FTC Considers Rules on Algorithmic Discrimination and Surveillance

FTC Considers New Rule Targeting Digital Surveillance Practices

The Federal Trade Commission is reportedly preparing to evaluate a new regulation concerning digital platforms. This potential rule would address platforms that engage in extensive user tracking or permit others to do so.

Details of the Proposed Rule

Currently identified as the “Trade Regulation Rule on Commercial Surveillance,” the initiative is in its preliminary phases. It could represent the first significant action against major technology companies under the leadership of FTC Chair Lina Khan.

Information regarding the rule is presently limited to a summary submitted to the Office of Management and Budget. This document indicates the rule aims to “curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.”

A public draft of the rule is not yet available, and the extent of the rule-making process remains uncertain at this stage.

FTC Statement and Senator’s Reaction

An FTC spokesperson released a brief statement, declining to provide further details: “The FTC is prepared to use all of our tools to combat harmful commercial surveillance practices and protect Americans’ privacy.”

Senator Brian Schatz highlighted the filing, praising the agency for addressing this issue: “I’m glad to see Chair Khan and the agency take this step to crack down on companies using discriminatory algorithms. It’s crucial that we address this,” he stated.

Authority for Rulemaking

The proposed rule-making would leverage the FTC’s authority under Section 18, which allows regulation of “Unfair or deceptive acts or practices.” This authority has been previously used to establish various requirements and prohibitions.

Potential Scope and Precedents

This rule could resemble previous proposals, such as the Broadband Privacy Act, and other attempts to protect consumers from potentially harmful practices by social media companies and internet service providers.

The FTC typically establishes rules when industries circumvent existing regulations or when new practices emerge that require clarification.

Defining Deceptive Practices in the Digital Age

Traditional false advertising, like mislabeling a food product, is easily identifiable. However, the question arises whether claims made by social media companies regarding data ownership are deceptive if users cannot fully control or access their data.

Is it false advertising when a platform asserts you “own your data” but restricts your ability to download, sell, or delete it?

Addressing Algorithmic Discrimination

Unlawful discrimination can occur when algorithms, trained on flawed data, unfairly favor or disfavor individuals based on protected characteristics like religion, race, or medical status.

Currently, there are limited formal requirements for vetting algorithms, as they and their underlying data are often considered proprietary information.

An FTC rule could potentially mandate algorithmic vetting as a standard practice.

Political Context and Future Outlook

This initiative aligns with the White House’s broader efforts to regulate Big Tech, and Chair Khan’s appointment signals strong support for such actions.

While still in the early stages, the filing with the OMB indicates this is a likely priority for the FTC in 2022.

Given the bipartisan appeal of addressing Big Tech’s influence, this issue could feature prominently in upcoming political platforms, particularly during an election year.