.
In testimony before the House Energy and Commerce subcommittee on consumer protection, commissioners also asked Congress to strengthen the agency's ability to police violations, and they sought more resources and greater authority to impose penalties.
Lawmakers are considering a national privacy law to regulate the collection and handling of user data, the most valuable currency of the internet economy. The idea has won the support of some Silicon Valley executives, and drew Facebook's chief operating officer, Sheryl Sandberg, to meet with lawmakers this week.
But progress has stalled over disagreements on the details of such a law, putting the United States far behind nations in Europe and beyond that have led a global charge to curb the growing power of big tech companies.
"We urge Congress to enact privacy and data security legislation, enforceable by the F.T.C.," Joseph Simons, the agency's chairman, said at the hearing.
The agency is nearing one of its most consequential decisions on privacy. The F.T.C. is in settlement talks with Facebook after a 13-month investigation into privacy violations, a decision that will set the bar for future enforcement of online privacy and provide a blueprint for regulation.
The case is also a test for Mr. Simons, a Republican appointed by President Trump, who is leading the settlement talks with Facebook. The agency is expected to impose a $3 billion to $5 billion penalty on Facebook for violating a 2011 privacy settlement with the regulator, in what would be a record penalty against a tech company.
The case was opened last year, after it was reported that a political consulting firm, Cambridge Analytica, had used a vast trove of Facebook data to compile voter profiles as part of its work on the 2016 presidential campaign.
As part of a settlement over the Cambridge Analytica breach, Facebook is expected to create several positions dedicated to privacy compliance and oversight. The five F.T.C. commissioners, three Republicans and two Democrats, have been divided on how severe the punishment should be, according to three people familiar with internal discussions.
At the hearing, Mr. Simons and other commissioners would not discuss the Facebook investigation, which is not completed. But comments from F.T.C. commissioners provided insight into their thinking on privacy cases.
The two Democratic commissioners said a punishment should send a strong message that a tech company in violation of privacy rules must change behavior. And in some cases, the F.T.C. should name top executives as liable parties, they said.
"For some firms fines are a parking ticket and the cost of doing business and cannot change behavior unless penalties are painful and finding out who at the top called the shots," said Rohit Chopra, one of the Democratic commissioners.
Mr. Chopra added that strong enforcement should include "looking at the role of individuals who made the decision that it was worth violating the law in order to profit."
The issue of executive responsibility has been a divisive topic during the F.T.C.'s settlement negotiations with Facebook, according to two people familiar with the decision. At one point, F.T.C. officials proposed naming Facebook's chief executive, Mark Zuckerberg, as a responsible party. That would subject him to financial and other penalties if Facebook ran afoul of privacy rules in the future. Mr. Zuckerberg is not expected to be made personally responsible in a final settlement.
[Read more: Facebook faces a big penalty, but regulators are split over how big.]
Republican members warned of going too far with a new privacy law.
Christine Wilson, one of the three Republican commissioners, said there could be "unintended consequences," and added that some privacy laws could be more burdensome on small companies than tech giants like Facebook and Google.
Noah Phillips, another Republican commissioner, cautioned that Congress and the agency needed to define what the legislation should achieve.
"We first have to figure out what problem needs to be solved," Mr. Phillips said in an interview during a break at the hearing.
After the hearing, Mr. Simons said he was open to naming individuals in privacy orders, but it depended on the circumstances.
"If you start naming people as a regular thing you will end up with lots more litigation, which means it's a lot more resource-intensive and you will bring fewer cases and get fewer settlements," he said.
Representative Kathy Castor, Democrat of Florida, was among lawmakers on Wednesday who pushed for the agency to seek higher financial penalties and stronger business restraints against tech companies that violate user privacy.
Ms. Castor pointed to the recent record-setting child privacy settlement against TikTok, a video-sharing app. The F.T.C. reached a $5.7 million settlement with the company, formerly known as Musical.ly. The company is owned by ByteDance, a Chinese internet conglomerate.
"I don't think the fine fits the crime," Ms. Castor said. "No C.E.O. is going to blink an eye" at that kind of penalty, she said.
But Representative Cathy McMorris Rodgers of Washington, the top Republican of the committee, warned about expanding the F.T.C.'s capabilities too far.
The agency should not, she said, "be transformed from a law-enforcement agency to a massive rule-making regime."
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