Yesterday, two of TechFreedom’s policy experts delivered remarks at the FTC’s September Open Commission Meeting. Their oral remarks are presented here, lightly edited for clarity.

Remarks of Berin Szóka, President of TechFreedom:

I’m Berin Szóka, an Internet lawyer and President of TechFreedom, a think tank dedicated to striking a careful balance in consumer protection.

The FTC has a long track record around advertising and kids. Indeed, Congress has specifically barred the Commission from making certain rules in this area—and only this area. That says a lot about the Commission’s disastrous attempt in the 1970s to ban much advertising to kids. More recently, in 2019, the Commission settled charges that YouTube had violated the Children’s Online Privacy Protection Act, requiring the site to ban interest based advertising in channels offering content “made for kids” under 13.

According to a 2019 study, this settlement reduced advertising revenues for content creators between 60 and 90%. A new study explores how this revenue drop affected the supply, quality, and mix of kids’ content. Four economists, led by Garrett Johnson and James Cooper, a former Deputy Director in the FTC’s Bureau of Consumer Protection, studied the top 5,000 YouTube channels. They found that the supply of content made for kids fell 13%, and that content views fell 22%. Smaller channels and those that post “educational and entertainment content” suffered most. Content creators shifted their focus in order to avoid the ban on interest-based advertising: Among channels that produced for a “mixed” audience of kids under 12 and older users, 25% simply stopped producing content for kids. Ultimately, these costs were borne by kids and parents.

Perhaps these costs were worth it, but without hard data, we can’t really say. The FTC employs some of the best economists in the country. It can get market data not available to academic researchers. The Bureau of Economics should study how the 2019 COPPA settlement affected content creators, and how the market for kids and teens’ content works today. A report on that question should guide the Commission before it makes any major changes in how it regulates children’s advertising, including acting on the staff report being voted on today. 

Remarks of Andy Jung, Legal Fellow at TechFreedom:

I’m Andy Jung, a Legal Fellow at TechFreedom.

In July, The Washington Post reported that the Commission had opened an investigation into OpenAI by issuing a civil investigative demand regarding potentially unfair or deceptive privacy practices.

Section 20 of the FTC Act authorizes the Commission to issue CIDs requiring the recipient to produce documents, submit tangible things, file written answers, and give oral testimony. These pre-complaint investigations are ordinarily nonpublic. “However, the Commission’s policy has long included exceptions for disclosure of . . . investigations that involve significant risk of economic harm or risk to public health or safety.” The Commission has the authority “to make appropriate disclosures concerning nonpublic investigations whenever it determines that doing so would be in the public interest.”

Additionally, the Office of Public Affairs may “make limited disclosures about the general nature and scope of a nonmerger investigation in unusual cases where there has been substantial publicity. . . .”

This is one of those unusual cases. The OpenAI investigation leaked and has received substantial publicity. The OpenAI CEO even tweeted about it. Further, AI is a topic of immense “public interest” and significance, as the Commissioners have each noted. The investigation also raises First Amendment concerns around anonymous speech, as flagged by Former FTC Acting Chief Technologist, Neil Chilson. 

The OpenAI investigation has meaningful implications for consumers, and the Commission has positioned itself as a major regulatory player in the space. Accordingly, the Commission should, at the least, disclose the general nature and scope of the investigation. The CID leaked two months ago, yet the Commission has yet to release a statement. The public deserves an explanation, in clear, plain language, of the Commission’s intentions regarding this high profile and high-impact agency action.