Addressing Personal Data Collection as Unfair Methods of Competition

Click here to read the full article online

Enforcers, policymakers, scholars, and the public are concerned about Google, Apple, Facebook, Amazon, and recently Microsoft and their influence. That influence comes in part from personal data. These companies are “data-opolies,” in that they are powerful firms that control our data. The data comes from their vital ecosystems of interlocking online platforms and services, which attract users; sellers; advertisers; website publishers; and software, app, and accessory developers.

The public sentiment is that a few companies, in possessing so much data, possess too much power. Something is amiss. Cutting across political lines, many Americans think Big Tech’s economic power is a problem facing the U.S. economy.

So how can one protect one’s privacy and data security in the digital economy? Many Americans support breaking up Big Tech.

Other jurisdictions, including Europe, call for regulating these gatekeepers. Unlike Europe, which has a comprehensive privacy and data protection framework, and has enacted in 2022 additional measures to make the digital economy fairer and more contestable, the bi-partisan antitrust and privacy legislation to help rein in the data-opolies has stalled in the U.S.

Over the past few decades, the FTC has prosecuted privacy and data protection offenses under its power to curb “unfair and deceptive acts and practices” under Section 5 of the FTC Act. Some have urged the FTC to go further and use its authority under Section 5’s “unfairness” prong to promulgate a “Data Minimization Rule.” While that remains an option, that rulemaking path has several limitations.

Instead, this Paper takes a different approach. It assesses whether the FTC can prohibit the different privacy-related competition concerns as an “unfair method of competition” under the FTC Act.

After outlining the legislative aim of “unfair methods of competition, this Paper offers a taxonomy of unfair methods of competition, and how many of the unfair data collection and surveillance practices that damage competition, consumer autonomy, and consumer privacy fall within the existing categories. But some surveillance practices do not fall within these categories. Since Congress did not want to “confine the forbidden methods [of competition] to fixed and unyielding categories,” the FTC can use its power to deter these privacy-related competition concerns as well. This Paper addresses one key source of many problems in the surveillance economy – namely, behavioral advertising.

The Paper also examines several concerns about such potential FTC rulemaking, including whether it would run afoul of the Supreme Court’s “major questions doctrine,” as recently outlined in West Virginia v. EPA.

As this Paper concludes, the FTC cannot repair the surveillance economy with its authority under the FTC Act. But there is no reason why the FTC cannot exercise the authority that Congress intended it to exercise to help rein in the data-opolies. America still needs an omnibus privacy framework, but the FTC can help close the regulatory gap.