Ohlhausen: Privacy Legislation Could Affect Competitive Market

FTC commissioner offers words of caution about bill's approach
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While the White House will be pushing the Senate to pass comprehensive privacy legislation Wednesday at a Senate Commerce Committee hearing featuring Commerce and Federal Trade Commission takes on the issue, the newly minted Republican commissioner of the Federal Trade Commission will offer some words of caution about that approach, including its potential impact on competition.

According to her prepared testimony, Commissioner Maureen Ohlhausen is all for data security legislation -- a different, but related, issue -- for muscular enforcement of existing prohibitions on false and deceptive conduct, and for protecting kids by enforcing the already existing Children's Online Privacy Protection Act. But she is wary of recommendations in a recent FTC privacy report -- one adopted before she joined the commission -- that supports additional, baseline privacy legislation.

While she supports the reports' emphasis on privacy by design, its "notice and choice" concept and with not applying choice in cases where it is implied, like data collection as part of a transaction, she said she would need to do a lot more studying -- she only joined April 4 -- before deciding whether additional privacy legislation is needed. But she clearly has her doubts.

She suggests privacy restrictions could have a market-distorting effect on competition by favoring entrenched players that have already collected consumer information, or by encouraging industry consolidation to get access to that already-collected data. "As a competition agency, the FTC should be sensitive to these concerns as well," she says in her testimony.

"I wish to proceed cautiously in exploring the need for any additional general privacy legislation," she said. Among those are what she said is the FTC report's apparent embrace of an expanded definition of harms that goes beyond health, safety and monetary harms to intangibles like "reputational harm" and "fear of being monitored."

"[A]s an initial matter," she said, "I have reservations about such an expansion."

She is also concerned about assuming consumers cannot make informed choices about collection, so long as they are given "clear notice" beforehand.  

Sounding a theme echoed by cable operators and other ISPs, Ohlhausen says: "I have concerns about the ability of legislative or regulatory efforts to keep up with the innovations and advances of the Internet without also imposing unintended chilling effects on many of the enormous benefits consumers have gained from these advances or without unduly curtailing the development and success of the Internet economy."

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