Yesterday, TechFreedom and the International Center for Law & Economics (ICLE) filed comments to be considered at the Federal Trade Commission’s (FTC) upcoming workshop: The “Sharing” Economy: Issues Facing Platforms, Participants, and Regulators. The comments urge the FTC to establish a permanent advocacy program, serving as a counterweight to entrenched incumbents who typically seek local and state government policies that prevent their markets from being disrupted by “sharing economy” services.
“There will always be counter-productive state and local laws that restrict new ways of serving consumers, yet the FTC spends only a tiny fraction of its resources on competition advocacy,” said Berin Szoka, President of TechFreedom, noting that, while the FTC does not clearly break out its advocacy budget, it could account for less than 1% of the agency’s total budget. “For years, Uber, Lyft, and other sharing-economy companies have been grappling with regulators doing the bidding of established industries. But the FTC’s been asleep at the wheel — too busy harassing tech companies over their use of customer data.”
“The FTC needs to make advocacy an institutional priority — starting with reviving its 2001-2004 ecommerce advocacy program,” urged Szoka, referring to the Internet Task Force, which counseled state and local regulators against red tape that stopped consumers from buying goods and services online, from contact lenses to wine and legal services. “The FTC also needs to become proactive: it can’t keep waiting for other regulators to ask for its opinion, because those who need it most have no incentive to ask — they’ve been captured by taxis, hotels and other incumbents.”
“Establishing a permanent, expanded advocacy program is easily the best investment the FTC could make, but it does come with risks,” warned Ben Sperry, ICLE Associate Director. “The FTC’s recent history is clear: the more it studies, the more it regulates. Last year’s FTC data broker report is just the latest example. The FTC should resist the tendency to regulate Uber, AirBnB and other sharing economy companies the same way it’s regulated privacy and data security — by bringing major players under consent decrees that force the companies to start vetting product innovations with the FTC. But forcing innovators to ‘play it safe’ will sap the disruptive spirit that has made these companies so successful. So any stepped-up advocacy program needs to be matched with an institutional commitment to regulatory humility.”
On Tuesday, the two organizations expressed concerns about the FTC’s so-called “common law of consent decrees” as de facto regulation created outside the legal system in comments objecting to the FTC’s settlement of charges brought against Nomi Technologies regarding tracking of customers’ movements in-store. The comments urge the FTC to reform its enforcement practices and hold workshops to assess whether its settlements have been consistent with its bedrock policy statements on deception and unfairness.
- FTC Reform Report, “Consumer Protection & Competition Regulation in a High-Tech World: Discussing the Future of the Federal Trade Commission”
- TF and ICLE Event on FTC Reform and the agency’s use of economics in digital consumer protection cases
- “The Second Century of the Federal Trade Commission,” Berin Szoka and Geoffrey Manney in Techdirt
- TF’s comments on the Office of Science and Technology Policy’s “Big Data” inquiry