Next Year’s FTC Activity Seen Focusing on Online Privacy, Filling Gaps Left by Leibowitz

A new chairman isn’t likely to change the fact that “the FTC has been really good at listening to both sides of the issues,” said William Rice, president of the Web Marketing Association, a voluntary organization that recognizes quality in Internet marketing. The FTC staff that remains once Leibowitz departs “can make sure that both sides are heard,” Rice said. While there’s a possibility that President Barack Obama could appoint a more aggressive chairman, “always a concern,” Rice said, it’s unlikely to change the agency too drastically. Unless the new chairman has a strong agenda and is eager to leave a mark, “I don’t think that you're going to get a major shift,” he said.

Some familiar with the FTC think Commissioner Julie Brill is the logical choice to replace Leibowitz. She has “everything you would want in a chairman,” said David Balto, former assistant policy director of the FTC’s Bureau of Competition. He said this includes enforcement experience and “the savvy to deal with the businesses, the Hill and a wide variety of stakeholders.” Brill would effectively use the FTC’s resources, including an ability to work with states on consumer protections, Balto said.

Before joining the FTC, Brill was the North Carolina senior deputy attorney general and chief of consumer protection and antitrust, and an assistant attorney general for consumer protection and antitrust for Vermont. While Leibowitz’s FTC tenure is commendable, Brill’s experience in state enforcement agencies would make her a very effective leader, Balto said. “There’s a difference between someone who has been an enforcer ... and someone who has grown up on the Hill.” Leibowitz served as chief counsel to the Senate Antitrust Subcommittee and was the Motion Picture Association of America’s top Hill lobbyist right before joining the FTC. Mike Zaneis, senior vice president of public policy at the Interactive Advertising Bureau -- which supported the Digital Advertising Alliance’s stance on not requiring advertisers to respect do-not-track (DNT) requests enabled by default (CD Oct 10 p15) -- credited Brill for her “open door policy” and ability to work with industry members as well as privacy advocates. “She has worked with us extensively to try to improve self-regulation,” he said.

Bureau of Consumer Protection Director David Vladeck is on his way out of the agency, an agency spokeswoman confirmed. She otherwise declined to comment for this story. “Vladeck has done an outstanding job” as BCP director, Consumer Watchdog’s John Simpson said, crediting him with spearheading “much of the FTC’s online privacy efforts.” The group has been strongly critical of the agency in other ways, most recently deriding as insufficient its approved $22.5 million privacy settlement with Google. Zaneis called Vladeck “aggressive but fair” at the FTC, and said it’s “a shame” he’s leaving. “It’s been a very productive partnership” between the agency and the industry, he said.

The FTC has said it will have an update to the Children’s Online Privacy Protection Act (COPPA) by the end of the year. Those critical of the agency’s proposals expect the commission will be dealing with backlash once the rulemaking update goes into effect, which could take a few months. TechFreedom President Berin Szoka said he expect someone to sue over the update. The likelihood of a lawsuit “depends on how much the rule retrenches” from the most recent proposal, he said, especially its inclusion of Internet Protocol addresses as unique identifiers. Despite the criticism it has received over the provision, the FTC is likely to keep that definition in the final rulemaking, Szoka said.

The final rulemaking will likely reflect criticism of the proposals, said Internet policy lawyer Jim Halpert of DLA Piper, based on what he has heard from those meeting with the FTC. One change he expects is the proposal’s provision that would apply COPPA standards to third party plugins that have “reason to know” their products have been included in websites directed to children. He also expects the revised update to have a different standard for websites that are targeted to youth and subject to the law. Currently, the rules would apply to websites that are likely to attract a disproportionately large number of children compared to the general public, Halpert said. This created an “uncertain standard,” Halpert said. “I don’t know what it will be revised to, but I think it will be revised.” Halpert said the FTC will probably keep the definition of personal information that includes IP addresses with a “fairly long list” of exemptions that would not require verifiable parental consent.

The FTC is looking to industry members to develop DNT standards and it “appropriately” views “legislation as a last resort,” Balto said. In addition to individual industry members, self-regulatory bodies are attempting to develop standards, such as the World Wide Web Consortium (W3C) Tracking Protection Working Group, which includes technology companies, trade associations and consumer protection groups. While the FTC told us there is no official deadline for the working group, Politico reported that Leibowitz said the agency will “think about whether we want to endorse” DNT legislation if stakeholders haven’t made progress “by the end of the year or early next year” (http://xrl.us/bn2pm2).

It’s unlikely the W3C group will have standards this year, Zaneis said. The IAB is a member of the working group. “I think the FTC has done all it can” in encouraging stakeholders to develop standards, he said, but as an industry standard-setting body, the W3C is “not particularly well equipped to create policy standards.” “There’s really not been a lot of progress made in that group in the last year,” he said. The almost 100 members haven’t reached consensus on what constitutes a meaningful DNT option, he said. The group has yet to define “tracking,” he said. “Nobody knows what it means. The commission hasn’t even defined it."

If the working group is unable to craft a set of tracking standards, “you will see a hearing in the spring” in Congress, said Szoka, who serves on the working group as an invited expert. At such a hearing, he continued, whoever is chairman would likely testify that industry-led, collaborative efforts have failed and there is a need for legislation. The FTC would have a chance to lay out what it would like to see in a bill and how it would want the law to establish key definitions, Szoka said. There’s little bipartisan consensus on online tracking, which a bill would need to pass both chambers, he said. “I still don’t see legislation going anywhere.”