FTC consumer protection chief puts data brokers on notice

Publish date: 2024-07-09

Happy Thursday! I’ll be out of the country next week for a certain October celebration, but fret not: the newsletter will be in the capable hands of our tech team. Prost!

Below: A billionaire financier is backing a conservative push to keep TikTok in the United States, and FTC nominees vow to tackle deceptive AI practices. First:

FTC consumer protection chief puts data brokers on notice

A top Federal Trade Commission official is slated to fire a warning shot against the data broker industry on Thursday, speaking out in a key address against a “fever” by companies to scoop up and trade consumers’ personal information with little or no regard for their privacy or well-being.

Delivering a speech later this morning at a major data summit, Sam Levine, the FTC’s consumer protection chief, is poised to speak out against what he calls a trend of data brokers looking to “maximize” how much information they can extract from consumers at all costs.

“I believe this maximization model is posing serious threats to our constitutional liberties as Americans — our freedom of worship, our freedom of assembly, and our freedom of association,” Levine will say, according to prepared remarks shared with The Technology 202.

The remarks signal that the agency is dialing up scrutiny of how little-known data brokers can pose significant risks to consumers — and could foreshadow more stringent enforcement against bad actors who trample on user privacy.

In addition to undermining privacy, Levine says in the address, brokers are also at times threatening consumers’ personal safety and freedoms by creating “detailed digital dossiers on almost every American” that can be easily be weaponized.

Their actions, he says, stand in stark contrast to the growing calls from regulators and legislators for companies to limit their collection to what is strictly needed by their services, a practice known as data minimization.

Levine will also urge companies to more closely vet what brokers they partner with and to implement more “robust” privacy practices.

“As your industry faces increased scrutiny from consumer protection agencies, from the Intelligence Community, from Congress, and from the Supreme Court, implementing these steps could go a long way toward addressing serious concerns that are emerging across the government and across the political spectrum,” Levine’s prepared remarks say.

The agency last year filed one of its first major lawsuits against a prominent data broker under Democratic Chair Lina Khan, accusing Kochava of inappropriately selling location data that could be used to track visits to abortion clinics and other sensitive places.

But the effort was dealt a blow in May when a federal judge in Idaho dismissed the case, arguing that the agency failed to provide enough evidence to back up their claim that the company’s data selling and privacy practices would lead to harm.

Levine’s planned remarks, however, suggest that the FTC is unlikely to shy away from future legal fights with brokers, despite the recent setback against Kochava.

The agency has launched a slew of initiatives aimed at reining in companies’ data privacy practices under Khan beyond its more recent data broker work.

The agency last year launched a sprawling process to create new privacy rules around “commercial surveillance,” a closely watched effort that could tee up more aggressive enforcement.

The agency is also reviewing its enforcement of a decades-old children’s privacy law, the Children's Online Privacy Protection Act, and has targeted giants including Facebook parent Meta, Microsoft and Epic Games over their handling of children’s data.

But a number of the efforts have run into either legal challenges or political blowback, with critics and some companies accusing the agency of overstepping its authority in tackling potential privacy abuses.

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Billionaire financier backing conservative push to keep TikTok in U.S.

Billionaire financier Jeff Yass has been helping TikTok rally conservative support to stall attempts at ejecting the China-linked app from the United States, the Wall Street Journal’s John D. McKinnon and Stu Woo report.

“Yass’s investment company, Susquehanna International Group, bet big on TikTok in 2012, buying a stake in parent company ByteDance now measured at about 15%. That translates into a personal stake for Yass of 7% in ByteDance,” they write. Yass is also a top donor of Club for Growth, which has rallied GOP opposition to a total ban of TikTok, the report adds.

He donated $3 million to a political committee supporting Sen. Rand Paul (R-Ky.), who has openly spoken out against a blanket TikTok ban on the grounds that it would infringe on First Amendment rights. Rep. Thomas Massie (R-Ky.), who is also backed by Club for Growth, urged House GOP leadership to oppose a bipartisan Senate bill that would empower the Commerce Department to ban or restrict TikTok and other apps based in foreign nations, people familiar with the matter told the outlet.

“I’ve supported libertarian and free market principles my entire adult life,” Yass said. “TikTok is about free speech and innovation, the epitome of libertarian and free market ideals. The idea of banning TikTok is an anathema to everything I believe.”

FTC accuses three Amazon executives of deceiving Prime users

The Federal Trade Commission alleged that three Amazon executives participated in a plan to make it more difficult for customers to cancel their subscriptions to the e-commerce giant’s Prime membership, Bloomberg News’s Spencer Soper reports.

Senior vice presidents Neil Lindsay and Russell Grandinetti and Vice President Jamil Ghani on Wednesday were added as new defendants in a lawsuit the consumer protection agency filed against the company in June. The FTC in the original complaint claimed that Amazon tricked customers into enrolling in Prime and made it difficult for them to cancel.

Soper writes: “Lindsay oversaw the membership program, Grandinetti handled the international consumer business, and Ghani was responsible for Prime’s subscription program, according to the filing. The FTC cited internal memos at Amazon going back to 2017 discussing concern that enrollment wasn’t designed to be easy for customers to cancel.”

The three executives declined to comment to Bloomberg. Amazon spokesperson Tim Doyle told the outlet the decision to add them as defendants “represents a radical departure from the FTC’s own standards for such claims.” (Amazon founder Jeff Bezos owns The Washington Post. Interim CEO Patty Stonesifer sits on Amazon’s board.)

Correction: A previous version of this report misstated the amount financier Jeff Yass donated to a political committee supporting Sen. Rand Paul. It was $3 million.

FTC nominees vow to tackle deceptive AI practices

Federal Trade Commission nominees agreed in a Wednesday confirmation hearing that the agency should prioritize scrutiny of deceptive artificial intelligence systems, Reuters’s Diane Bartz reports.

“The hearing was held to consider the re-nomination of Commissioner Rebecca Slaughter, a Democrat, along with the nominations of two Republicans, Andrew Ferguson and Melissa Holyoak, the solicitors general of Virginia and Utah, respectively,” Bartz writes.

In response to a question from Sen. John Thune (R-S.D.) about the FTC’s authority to regulate the emerging technology, Slaughter said it was the agency’s job “to pursue instances where laws against unfair and deceptive acts and practices were broken, whether or not artificial intelligence was used,” according to the report. Holyoak and Ferguson agreed.

The two Republican nominees, if confirmed, would not break the Democratic majority held at the agency. The FTC has already taken steps to examine ChatGPT maker OpenAI, and former agency officials have encouraged regulators to use legal authorities to address potential safety issues raised by AI.

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The House Energy and Commerce Committee holds a hearing on the future of rural broadband funding at 9 a.m.
The FCC holds its September open meeting at 10 a.m.
The American Enterprise Institute convenes a discussion on Indo-Pacific digital trade rules at 1 p.m.
Johns Hopkins University holds a debate on whether the United States should ban TikTok at 7 p.m.
The Brookings Institution holds an event on U.S. semiconductor supply chain resilience tomorrow at 10 a.m.
FTC Chair Lina Khan speaks at the Fordham Annual Conference on International Antitrust Law and Policy tomorrow at 9:15 a.m.

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FTC consumer protection chief puts data brokers on notice

FTC consumer protection chief puts data brokers on notice

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Billionaire financier backing conservative push to keep TikTok in U.S.

FTC accuses three Amazon executives of deceiving Prime users

FTC nominees vow to tackle deceptive AI practices

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