Having oppositely controlled chambers of Congress bodes well for bipartisan negotiation on regulating online privacy, tech trade group executives told us Wednesday. Industry allies agreed Republicans and Democrats remain far apart on specific policy. President Donald Trump in a post-election news conference said he’s open to working with Democrats on regulating social media companies, though he called Silicon Valley’s alleged anti-conservative bias a “serious problem.”
Karl Herchenroeder
Karl Herchenroeder, Associate Editor, is a technology policy journalist for publications including Communications Daily. Born in Rockville, Maryland, he joined the Warren Communications News staff in 2018. He began his journalism career in 2012 at the Aspen Times in Aspen, Colorado, where he covered city government. After that, he covered the nuclear industry for ExchangeMonitor in Washington. You can follow Herchenroeder on Twitter: @karlherk
Chairman Joe Simons recused himself from the FTC’s Qualcomm case in California federal court claiming anti-competitive patent licensing behavior (see 1809190041), an agency spokesperson said Tuesday. The spokesperson declined to give a reason. Simons previously was a partner at Paul Weiss, which has represented Qualcomm. Simons’ recusal divides the commissioners evenly along party lines, and the commission wouldn't act in a 2-2 vote. Documents Simons submitted to the agency disclosing his previous clients and investments don't list any Qualcomm entities. A federal judge on Tuesday denied a joint request from the FTC and Qualcomm to delay the ruling to allow for settlement talks.
Two tech trade group representatives played down the value of consumer data during Tuesday’s FTC policy hearing (see 1810310052). Another industry official argued too much focus is on drawbacks of big-data collection, not enough on benefits.
The Supreme Court will hear argument Nov. 26 in Apple v. Robert Pepper, with implications for app stores. The conservative majority figures to favor Apple interests, stakeholders told us. Justices will decide whether Apple customers can sue for antitrust damages in a case, docket 17-204 (see 1810100058), stemming from a lawsuit claiming Apple has a monopoly through its App Store. Apple, which collects a 30 percent commission on apps purchased, limits iOS users to installing apps through that store, unless they jailbreak their phones, voiding warranty. Pepper argued this anticompetitive model lets developers pass added costs onto users. App developers benefit greatly from the App Store, given the booming app economy, and the liability and security protections the store offers, Pepper argued, making it unlikely developers will challenge Apple’s model.
FTC Commissioner Noah Phillips said he’s open to alternatives to the consumer welfare standard, which guides U.S. antitrust law. The agency fielded a wide range of opinions about the standard during its fifth competition policy hearing Thursday.
The Supreme Court debated the wisdom of directing Google’s $8.5 million data privacy settlement to charitable and academic organizations rather than to alleged victims (see 1805010051). During oral argument Wednesday in Frank v. Gaos (docket 17-961), Chief Justice John Roberts suggested Google could have awarded the money to organizations it hadn't contributed to in the past, alluding to criticisms from Ted Frank, litigation director for the Competitive Enterprise Institute, which challenged the settlement. New Justice Brett Kavanaugh asked whether it would be better to have a lottery or a pro rata system to ensure an injured party benefits. Justice Samuel Alito’s questioning suggested the deal awards a lot of money to attorneys, the class-action members get nothing, and groups potentially partial to Google benefit. Justice Ruth Bader Ginsburg suggested an indirect benefit outweighs what class members could have gotten. Frank told her each claiming class member “probably could have gotten between $5 and $10” with typical claims rates. Justice Sonia Sotomayor said of the settlement, “It seems like the system is working.” Google attorney Andrew Pincus said the question is whether the cost of distributing the money means the class gets essentially nothing, making an indirect benefit better.
Sen. Lindsey Graham, R-S.C., is the favorite to succeed Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, if Grassley replaces retiring Senate Finance Committee Chairman Orrin Hatch, R-Utah, lobbyists and industry officials told us. Rep. Doug Collins, R-Ga., who scored legislative victories in 2018, is favored to succeed retiring House Judiciary Committee Chairman Bob Goodlatte, R-Va. Rep. Steve Chabot, R-Ohio, who holds seniority over Collins, also is said to be seeking the top GOP seat.
The longer the FTC’s Facebook-Cambridge Analytica probe lasts (see 1808220030), the worse the outcome could be for Facebook, said former FTC Deputy Chief Trial Counsel Michael Kades Tuesday. “If you’re really going to try to hammer a company in a new way, you get your ducks in a row.” Kades at a New America Open Technology Institute event noted the agency is likely preparing for all possible rebuttals. “That the FTC hasn’t done anything on the Facebook [probe] yet, I don’t think that means anything," he said.
The EU-U.S. Privacy Shield is working as intended, American software industry groups told us, and companies expect the program to be extended at the end of the current review, as do some in Europe (see 1810170028). A privacy advocate also expects extension but warned officials are avoiding the bigger issue -- lack of cohesion between U.S. and EU surveillance laws. Two other privacy advocates expect the FTC’s ongoing Facebook-Cambridge Analytica probe to heavily influence negotiations pending EU recommendations for the agreement.
Discussing the need for a federal privacy law, Commissioner Rebecca Kelly Slaughter cited the “real tools” the FTC gained from the children’s privacy law: specific rulemaking and civil penalty authorities. Granted under the Children's Online Privacy Protection Act, those tools have been debated this Congress (see 1810110043). Children should be at the center of the legislative debate, said Sen. Ed Markey, D-Mass., in a video address. Slaughter spoke Wednesday at the Georgetown Institute for Tech Law & Policy (see 1810220041) and at that day’s FTC hearing (see 1810230042).