The Custody Battle for Your Internet Privacy

Google, Facebook, and YouTube; how do these large websites stay free? Internet advertising is part of a huge economy of $27.5 billion that allows the world’s most popular websites to stay free for the average user. Ads are an integral part of your everyday internet use, and every mobile webpage, video, news article, social media post, and popup has been subject to a barrage of federal regulation.

The Internet long remained a refuge from heavy-handed federal regulation, but lately the Federal Communications Commission and Federal Trade Commission have been battling for supremacy in the regulatory space. FCC chairman Tom Wheeler recently circulated a Notice of Proposed Rulemaking to require broadband providers to give consumers the option to opt-in for targeted advertising. In theory, allowing consumers to deny Internet Service Providers access to their personal data might seem desirable, but, according to reply comments by CEI's Ryan Radia and TechFreedom, such action does a disservice to consumers. Instead, they urge the FCC to harmonize its approach with that of the FTC.

The FTC has sought to achieve a balance of privacy and data security, achieving a positive net benefit for both consumers and “edge providers.” Edge providers are classified as any website that provides content, applications, or service over the internet. A key concept of the FTC’s practice is allowing edge providers to keep an opt-out approach, resulting in a benefit to end users. FTC commissioner Jon Leibowitz and FTC general counsel Jonathan Nuechterlein wrote:

The FCC should hold ISPs to the same privacy standards to which the FTC successfully held them for many years — and to which the FTC still holds all other companies. We were disappointed, then, when the FCC recently proposed to subject ISPs to a detailed set of burdensome data-privacy rules with no precedent in the FTC’s regime. These rules would severely restrict how ISPs may use consumer data.

The FCC has moved in this direction, essentially adopting core ideas of the FTC through a joint FCC/FTC policy statement. Reaffirming this commitment will put consumers and ISPs at ease, accepting the status quo of allowing tech-related enforcement to rely on “materiality of harms” when determining settlements or adjudication. Materiality is defined as an actual material injury, and this principle keeps the FTC’s focus on the consumer. The second set of FTC’s policies the FCC should follow is the Unfairness Policy Statement of 1980, asserting the Commission has no authority to declare unfairness unless the act or practice causes or likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves.

These concerns about rulemaking on broadband privacy illustrate the need to designate a standard of reasonableness.  This is just a single issue of many where ISPs are treated differently than edge providers, and this creates a realm of unfairness prevalent in the current system. A solution would be to refrain from reclassifying broadband Internet access, but since that ship has long sailed, the next step is to urge the FCC not to impose any additional rules until litigation over reclassification is resolved.