FTC might seize tech companies’ algorithms

The Federal Trade Commission warned on Tuesday that big technology companies like Google and Facebook might be forced to surrender the proprietary algorithms that fuel their businesses if they continue to mishandle and misuse consumers’ data.

FTC chief technologist Erie Meyer said at a privacy conference that the commission will also consider corporate restructuring, bans and other more punitive enforcement tools against businesses that engage in data abuses, further escalating the FTC’s push under chair Lina Khan to take more aggressive action against companies that exploit users’ personal information.

“We’re going to make sure that data abusers face consequences for their wrongdoing and provide real help for affected individuals,” she said.

The announcement came during the FTC’s annual privacy convention. Commissioner Rebecca K. Slaughter told the conference that the agenda, which included panels on algorithmic bias, consent and misinformation during the pandemic, “reflects a growing understanding” that issues around privacy and data should not only be considered through the lens of consumer welfare but also competition, civil rights and economic opportunity.”

FTC officials detailed that data abuses such as breaches and the misuse of personal information for targeted advertising occur because of the underlying business incentives anchored in the mass collection and application of data to stifle competition. These incentives, they argued, have facilitated the monopolization of digital markets by a handful of bad actors.

“The Khan commission approach to data is not through a narrow lens of consumer protection,” Meyers said. “Data abuses do not happen in a vacuum. They’re fed by incentives, among them beating out competitors.”

Slaughter echoed that. “Simply challenging the application of abusive data practices on a case-by-case basis isn’t likely to bring about the systemic change we need to see in the markets,” she said.

Among the FTC’s priorities, Meyers said, will be reigning in repeat offenders. She denounced fixes that the commission has imposed in the past that simply make “a disclosure longer or a one-time fine bigger.”

These companies may not only have to “disgorge data and money but the algorithms that were juiced by ill-gotten data” in addition to possibly “being subject to bans, just like abusive debt collectors,” she said.

The FTC sued Facebook in December alleging that it violated antitrust laws by deceiving consumers on how it harvests and uses their data, but the lawsuit was not the first time the commission took legal action against the company.

In 2011, Facebook settled with the FTC charges that it lied to users by telling them they could keep their information private and then repeatedly allowing it to be shared. The settlement barred it from making any further deceptive privacy claims, required it to get users’ approval before it changes the way it shares their data and allowed the FTC to monitor compliance.

But Facebook was again caught engaging in vast data privacy violations in the wake of revelations in March 2018 that it illegally shared the data of 87 million users with political consulting firm Cambridge Analytica, resulting in a record $5 billion settlement with the FTC for violations of the earlier order.

Slaughter, at the time, voted against the settlement, claiming it let Facebook off the hook although it flagrantly violated agreements in a prior settlement over the same practices. She was joined by fellow Democratic commissioner Rohit Chopra.

Meyers said data abuse by Facebook and other companies have led to a surge in identity theft, citing a 2,900% increase this year in reports of stolen identities via government benefits programs. She also argued it’s a civil rights issue. She noted that Facebook has been accused in a lawsuit by the U.S. Department of Housing and Urban Development of violating the Fair Housing Act by encouraging housing discrimination through targeted advertising.