A Positive Agenda for the New FTC

Today, the U.S. Senate’s Committee on Commerce, Science and Transportation will convene a hearing to review President Donald Trump’s nominees to head the Federal Trade Commission: Joseph Simons, Noah Phillips, Christine Wilson and Rohit Chopra. For over a year, the FTC has had only two commissioners — Acting Chairman Maureen Ohlhausen, a Republican, and Commissioner Terrell McSweeny, a Democrat — which left it unable to pursue any cases that would split political opinion. Once the nominees are confirmed, though, our nation’s chief competition and consumer-protection agency will once again be able to tackle the most difficult and controversial economic issues of our time.

With its broad jurisdiction and limited resources, the FTC must pick and choose its battles wisely, and we can expect it to hew closely to conservative economic thinking when setting its agenda. However, abstract notions of regulatory humility and cost-benefit analysis are difficult to sell to average American voters. Thus, instead of focusing on what it won’t do, the new FTC should develop a positive agenda of steps it will take to improve itself and better protect both consumers and competition going forward. Here are three suggestions:

Litigate More Privacy & Cybersecurity Cases

Privacy and cybersecurity are vital to the modern economy. As chief regulator of both, the FTC has brought dozens of privacy and cybersecurity cases over the years, but almost all these cases were settled via unadjudicated consent decrees, which establish no binding precedent. Consent decrees and other types of informal guidance (reports, letters, etc.) are useful, but they are no substitute for binding legal precedent, which can be obtained only by going to court and litigating cases to their conclusion.

Run-of-the-mill cases should still be settled, but any time the FTC faces a novel issue or relies on an untested legal theory, it should go to court and see whether its actions pass muster. Recent cases like LabMD, Wyndham and D-Link are a step in the right direction, but the new FTC should go even further to clarify what privacy or cybersecurity practices qualify as “unfair” or “deceptive.” Last year saw major breaches revealed at Equifax and Uber, and similar events will surely continue so long as the FTC leaves industry in the dark when it comes to regulatory compliance. The new FTC should right the ship, reform its processes and litigate more privacy and cybersecurity cases.

Put Up or Shut Up on Net Neutrality

The Federal Communications Commission’s Restoring Internet Freedom order restored the FTC’s jurisdiction over broadband, and the new FTC will have primary responsibility for policing any unfair discrimination or anticompetitive behavior online. The FTC is no stranger to net neutrality, having issued a fulsome 170-page report on the matter in 2007 and having brought recent complaints against both TracFone and AT&T for deceptive throttling. However, some still doubt whether the agency is up to the task. The new FTC needs to prove whether it can handle net neutrality — and whether broadband regulation should stay at the FTC — or whether Congress will need to step in and shift net neutrality back to the FCC.

Many believe the FTC can handle net neutrality because harm to consumers or competition from any unfair blocking, throttling or prioritization would map directly onto the FTC’s authority in Section 5, but this theory has not been fully tested. An enforcement action would be the only true test of the FTC’s net neutrality chops. However, hosting a workshop and/or updating its 2007 report to give additional guidance (albeit informal) on how the agency’s authority would apply in the net neutrality context would also help.

Additionally, the new FTC should consider bolstering its Office of Technology Research and Investigation with additional computer scientists and electrical engineers who specialize in telecom. The FTC and FCC currently have a memorandum of understanding for exchanging information and coordinating online consumer protection efforts, but getting expertise in-house will be vital to making broadband regulation at the FTC a long-term success.

Look Beyond the Swamp

Shrinking government and repealing costly regulations has been a key pillar of the Trump administration, which can claim several victories from 2017. However, while the effort to “drain the swamp” has been focused mostly on Washington, D.C., cronyism and arbitrage also persist at the state and local levels. Here, too, the FTC can do tremendous good.

The FTC has a long, proud history of protecting consumers and promoting competition at the state and local levels. Its Office of Policy Planning promotes competition with both advocacy filings and amicus briefs, and it has successfully challenged unfair state licensing laws in court. However, there’s more that could be done, particularly to address the growing body of occupational licensing laws that unfairly restrict competition, limit personal mobility and otherwise harm consumers. Acting Chairman Ohlhausen established an Economic Liberty Task Force to investigate occupational licensure in various industries and its effects on competition and consumers. The new FTC should continue this important work going forward.

Whether it’s challenging occupational licensing and other forms of incumbent protectionism, or simply offering guidance on how to promote competition in industries undergoing rapid change, the new FTC should look beyond the swamp and make a concerted effort to protect competition and consumers at the state and local levels.

Tom Struble is the technology policy manager for the R Street Institute.

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