TR Daily FTC Launches Study of Social Media, Streaming Firms’ Data Use
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Monday, December 14, 2020

FTC Launches Study of Social Media, Streaming Firms’ Data Use

Over the dissent of Republican Commissioner Noah Joshua Phillips, the Federal Trade Commission today announced the launch of an inquiry into the collection, use, storage, and disclosure of personal information by nine social media and video streaming companies, using its authority under section 6(b) of the FTC Act to conduct studies of business practices, management, organizations, and relationship with other businesses, without a specific law enforcement purpose.

The nine companies targeted by the section 6(b) orders are Amazon.com, Inc., TikTok operators ByteDance Ltd., Discord Inc., Facebook, Inc., Reddit, Inc., Snap Inc., Twitter, Inc., WhatsApp Inc., and YouTube LLC.

The FTC said it was seeking information related 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."

The 6(b) orders list 53 requests for various documents and information, many with at least a few subcategories of information delineated. They cover general information about the company, the services it offers, and user statistics; its data collection, use, storage, disclosure, and deletion; digital advertising services; the application of algorithms or data analytics to personal information; user engagement; demographic information; policies, processes, procedures, and practices with respect to children and teens; and relationships with other services.

The orders ask whether the companies use data professionals to address privacy, ethics, or bias issues. They ask for details on identifying and reporting inaccurate user attribute information. They ask about the minimization of personal information and about non-user sources of personal information. They ask how the company monitors any automated decision-making by algorithms or data analytics. They ask about strategies and tools used to increase user numbers or user engagement and about strategies for increasing revenues. They ask about the ability and willingness of users to switch to other services.

In his dissenting statement, Commissioner Phillips said that the 6(b) orders are "an undisciplined foray into a wide variety of topics, some only tangentially related to the stated focus of this investigation. The actions undertaken today 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. The breadth of the inquiry, the tangential relationship of its parts, and the dissimilarity of the recipients combine to render these orders unlikely to produce the kind of information the public needs, and certain to divert scarce Commission resources better directed elsewhere."

Commissioner Phillips said that "Congress intended the Commission to execute its Section 6 authority to serve the public interest: to inform the Commission, to make recommendations to Congress about legislation, and to publish reports about business practices for public dissemination."

In this case, he said, the orders are not designed to generate useful information. The companies "have strikingly different business models" and thus [t]he only plausible benefit to drawing the lines the Commission has is targeting a number of high profile companies and, by limiting the number to nine, avoiding the review process required under the Paperwork Reduction Act, which is not triggered if fewer than ten entities are subject to requests."

He added, "The biggest problem is that today’s 6(b) orders simply cover too many topics to make them likely to result in the production of comparable, usable information—yet another feature proper oversight and public comment [under the Paperwork Reduction Act] could have flagged."

Commissioner Phillips also criticized the orders for being "untethered to the stated purpose of the underlying resolution authorizing them: consumer privacy.

"Standing on their own, most are reasonable topics for inquiry, perhaps warranting a separate 6(b) study. But they do not stand alone, and, as explained above, by doing them all together we weaken our ability to study any one," he said.

"One example is the searching inquiry into business strategy and financial plans. Another is the set of specifications asking questions about content moderation. Content moderation at scale is a tremendously difficult policy question, which has been the subject of a number of recent and high-profile congressional inquiries and one presidential Executive Order. A third is a list of specifications intended to elicit information about the costs of inaccurate information on users of the recipients’ services, and how the recipients have remediated those costs. On and on," he said.

In a joint statement, FTC Commissioners Rohit Chopra, Rebecca Kelly Slaughter, and Christine S. Wilson said, "Social media and video streaming services have become almost unavoidable in today’s modern world, particularly as many Americans are working, socializing, and attending school online during the national pandemic. 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."

They said that "[o]ne key aspect of the inquiry is ascertaining the full scale and scope of social media and video streaming companies’ data collection. The FTC wants to know how many users these companies have, how active the users are, what the companies know about them, how they got that information, and what steps the companies take to continue to engage users. The inquiry also asks how social media and video streaming companies process the data they collect and what kinds of inferences they are able to make about user attributes, interest, and interactions. The FTC wants to understand how business models influence what Americans hear and see, with whom they talk, and what information they share. The questions push to uncover how children and families are targeted and categorized. These questions also address whether we are being subjected to social engineering experiments. And the FTC wants to better understand the financial incentives of social media and video streaming services."

In a statement, Sen. Mark Warner (D., Va.) said, "As I have impressed upon [FTC] Chairman [Joseph] Simons in the past, an effort by the FTC to systematically study the data collection and business practices of the largest technology platforms is long overdue. Policymakers and regulators—not to mention consumers—are totally in the dark about how their data is being collected and monetized; about the metrics used to measure their attention, engagement, and value to the platform; and about the ways in which these platforms design their products to maximize data collection, ad revenue, and user engagement. I applaud Chairman Simons and the Commission for this important step in bringing sunlight to what has far too long been an opaque market, vulnerable to abuse, digital ad fraud, and consumer harm."

Sen. Ed Markey (D., Mass.), a member of the Commerce, Science, and Transportation Committee, said, "Social media platforms and video streaming services are daily destinations for young people today. Unfortunately, parents and policymakers alike are in the dark about how powerful websites and apps are siphoning kids’ and teens’ personal information, profiling users, and raking in profits while children get hooked on their devices. No comprehensive investigation of these websites would be complete without special attention to children and teens, a uniquely vulnerable population online. I am glad that the FTC heeded my calls to issue these orders, and I thank my bipartisan partners who joined me in advocating for this investigation."

Sen. Amy Klobuchar (D., Minn.), ranking minority member of the Senate Judiciary antitrust, competition policy and consumer rights subcommittee and a member of the Commerce Committee said, "As big technology companies continue to profit off of Americans’ data, consumers are left in the dark about how their personal information is collected, manipulated, and used by these multi-billion dollar businesses. This action by the Federal Trade Commission is an important step towards further protecting consumers from overreach by big tech companies. I urge the FTC to publish a comprehensive report of its findings."

Public Knowledge Director–competition policy Charlotte Slaiman said, "The massive collection and exploitation of user data is a key ingredient in Big Tech platforms’ power. I’m glad to see the FTC is moving forward with this study focusing on platforms’ use of consumer data. This study must consider and review the competition impacts of how this data is collected, held, shared, and used. This study provides a great opportunity to identify how consumer data access, use, and flows within or between companies further entrench dominant firms like Google and Facebook. The FTC should use this study to identify and support public policy on consumer data that actually promotes competition against powerful gatekeeper firms." —Lynn Stanton, [email protected]

MainStory: FederalNews FTC InternetIoT Privacy

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