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Biden’s Executive Order Links Data Collection to Competition

July 9, 2021, 8:17 PM

President Joe Biden‘s push for Federal Trade Commission rules protecting consumer data privacy highlights ties between tech companies’ power and the personal information they collect.

Biden urged the FTC to write rules governing “the surveillance of users” in a wide-reaching executive order on competition, singling out unfair data collection practices that could damage competition and consumer privacy.

The commission laid the groundwork for launching a data privacy proposal when it recently streamlined its process for writing rules. The effort gives the agency an opportunity to push forward with privacy protections through regulation, as federal legislative proposals have failed to gain traction and U.S. states pursue laws of their own.

“The inclusion of privacy in an executive order focused on competition underscores increasing awareness by policymakers that you can’t isolate these two really important issues,” said Rory Van Loo, a law professor at Boston University whose research focuses on the intersection of business, technology, and regulation.

He said the order demonstrates that the Biden administration is thinking more broadly about competition policy than past approaches that focused more on pricing than privacy. The FTC’s new chair, Lina Khan, is expected to scrutinize consumer data collection as part of her focus on the dominance of U.S. tech giants.

“When businesses have control over large amounts of data, it’s easier for them to block competitors or lock consumers in,” Van Loo said.

Enforcing Rules

A rulemaking is expected to take years to complete because the FTC must follow a more complicated process than the average agency.

Still, privacy rules could be a “game-changer” for the federal regulator’s ability to enforce consumer data protections, said Kristin Madigan, a partner at Crowell & Moring LLP who previously worked on privacy and data security as an FTC attorney.

Without rules to implement, the FTC has been policing consumer data privacy primarily through enforcement actions against companies from social media platform Facebook Inc. to fertility-tracking app Flo Health Inc. Such actions rely on Section 5 of the Federal Trade Commission Act, which gives the agency authority to protect consumers from unfair or deceptive business practices that involve their data.

Critics say privacy enforcement lacks teeth, since the agency generally can’t fine a company for a first misstep. Privacy advocates argue that rules could give companies clearer expectations for compliance.

Rules centered on the collection and use of consumer data could also give the commission more enforcement power, “depending on how the FTC acts on this call to action and how the rulemaking goes,” Madigan said.

Data Limits

While it’s unclear what an FTC rule on consumer data privacy might look like, the commission could start by classifying certain types of data as sensitive, such as information on a person’s health, finances, or location.

Then rules could put “strictures” around companies’ ability to collect and use such data, said James Cooper, a former FTC official who now teaches at George Mason University’s law school. Limits could include more robust rules for giving consent to collecting sensitive data or mandates to only collect data that’s necessary and to delete data that’s no longer needed, he said.

Biden’s executive order raises broader questions about whether efforts to promote tech company competition can sideline privacy and vice versa. Alphabet Inc.'s Google, for example, is phasing out third-party tracking cookies used to target ads online, a policy intended to promote privacy that could end up hamstringing ad-tech companies that compete with Google.

“There’s a tension there,” Cooper said.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editors responsible for this story: Kibkabe Araya at karaya@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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