FTC faces skeptics as it targets big tech

FTC faces skeptics as it targets big tech
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The Federal Trade Commission (FTC) responded to its critics this week by launching a new task force to examine big tech’s market power as the agency faces pressure to get tougher on the nation’s corporate giants.

The FTC said Tuesday that the new team would be policing for anticompetitive behavior in the tech sector as well as reviewing proposed mergers and ones that have already been approved by the agency. 

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But the announcement has sparked a host of questions and new criticism for the agency from both tech industry defenders and critics. 

The commitment to look at “consummated” mergers suggests the task force could be looking to breakup large tech companies. But those who have called on the agency to do that are waiting for more concrete signs the FTC is serious about cracking down on Silicon Valley.

“Obviously, we are glad that the FTC is looking more closely at competition in the tech sector, but the creation of the task force is not a substitute for overdue enforcement action,” said Marc Rotenberg, president of the Electronic Privacy Information Center (EPIC).

EPIC has urged the FTC to “unwind” past transactions from companies like Facebook and Google over concerns about their market power and handling of user data. Privacy and antitrust advocates have railed against regulators for allowing Facebook to buy Instagram and WhatsApp and for approving Google’s purchase of online ad and smart home companies.

The agency has also been careful not to identify potential targets of the task force.

In a phone call with reporters Tuesday, Bruce Hoffman, director of the FTC’s Bureau of Competition, wouldn’t identify any specific cases that the new team will be looking at.

The move has caused concern among those who want the government to remain hands-off with the industry. Robert Atkinson, the president of the free market Information Technology and Innovation Foundation, urged the FTC not to give in to the growing movement to take on Silicon Valley.

“Given the increasing ‘techlash,’ especially from the anti-monopoly left that sees large firms of any kind as suspect, it is not surprising that the FTC took this step,” Atkinson said in a statement. “Hopefully the FTC will not be swayed by populist furor and instead confine itself to careful, objective analysis based on the reality that many technology markets tend toward concentration, and that this concentration is usually pro-consumer and pro-innovation.”

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The FTC, which handles consumer protection and antitrust cases, has been under increasing pressure from lawmakers to crack down on internet giants amid growing concerns about their market dominance and privacy practices.

Last year, the agency opened an investigation into Facebook’s handling of the Cambridge Analytica scandal, in which the political consulting firm obtained millions of Facebook users’ data without their knowledge.

The scandal brought more heat on the agency, with critics saying regulators had been lax in enforcing a series of consent decrees with tech companies, including Facebook, over their data policies.

In the fall, the FTC held a series of panel discussions with experts addressing the agency’s role in overseeing the tech sector. FTC Chairman Joseph Simons, a Republican, said Tuesday the creation of the new task force was a result of those discussions.

Justin Brookman, the director of the privacy and technology policy at Consumer Reports and a former FTC staffer, said he’s encouraged by the agency’s move.

“At some point you get a little frustrated with the pace of how things are going. We’ve had now six months hearings and now we’re going to have a task force and meanwhile Facebook and Google are gobbling up the media advertising dollars while newspapers are going out of business,” Brookman said.

“So, I’d like to see a little more sense of urgency,” he continued. “But I do think that designating this level of resources is a significant sign that they recognize something needs to change.”

But Brookman added that the new task force should acknowledge that existing limitations in antitrust law and a lack of resources at the agency will be a significant hurdle in taking on any major tech company.

Others aren’t willing to cut the agency so much slack.

Sen. Richard Blumenthal (D-Conn.) has been hounding the FTC for months to move forward with an enforcement action against Facebook over the Cambridge Analytica scandal.

That case has quickly become a test for whether the agency can rein in internet giants that critics believe are out of control.

“I’m glad that they have convened it, but what we really need is action,” Blumenthal told reporters at the Capitol on Wednesday about the task force. “They should have acted well before now on the consent decree that was issued.”

How the FTC handles its new task force will be closely watched by all sides. 

The agency figures prominently in lawmakers’ plans to write up and pass the nation’s first comprehensive internet privacy law. Some members are hoping to use the privacy bill to expand the agency’s authority to set rules for the industry and to give it more funding.

Blumenthal said he would like to see the FTC do more with the resources it has.

“The FTC has to be a proactive and aggressive law enforcer in this area, otherwise the new law will be dead-letter,” he said. “The FTC has to be expansive in its powers, aggressive in using them and proactive in making sure the law is a real a deterrent.”