FTC’s Phillips Warns Against Broad Privacy Rulemaking

The FTC appears to be taking too broad of an approach to its potential privacy rulemaking (see 2204180049), Commissioner Noah Phillips told us Monday. He spoke at a George Mason University event the day after Senate Majority Leader Chuck Schumer, D-N.Y., announced the Senate plans to confirm Alvaro Bedoya as fifth commissioner this week.

There are major policy tradeoffs for privacy, Phillips said during the event, citing the balance between innovation and consumer protection. New privacy policies will have major economic impacts, and Congress is the best body to decide those tradeoffs, he said. Phillips declined to comment after the event on how much Chair Lina Khan is prioritizing a privacy rulemaking.

Before Congress left for recess, Schumer filed cloture on the nomination of Bedoya, who has an extensive background in privacy advocacy. The Senate voted 51-50 along party lines in March to discharge his nomination from the Senate Commerce Committee, which voted 14-14. Vice President Kamala Harris is expected to cast the tie-breaking vote this week.

The FTC and the White House seem to be operating as if the agency can solve “all the problems” as long as the majority has the votes, said Phillips: “There seems to be a collision.” He questioned the lack of congressional oversight hearings for the agency in the past year, noting the last oversight hearing was in April 2021, two days before the Supreme Court shot down the agency’s Section 13(b) authority (see 2104270086).

Rulemakings have a role, but an “unaccountable, bureaucratic” agency like the FTC shouldn’t be dictating terms for the entire economy on something like privacy, said Phillips. If the agency doesn’t have “clear instruction” from Congress to initiate rulemaking on things like competition and it proceeds, there’s a “real democratic deficit problem,” he added. Republicans aren’t against “good, well-thought-out” rules, he said, noting the FTC hasn’t “announced anything” on the potential commercial surveillance rule.

Phillips spoke against what he perceives as a lack of transparency at the agency, though Democrats often tout the value of transparency. Reports of Khan muzzling staff are “a real problem,” said Phillips. He agreed the FTC shouldn’t have staffers running around offering opinions on behalf of the agency, but he said there “used to be a culture that was a lot more interactive with the public.” Some staffers in question are “lifetime career experts on the subject matter,” he said.

Congress didn’t grant the agency the authority to pursue competition rules, panelists said at the event. Many rules in antitrust law have evolved from the bottom up, originating with the courts, said American Antitrust Institute Vice President-Legal Advocacy Randy Stutz, saying Khan is taking a top-down approach.

Khan and former Commissioner Rohit Chopra think the agency has the power to alter antitrust law through rulemaking, said George Washington University law professor Richard Pierce: It “won’t fly” for the Democratic majority to claim it knows better than the Supreme Court. Congress intended for the FTC’s unfairness language to apply to consumer protection policies, said former acting FTC Chairman Maureen Ohlhausen, now at Baker Botts: Congress didn’t embrace unfairness applications for competition rulemakings.