Dec 15, 2022 - Technology

Top FTC official warns companies on data

Photo illustration of Samuel Levine surrounded by a gavel and binary code.

Illustration: Axios Visuals. Photo: Courtesy of the Federal Trade Commission

A top Federal Trade Commission official told Axios the agency won't hesitate to sue companies that play fast and loose with customers' data.

In a rare interview, Samuel Levine, director of the Federal Trade Commission's bureau of consumer protection, also warned companies that operate under FTC consent decrees — which includes Twitter — that "there's no pause button" on such agreements.

What they're saying: "We are not afraid to take companies to court," Levine told Axios. "We are not afraid to litigate."

  • "Yes, we're a government agency," he said, but the FTC is also — in the words of former FTC chair Michael Pertschuk — the "greatest public-interest law firm in the country."
  • "We try to focus on cases where we can have the most impact... we want to send a message to other companies in the marketplace."

Zoom in: Levine, a top deputy of tech-industry critic FTC chair Lina Khan, is playing a key role in shaping the agency's potential new rules on "commercial surveillance" — which includes the targeted advertising that drives so many online business models.

  • Those rules also focus on data security, and privacy advocates see them as a key means to restrain industry abuses in the absence of a federal online privacy law. The agency could issue them next year.

Driving the news: Part of Levine's job is overseeing consent orders — legal agreements companies can enter if an agency investigation alleges that they broke consumer protection laws.

  • "As far as I'm concerned, it's up to companies to ensure they are constantly in compliance with the FTC and responding to our requests," he said.

Be smart: Twitter, now owned by Elon Musk, has been under a consent order with the FTC since 2011, subject to financial penalties if the company misrepresents "the extent to which [Twitter] maintains and protects the security, privacy, confidentiality, or integrity of any nonpublic consumer information."

  • Twitter has shed much of its staff working on privacy, security, policy and government relations, and it's not clear who within the company is now in charge of compliance with the FTC order.

Musk attorney Alex Spiro told Bloomberg Law last month Twitter would continue complying with the order.

  • But Spiro is no longer at Twitter, and Musk is filling his legal department with lawyers from his other companies, including Tesla, per the New York Times. Twitter did not respond to a request for comment.
  • Earlier this year, Twitter was fined $150 million to settle allegations it failed to comply with the 2011 order by targeting ads using emails and phone numbers users provided in setting up accounts.

The intrigue: In the Axios interview, Levine would not comment specifically on the Twitter order. But he said generally: "One example [of a violation] that the agency has seen repeatedly over the last decade is business models where the people really are the products, business models that rely on harvesting our data and making it available to advertisers."

  • "What we really try to do in our orders is trying to reverse those incentives," Levine said.
  • He said the FTC is in constant communication with companies that are under consent orders.
  • "We can demand information from them, and they need to turn over that information, or they'll be in violation of the order," he said. "We expect strict compliance with our orders, and we monitor them carefully to ensure that companies stay on the right side of the line."
  • Typically, companies have 14 days to respond to these types of questions. Levine said: "They're aggressive provisions."

The latest: Twitter is mulling a more aggressive strategy to push more users to accept targeted advertising, per the Platformer newsletter. Right now many users opt out.

  • The plan could run afoul of state privacy laws, and also potentially the FTC consent order, a former FTC official told Axios.
  • The order bars Twitter from misrepresenting the measures it provides to honor users' choice and the extent to which users can control their privacy. The order also requires privacy and security audits before the company implements new products or services.

What's next: Levine said the FTC's consumer protection bureau will keep working with its bureau of competition, which is in charge of antitrust cases, to gauge where a lack of competition may be affecting consumer privacy and other experiences online.

  • "We have to not just think about the ads we see — we have to look under the hood and think about what those represent, and how that might be fueling practices that can pose real harm to consumers and potentially competition," he said.
  • "I think our record speaks for itself," Levine said of the agency under Khan's leadership. "There's going to be more to come before the end of the year."

Editor’s note: This story has been corrected to show that Levine called the FTC the greatest public-interest law firm in the country, not the biggest.

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