On December 27, 2021, the Federal Trade Commission invited public comment on a petition filed by Accountable Tech calling on the FTC to use its regulatory authority to ban “surveillance advertising” as an “unfair competition method” (“UMC “). Accountable Tech is a non-profit organization that advocates for social media companies to strengthen the integrity of their platforms.
In its petition, Accountable Tech cites President Biden’s executive order encouraging the FTC to use its regulatory authority to establish rules that regulate “unfair data collection and monitoring practices that can harm competition, consumer empowerment. and their privacy ”. Although the FTC has generally exercised its UMC authority through enforcement action, Accountable Tech says the Commission can also enact legislative rules under the CMU. In addition, Accountable Tech asserts that certain procedural limitations on the ability of the Commission to promulgate rules under its authority relating to unfair or deceptive acts or practices do not apply in the context of CMU.
Accountable Tech claims that surveillance advertising is “inherently an unfair competition method” because it relies on and reinforces “monopoly power”. More specifically, the petitioner argues that because digital markets are ‘likely to shift’ (that is to say, initial competition is ‘the whole market’) Dominant companies that entered the market early and had access to massive user bases continued to excel due to ‘self-sustaining data advantages’, allowing them to continuously and unfairly extract and monetize more data while raising barriers to entry for competitors. These “self-sustaining benefits” include the integration of extracted data across all lines of business, which Accountable Tech says effectively limits the ability of consumers to exit these ecosystems and allows dominant companies to “capture more. data and market power ”, as well as obtaining easy leverage to enter adjacent markets. Accountable Tech claims that the anti-competitive nature of surveillance advertising and the abuse of market power by dominant firms causes significant harm to firms (for example, publishers and advertisers), consumers and society. For example, Accountable Tech claims that “resource-strapped” publishers “effectively deliver proprietary audience data by incorporating [dominant firms’] tracking tools. In addition, the petitioner claims that some dominant companies have ‘repeatedly and knowingly inflated[ed] metrics, basically defrauding advertisers. Regarding consumers, Accountable Tech states that “for users of nominally ‘free’ products[s] paid in the form of personal data ”, each“ new invasion of privacy and degradation of services ”is an“ effective price increase ”. The petitioner also claims that the dominant companies, as part of their surveillance advertising activities, have inflicted “a litany of significant damage” on society, including by perpetuating discrimination, exploiting children and adolescents, fueling the extremism and amplifying disinformation.
Accountable Tech explains that due to the “unfair business model” of surveillance advertising – where damage to competition and consumers “cannot be separated from the business model that produces it” – and the fact that litigation and the like enforcement measures “have proved ineffective in restricting [such] misdeeds ”, the“ most effective and manageable solution ”is a total ban on the practice. Accountable Tech further provides the FTC with sample rules, including those prohibiting “online platforms from using personal data for the purpose of serving advertisements” or “businesses from sharing user data, to for advertising purposes, with any industry, website, advertising technology or tracker other than the business or service with which a user intentionally interacts. The public will have until January 26, 2022 to submit comments.
Copyright © 2022, Hunton Andrews Kurth LLP. All rights reserved.National Law Review, Volume XII, Number 6