Chairman Graham ‘Agnostic’ About Need for New Privacy Agency
Senate Judiciary Committee Chairman Lindsey Graham is “agnostic” about whether a new agency should replace the FTC as primary privacy enforcer, the South Carolina Republican told reporters Tuesday. “I’m agnostic until you prove to me that they’re not the right agency,” he said when asked about consumer groups’ call for a new agency.
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A Judiciary hearing Tuesday focused on the intersection of data privacy and competition, as expected (see 1905170073). A regulatory body is the best method for dealing with privacy, Graham said. He suggested an approach similar to the Clean Air Act, where principles are set through legislation and the regulatory body determines specifics. He also raised “monopoly” questions after the hearing, asking, “Why isn’t there an alternative to Facebook?”
Sen. John Kennedy, R-La., expressed frustration that Congress is nearly six months into the session and hasn’t formally considered privacy legislation. “We don’t need any more working groups,” Kennedy told reporters. “Everybody knows what the issues are. I’m hoping that Senator Graham will put a bill in front of the committee and let us start marking it up.”
“I don’t think it’s a matter of just putting something out there,” said Sen. Jerry Moran, R-Kan., a member of the Commerce Committee privacy working group. “Happy to work with Judiciary, Senator Kennedy to see that we get an end product, but I think what we want is a result that can actually pass the" Senate. An August recess deadline for a markup is “realistic,” but there have been no major developments this week so far, he said. Senate Commerce Committee Chairman Roger Wicker, R-Miss., told us there isn’t a hard deadline yet.
Lawmakers must first decide whether to pre-empt state privacy laws like the California Consumer Privacy Act, Graham said during the hearing. Afterward, he said he won’t support a bill that doesn’t pre-empt state law. Democrats like Senate Commerce Committee ranking member Maria Cantwell, D-Wash., another privacy group member, have said pre-emption discussion should come at the end of negotiation, when the bill's strength is set. Kennedy called pre-emption a “threshold” issue: “I’m sick of the delay and stultification. I was sent here to debate and decide.”
Antitrust law isn't keeping pace with the economy, Yale economics professor Fiona Scott Morton testified. If there were more platform alternatives, there would be more options to transfer data, and companies would need to better meet the demands of consumers, she said, calling for data portability. She likened the current social media landscape to a utility situation in which consumers couldn’t call each other using phones from different carriers.
Antitrust enforcers are timid because courts have more favorably sided with plaintiffs in competition cases, the professor said. Kennedy asked Scott Morton if Google and Facebook need to be broken up. She replied that enforcers should open an investigation because much of the information needed to make a determination isn’t public. FTC Chairman Joe Simons initiated a study of broadband providers that allows the agency to gather nonpublic data with subpoena power (see 1904120062). Both privacy legislation and antitrust action are needed, said Sen. Richard Blumenthal, D-Conn.
Zero-price models are enabling hundreds of harmful combinations from giants like Facebook and Google, AppNexus founder Brian O’Kelley testified. Because YouTube is free and doesn’t overlap with Google’s primary business, its acquisition seemed harmless, he said. But data should be treated like a valuable asset, and enforcers should assume “internet giants, like any other big companies, will use their assets to maximize profit and strategic value," he said. "Free isn’t an excuse to be anticompetitive.”
Proposals to break up platforms are premature because there's no hard evidence of market failure, said Freshfields Bruckhaus Counsel Jan Rybnicek, a former FTC staffer. He didn’t directly cite any Democratic proposals but said “shortcuts” to enforcement would undermine long-standing, bipartisan development of antitrust laws. Platforms such as Pinterest and Snapchat compete with the likes of Google and Facebook for consumer attention, even if their services don’t directly overlap, he said.
The FTC needs rulemaking authority, fining authority and more staff, Brave Software Chief Policy Officer Johnny Ryan testified. He cited discrepancies between privacy staffs for U.S. and EU enforcers. Like Scott Morton, he called for policymakers to find a way to foster more competition. If consumers have more and better choices, they can dictate platform market share, he said.
Sen. Ted Cruz, R-Texas, singled out Google, calling the platform’s power “unprecedented.” The company is larger than Standard Oil and AT&T when those were broken up, Cruz said. He again called attention to claims of Silicon Valley’s alleged political censorship. The consistent message from tech companies is to “trust us,” despite their black boxes, Cruz said. More competition would mean less concern for each individual platform’s content practices, Scott Morton said.
Data collection obviously has benefits, University of Toronto professor Avi Goldfarb said. Google, for instance, is a far better search service now with 20-plus years of data gathering on user habits and needs, he said.