Facebook scandals put US watchdog’s power at stake

Bloomberg

Facebook Inc’s repeated privacy scandals have infuriated users, lawmakers and data-security advocates who are clamouring for a forceful government response. That job mainly falls to Joe Simons, who is under pressure to satisfy doubters or risk sidelining his agency as the nation’s chief privacy watchdog.
The chairman of the Federal Trade Commission talked tough when he took over the agency last year, vowing to increase scrutiny of America’s technology giants after years of a mostly hands-off approach. More than eight months later, his critics are getting impatient.
“They need to demonstrate they’re willing to use the tools they have aggressively,” said Justin Brookman, the director of consumer privacy and technology policy for Consumer Reports Inc. “Everyone wants to see the hammer brought down.”
To some Facebook critics, that means more than just a large fine for allegedly violating a 2011 consent agreement with the FTC over an earlier privacy breach. The FTC is investigating whether the social-media giant failed to honor its commitments when political consulting firm Cambridge Analytica gained access to information about millions of users.
While a conclusion could still be months away, the agency is expected to hit Facebook with a record fine, said a person familiar with the case who asked not to be named because the investigation is confidential.
That likelihood seems to indicate officials have determined there was a violation of the settlement. Facebook says it hasn’t violated the decree. The Cambridge Analytica case was already the agency’s most high-profile investigation when Simons took over in May last year. Facebook’s mishaps have since increased, with disclosure of a security breach affecting 50 million accounts and news that some of the world’s biggest technology companies were given more access to users’ data than had been disclosed.

PRIVACY LAW
Some privacy experts, including Brookman at Consumer Reports, are lobbying for passage of the nation’s first privacy law, which could upend how Facebook does business. Others want to break the company into three components: the main social-network business; the Instagram photo-sharing app, which Facebook acquired in 2012; and WhatsApp, the direct-messaging service it bought in 2014.
A break-up is the best way to generate competition to offer stronger privacy protections, says Barry Lynn, the executive director of the left-leaning Open Markets Institute in Washington, which advocates for aggressive antitrust enforcement.
Open Markets’ deputy director, Sarah Miller, said she and other members of a coalition called Freedom From Facebook discussed that approach with Simons over the summer. It would require an expensive and risky court fight that some privacy experts say the FTC is unlikely to undertake.

‘PASSIVE LAPDOG’
Some argue that the FTC is so overly cautious that it should lose its privacy-protection role. Jeff Chester, the executive director of the Center for Digital Democracy, which advocates for online privacy, is among them. “This is why the industry wants the FTC to be the regulator of choice for privacy,” Chester said. The industry “knows that it’s nothing more than a passive lapdog.”
For his part, Simons, a Washington antitrust lawyer and former partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP, is pushing Congress for more power to punish privacy violations, and not give away his authority to a new agency.
Simons, 60, has declined to comment on the Facebook investigation beyond telling lawmakers in November that the FTC will take action “as fast as possible.” He wouldn’t comment for this article.
Some lawmakers also think the FTC lacks spine. Democratic Senator Richard Blumenthal of Connecticut, who is planning to offer bipartisan privacy legislation this year, accuses the agency of failing to use the power it already has.
“Time and again, the FTC has shied away from pursuing clear consumer abuses by big technology companies,” Blumenthal said in a statement. “The FTC must demonstrate that it is willing to step up to hold Big Tech accountable.” The commission’s 2011 consent decree addressed a litany of deceptive practices. Facebook, for example, allowed profile information — photos, education, place of employment — that a user chose to restrict to “Only Friends” or “Friends of Friends” to be accessible to apps that the person’s friends used.