Last week, the Federal Trade Commission (FTC) released its report on consumer privacy (PDF), calling for “baseline privacy legislation” along with a strong self-regulatory framework for industry. FTC Chairman Jon Leibowitz then penned an op-ed reiterating his privacy strategy: Congress sets “clear rules of the road” – a sort of best practices regulatory model – while the FTC threateningly aims its regulatory firearm at companies, nudging them into accepting the Commission’s recommendations regardless of statutory authority.
But at a House subcommittee hearing just days later, Congressional leaders rightly pushed back against the FTC. At a House Subcommittee on Commerce, Manufacturing, and Trade hearing on Thursday, Chairman Mary Bono Mack met the FTC’s recommendations with caution, saying, “I’m still not certain legislation is necessary, still skeptical of the motives of both industry and government, and still leery that advancements like “Do Not Track” and “eraser button” technology will work as intended.”
The point is simple: calls for expanding government oversight and regulation on online consumer privacy have originated largely from within government, and less so from outside the beltway. The FTC’s Leibowitz unintentionally conceded this point in the op-ed: “It is time to move the conversation about privacy…beyond Washington and out to where all serious determinations of how to safeguard basic rights and freedoms in this country begin.”
Additionally, privacy practices constructed in Washington can have enormous negative reprocussions for consumers who utilize free, ad-based services. Some companies have already taken voluntary steps to adopt a “Do Not Track” button on web browsers. But whether it arose out of consumer demand or threats by the FTC – who called for a “Do Not Track” function in their preliminary privacy report – is unclear. One thing that is clear is that top-down "baseline" legislation combined with a proactive FTC could result in a less streamlined web, where consumers see less innovative services tailored to their needs. It could also mean an end to "free" and the rise of paywalls and subscriptions.
Consumers already have plenty of options for managing and protecting their own privacy. Inserting government’s foot in the door could allow the FTC to seriously expand their regulatory reach over Internet data. A vague, baseline “best practices” law from Congress could make the situation even worse: allowing open and varying interpretation of the law by the FTC. Congress and Chairman Mack are right to be hesitant.