Tech Issues Dominate at Confirmation Hearing for Four FTC Nominees
At a February 14, 2018, confirmation hearing on President Trump’s nominees to the Federal Trade Commission before the Senate Commerce, Science, and Transportation Committee, Senators asked the nominees how, if confirmed, they would regulate technology companies, address data security issues exposed by the Equifax breach, and address net neutrality. While making few firm commitments other than to study the issues, the nominees agreed that the FTC should use its authority and resources to protect consumers from abuses by large firms, especially in light of evolving concerns over data privacy and aggregation.
Regulation of Large Technology Firms
Committee Chairman Senator John Thune (R-SD) started off the hearing by saying that it is his “expectation that the FTC will continue its focus on Silicon Valley.” When asked by Sen. Thune about what their views were of antitrust concerns regarding large technology firms, the nominees promised to be vigilant about policing anticompetitive behavior but made no commitments to investigate or pursue any particular firm.
Nominee for Chairman Joseph J. Simons said that size in and of itself was not determinative of antitrust concerns: “Sometimes big is good, sometimes big is bad, and sometimes it’s both at the same time. Often times companies get big because they are successful with the consumer — they offer a good service at low price, and that’s a good thing, and we don’t want to interfere with that. On the other hand, companies that are already big and influential can sometimes use inappropriate means, anticompetitive means, to get big or to stay big.” Without mentioning any firm by name, nominee Christine Wilson said, “[T]here is no company that is above the law.” Nominee Noah Phillips said that Thune’s question was “the big question” because of “the incredible impact that many of these firms” have on daily life. Nominee Rohit Chopra focused on the complexity of analyzing the role of large technology firms: “They are competing with health care companies, they are competing with retail, and so many other major sectors.”
Equifax and Consumer Data Protection
Several senators pressed the nominees for commitments to act on data breaches like the 2017 Equifax breach. Simons expressed concern that the FTC lacks legal authority to address situations like Equifax. He said that the FTC’s lack of civil penalty authority is “something we should consider very carefully, and take a very close look at.” The other nominees similarly expressed interest in legislation that would add such authority. Chopra highlighted the significant costs of the breach to community banks, credit unions, and other financial institutions, saying, “I think we need to think about the whole picture, including harms that occur to consumers.”
Senator Tom Udall (D-NM) raised the related issue of consumer data privacy vis-à-vis Internet-connected devices, and “the enormous amounts of data that those items may collect.” Chopra and Phillips responded that they thought that consumer education was necessary to increase understanding of the volume of data currently being collected.
Technology and Addiction Issues
Citing research about the health effects of technology addiction on children, Sen. Ed Markey (D-MA) pressed the nominees to commit to an “active, pro-child privacy protection policy” if confirmed. All nominees agreed. Chopra said, “I think we need to be very vigilant and come back to you especially if we feel like we don’t have adequate authorities to address this.” On a similar topic, Sen. Maggie Hassan (D-NH) received assent from all the nominees to have the FTC look into the issue of in-game video game purchases by children.
Ranking member Sen. Bill Nelson (D-FL) in his opening statement said that, “Simply put, the Federal Trade Commission is not the agency for net neutrality. Despite the amazing things the FTC does, it does not have the expertise, the resources or the authority to adopt forward looking rules to protect broadband consumers.” Sen. Markey expressed similar sentiments, and asked Simons whether he agreed that the FTC lacked rule-making authority to prevent blocking, throttling, and paid prioritization by ISPs. Simons deferred to the FTC Office of General Counsel, saying that he was “not entirely clear” on whether the agency had authority in those areas.
The four nominees have a range of experience in government and private practice. The Republican nominee for Chairman, Joseph J. Simons, spent two years as head of the FTC’s Bureau of Competition in the George W. Bush administration before leading the antitrust group at Paul, Weiss for over a decade. Republican nominee Christine Wilson also spent time at the FTC during the George W. Bush administration, as chief of staff to then-Chairman Tim Muris (Simons, Wilson, and a number of senators praised Muris’ leadership over the FTC during the hearing). Following her time at the FTC, Wilson was a partner at O’Melveny & Myers and Kirkland & Ellis before becoming Senior Vice President ‒- Regulatory and International, at Delta Air Lines in 2016. The third Republican nominee, Noah Phillips, was for several years Chief Counsel to Sen. John Cornyn (R-TX). Prior to joining Sen. Cornyn’s staff, Phillips was an associate at Cravath, Swaine & Moore and also Steptoe & Johnson for several years. Rohit Chopra, the lone Democratic nominee, is a non-lawyer and was Assistant Director & Student Loan Ombudsman at the Consumer Financial Protection Bureau from 2010-2015, testifying before Congress several times during that period about higher education finance and student loan issues.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.