Today marks the 99th anniversary of the Federal Trade Commission Act, which will be commemorated tomorrow by FTC Commissioner Maureen Ohlhausen in an public address entitled: “100 is the New 30: How the FTC Stays Vital in the Digital Age.” The following statement about the anniversary can be attributed to Berin Szoka, President of TechFreedom, and Geoffrey Manne, Executive Director of the International Center for Law and Economics:
When Congress created the Federal Trade Commission ninety-nine years ago today, it never imagined the Commission would become the primary agency responsible for grappling with technological change, but that’s precisely what the FTC has become: the de facto Federal Technology Commission. In principle, this is mostly for the best. The FTC’s case-by-case approach is far better suited to fast-changing industries, from broadband to Uber to data-driven tech companies, than the FCC, local taxicab commissions or European-style data protection agencies. Those traditional regulatory agencies all try to write rules based on what they imagine new technology will look like — or what they think it should look like.
But as attractive as the FTC model is in principle, how the agency works is deeply problematic. The Commission has uniquely broad powers over nearly every company in the country based on the remarkably vague legal standards of Section 5. The core problem isn’t the FTC Act but that the FTC has failed to develop its own legal standards the way antitrust law has evolved over the last century: through judicial adjudication and ongoing doctrinal analysis by the agency grounded in economics. Particularly on issues like privacy and data security, the FTC operates primarily by strong-arming companies into settling cases out of court. But neither this “common law of consent decrees” nor the FTC’s privacy reports constitute actual law. It’s a flexible approach, but only in the worst sense: made by disposing of any legal constraints or due process. The FTC is repeating kind of informal regulation through unbounded discretion that, in the 1970s, nearly led a heavily Democratic Congress to abolish the agency. This kind of extra-legal approach cannot be the way we regulate technology in the next century.
For more information, check out TechFreedom’s amicus briefs in the Wyndham and POM Wonderful cases, and its recent event on the LabMD case.