Could a turf war be brewing? Federal Trade Commission Commissioner Maureen Ohlhausen spoke out against the Federal Communications Commission's proposal to regulate privacy and did not hold back.
In prepared remarks at the Free State Foundation's Eighth Annual Telecom Policy Conference, Ohlhausen told attendees that the FCC's proposed rules would "unavoidably reduce consumer choice" and did not reflect the will of the majority of consumers.
The Commissioner began by discussing the FTC's method of protecting consumer privacy, noting the agency has brought more than 150 privacy and data security enforcement actions using an approach that "respects the autonomy of all consumers" by enabling "consumers to match their privacy preferences with a company's privacy practices."
This strategy is reflected in enforcement actions alleging deceptive conduct where a company fails to live up to its privacy promises, Ohlhausen explained, with unfairness actions established at "a baseline prohibition on practices that the overwhelming majority of consumers would never knowingly approve."
Ohlhausen then compared one of the FTC's most sweeping consumer privacy efforts—the establishment of the national Do Not Call Registry—with the FCC's recently proposed privacy rules for broadband providers.
Pursuant to the FCC's proposal, consumers must provide consent before a broadband provider can make use of their Internet history for behavioral targeting unless the ads are related to other communications services, which requires opt-out consent.
Both the DNC rule and the FCC's proposal mandate specific behaviors by the companies subject to them and a framework for consumer choices, the Commissioner explained. However, the FCC's privacy proposal "differs significantly from the choice architecture the FTC has established under its deception authority." Under the FTC's approach, the agency enforces the promises made by companies to consumers. Alternatively, the FCC requires companies to make privacy promises by adopting a specific opt-in/opt-out regime, Ohlhausen said.
Although the FCC "repeatedly insists this is about consumer choice," Ohlhausen strongly disagreed, as "opt in mandates unavoidably reduceconsumer choice." The default opt-in condition may not match the average consumer preference, she said. "If the FCC mandates opt in for a specific data collection, but a majority of consumers already prefer to share that information, the mandate unnecessarily raises the costs to company and consumers," she told conference attendees.
Opt-in mandates may also prevent unanticipated beneficial uses of data, she added. "[D]ata, including non-sensitive data, often yields significant consumer benefits from uses that could not be known at the time of collection," the Commissioner said. "This proposed opt in regime would prohibit unforeseeable future uses of collected data, regardless of what consumers would prefer. This approach is stricter and more limiting than the requirements that other Internet companies face."
If the FCC wished to be consistent with the FTC's strategy with regard to privacy, "it would take a different approach and simply require opt in for specific, sensitive uses," Ohlhausen suggested.
She also contrasted the popularity of the DNC rule—which reflected an overwhelming consensus among consumers, the FTC Commissioners, and strong support in Congress—with the controversy facing the FCC's privacy proposal, opposed by the minority FCC Commissioners and lacking congressional backing.
Finally, Ohlhausen reiterated the importance of the FTC's role in privacy and data security enforcement, calling the Commission "one of the most active and effective data protection agencies in the world."
"At its core, protecting consumer privacy ought to be about effectuating consumers' preferences," the Commissioner concluded. "If privacy rules impose the preferences of the few on the many, consumers will not be better off. Therefore, prescriptive baseline privacy mandates like the FCC's proposal should be reserved for practices that consumers overwhelmingly disfavor. Otherwise, consumers should remain free to exercise their privacy preferences in the marketplace, and companies should be held to the promises they make. This approach, which is a time-tested, emergent result of the FTC's case-by-case application of its statutory authority, offers a good template for the FCC."
To read Commissioner Ohlhausen's remarks, click here.
Why it matters: Commissioner Ohlhausen did not mince words about the FCC's privacy proposal (although she did add a disclaimer that the comments were based on her own thoughts and did not necessarily represent the views of the FTC or other Commissioners). Contrasting the proposal with the FTC's standard approach to privacy and data security, as well as one of its most successful consumer privacy endeavors, the federal Do Not Call registry, Ohlhausen found fault with the mandated opt-in regime, which she argued did not reflect true consumer preference. Since the Commissioner discussed the proposal, the FCC voted 3 to 2 to move forward with the rules, opening them up to public comment.