FTC Struggling to Understand Rapid Technological Changes, Says Outgoing Commissioner Kovacic
The FTC needs to commit more resources to understand rapidly evolving technologies, despite the trend of heightened fiscal scrutiny, said former Commissioner Bill Kovacic in an exit interview Wednesday. His term, a Republican slot, ended Sept. 25 after five years on the commission, including a year as chairman from March 2008 to March 2009. Kovacic returns to his former job as a law professor at the George Washington University Law School in Washington.
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The biggest change Kovacic saw during his term was the increased speed at which new technological phenomena begin, he said. The rate of change in technologies is occurring “faster today than ever,” and is placing “extreme pressure on policy making institutions” like the FTC, he said. “The greatest challenge for the commission is to understand what is taking place. And secondly it must appreciate both the hazards and benefits associated with these changes and to take those tips to create a base of knowledge for making judgments about the policy response going ahead.”
The commission is still working to wrap its head around emerging technologies like Apple and Android’s mobile application stores, Kovacic said. “These are extraordinarily complex phenomena and they are changing quickly, so the commission is spending more resources on understanding it first,” he said. “It requires a base of technical knowledge and a deep understanding of the relevant commercial practices and their significance. That is a key investment of the agency’s resources.” The FTC recently settled with the makers of two apps that promised to treat acne using colored lights on mobile devices (CD Sept 9 p12).
But the tight fiscal environment facing nearly all federal agencies could constrain the FTC’s investment in new resources, Kovacic said. “One hopes Congress will understand that you can’t get first-rate policy results on the cheap,” he said. “If you want broadband-quality policy outcomes you can’t do it with dialup-quality institutions.”
Kovacic said one of his biggest regrets is that he won’t be around to contribute to the agency’s conversation in the online privacy debate. Just this month the FTC suggested more than two dozen changes to the rules for the Children’s Online Privacy Protection Act (COPPA). The proposed changes would impose new requirements on operators of websites that cater to children under the age of 13.
The FTC’s proposed revisions to COPPA are “appropriate” to ensure that minors “know what they are getting into online,” Kovacic said. “A greater level of precaution taking is important for children.” The proposed revisions “respond to a deep social preference to ensure that minors do not get in over their heads in a form of communication whose implications may not be entirely apparent to them,” he said. “I regret that I won’t be here as the further elaboration of the commission’s statement on privacy takes place.”
The agency’s antitrust inquiry into Google’s business practices is warranted, Kovacic said, but that doesn’t necessarily mean the FTC will bring action against the company. “I believe that it is responsible for the agency to take a closer look, but where that leads is an entirely different question,” he said. Kovacic said he’s particularly concerned about the way Google integrates the service offerings of other firms into its own search listings and products. “The assessment will evaluate whether some of the complaints that were made about access discrimination are well founded,” Kovacic said. Last week, Yelp CEO Jeremy Stoppelman said Google incorporated Yelp content into Google Local without permission (WID Sept 22 p1). “Those results are worth exploring, but initiating an inquiry does not necessarily mean prosecuting the company,” Kovacic said.
Another change the outgoing commissioner observed is the increased globalization of the policy-making arena. There is a “growing awareness that the solutions have an increasingly international dimension” and the solutions to many of today’s policy questions “require a broad range of interaction with policy makers at home and abroad,” he said.
Kovacic hopes his successor will be able to work cooperatively with international regulatory agencies on policies that require a more global approach. “There is a lot of room for improvement in strengthening the cooperative framework related to the international and state governments,” he said. Kovacic’s successor should also “emphasize the importance of making capital investments in improving capability in the regulatory framework,” he said. “The quality of the institution should be decisive in good results and we should not short change the investment of these policies.” In July, President Barack Obama nominated Maureen Ohlhausen, a partner at the Washington law firm of Wilkinson Barker, to replace Kovacic (CD July 21 p7). She previously spent 11 years at the FTC, where she was the director of the Office of Policy Planning until 2008. Her nomination is awaiting approval from the Senate, which hasn’t scheduled a hearing.