FTC 6(b) Orders Start a Broad Investigation of Privacy Practices and Technology Use by Nine Tech Companies
On December 14, 2020, the Federal Trade Commission (FTC or Commission) issued extremely broad information and document production orders under Section 6(b) of the FTC Act (6(b) Orders) to nine social media and video streaming companies. The orders were issued following a 4-1 vote from the Commission, with a Joint Statement issued by Commissioners Chopra, Slaughter, and Wilson, as well as a highly critical Dissenting Statement from Commissioner Phillips.
As described below, these orders cover an expansive range of issues—including privacy and data collection and use, as well as practices related to targeted advertising, algorithms and data analytics, promotion of user engagement, content moderation, demographic information, interactions with children and teens, and competition with other services, among other things. While the orders presently impact social media and streaming voice companies, others engaged in the targeted practices should take note of the Commission’s increasing scrutiny, particularly in a new Administration.
The 6(b) Orders Contain Extensive Requests on a Sprawling Range of Topics.
The Commission issued 6(b) orders to nine popular social media and video streaming companies. The orders, which call for the companies to respond within 45 days, are notable in the extensive and broad reach of the questions.
The questions cover a wide range of topics—including but not limited to: “how social media and video streaming services collect, use, track, estimate, or derive personal and demographic information; how they determine which ads and other content are shown to consumers; whether they apply algorithms or data analytics to personal information; how they measure, promote, and research user engagement; and how their practices affect children and teens.” Indeed, Commissioner Phillips, in his dissent, described the breadth of the inquiries as “an undisciplined foray into a wide variety of topics, some only tangentially related to the stated focus of this investigation.”
The Orders Garnered Bipartisan Support, But Drew Sharp Criticism from a Republican Commissioner.
There was strong bipartisan support for these 6(b) Orders. The Joint Statement by three of the four Commissioners that approved this action—Commissioners Chopra, Slaughter, and Wilson—indicates frustration with what they call the “dangerously opaque” privacy (and other) practices of social media and video streaming platforms, opining that:
Despite their central role in our daily lives, the decisions that prominent online platforms make regarding consumers and consumer data remain shrouded in secrecy. Critical questions about business models, algorithms, and data collection and use have gone unanswered. Policymakers and the public are in the dark about what social media and video streaming services do to capture and sell users’ data and attention. It is alarming that we still know so little about companies that know so much about us.
The orders reflect both the stated interests of the majority Commissioners in how social media companies operate when dealing with consumers, as well as criticisms aimed at these companies from both sides of the aisle in Congress. The three Commissioners who issued a joint statement have expressed interest in different but overlapping areas – for example, Commissioner Wilson has been critical of content moderation algorithms leading to bias, Commissioner Chopra has been critical of what he calls a “mass surveillance” approach to data collection and targeted advertising, and Commissioner Slaughter has been critical of the use of algorithms in ways that can be inaccurate or biased. Indeed, the Joint Statement discusses social media companies’ “user-surveillance capabilities” and questions whether they are used for purposes like “manipulate[ing] experiences to generate ad sales” or “promot[ing] content to capture attention or shape discourse[.]”
Importantly, Commissioner Phillips did not support the action. In dissent, he argued that the orders are not designed to generate useful information for the public and are untethered to the stated purpose—consumer privacy. Pointing to the breadth of the inquiries and the dissimilarities between the companies receiving the orders, he questioned the wisdom and utility of the orders. He warned that they “trade a real opportunity to use scarce government resources to advance public understanding of consumer data privacy practices—critical to informing ongoing policy discussions in the United States and internationally—for the appearance of action on a litany of gripes with technology companies.” Notably, however, Commissioner Phillips agrees that “[g]aining information about social media and video streaming services is important to [the Commission’s] mission to protect consumers”—he simply disagrees with the Commission’s tactics.
The Orders Portend Continued Scrutiny of Emerging Issues, Including Data Privacy, Advertising, Algorithms, and Content Moderation.
The Joint Statement of Commissioners Chopra, Slaughter, and Wilson make clear that these orders are “just a step toward getting much-needed clarity” into the practices of social media and video streaming companies. The intent of this 6(b) study is to “lift the hood on the social media and video streaming firms to carefully study their engines.” What the Commission will do once the hood is lifted is still yet to be determined, but there are multiple options, including issuing a report on its findings, pursuing company-specific investigations, or initiating rulemaking activity where authorized. What the FTC learns also will likely inform its priorities and policy recommendations under the new Administration.
While the focus of these orders is on social media and video streaming companies, it is possible that the Commission will extend its scrutiny of certain specified practices to other large incumbent companies, given the bipartisan interest by the Commission on these issues. While the FTC historically has often avoided criticism of specific business models, the Joint Statement and extremely broad requests here show a skepticism of the benefits of specific practices used by large social media companies. Companies outside the social media space should monitor these areas closely to the extent any of their business practices fall into the categories covered by these orders (e.g., content moderation, data-driven, and behavioral ad targeting).
Our FTC team has extensive expertise in dealing with all levels of the Commission and helping clients navigate the full range of FTC proceedings, including 6(b) orders. Please reach out to any of us additional questions.