tv The Communicators Noah Phillips FTC CSPAN November 19, 2018 11:55am-12:28pm EST
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commerce. the white house. the supreme court, and public policy events in washington d.c. and around the country. c-span is brought to you by your cable or satellite provider. we want to introduce you to know a phillips. he is one of three republican commissioners on the federal of trade mission. he is our guest this week communicators commissioner phillips, this is the first time the long time that the have been fully commissioned. >> is the first time in over 100 years. >> how to the happened? >> it began in the early 20th century. 1915, when our statute was passed. course at that time, it had five new commissioners. the way it was designed, was to give commissioners staggered terms and seven years. while multiple commissioners often come in on the same time,
again, the scheme is such that you don't have a whole new group of people all at one time. but that's what happened this time. here we are, over 100 years later, is the first time since the founding of the agency that we have five new commissioners coming in at the same time. >> you just begin your seven year term and may? >> yes, sir. >> what is the role of the federal trade commission when it comes to what in unit relation? >> thanks for the question. let me start with the following. the federal trade commission has two very important missions. the first is to protect competition. using antitrust laws. the second is to protect consumers. we enforce the variety of statutes but critically, the ftc act. for purposes of consumer protection, it bars unfair and deceptive practices in commerce. that is a flexible standard. it brought already in the statute. it has been applied over many decades to a variety of
technologies that can include the internet. >> this has changed over the last year, hasn't it? the responsible use of the ftc. >> on some level, yes. >> in what way? >> as you may know, under the obama administration, the federal communications commission, the fcc, classified certain internet service providers as common carriers. subjected them to a serious of relations that we quickly call mitt neutrality. the way the ftc is designed, without the fcc, is we don't have authority over common carriers. when someone is designated a common carrier, like a railroad, for instance, we lose jurisdiction. there was jurisdiction that we had under the new chairman of the federal communications commission, the fcc on did that.
the order to something called a restoring internet freedom order. what i did was put the ftc back in control of with the jurisdiction that it was a year before. without means is they practical matter, is that with respect to unfairness or deception, we have the authority that we had before. when players in that space of a leading of the law, we can go after them. >> turning us in our conversation with commissioner phillips is john who covers technology for political. >> thank you. thank you for having me. it's a real honor to be here on c-span. one thing i want to touch on is data privacy. we're going into a new provost -- midterm election. there's been debate about what new privacy laws look like. you had the trump administration comment on this. lawmakers in both parties indicate this is something what
they want. you have indicated that you don't necessarily think the midterms what's way one way or another. that's not based on political party. there has been some differences in terms of what democrats push for more power for the ftc. notably, focusing on, we're making authority and that look like, we talked to senator. he is indicated that republicans are maybe not as narrated with the idea but still open and talking. ... i expect that the administration
is, and congress will be, weighing a lot of these really important things. that's the first step in the process is for us through our democratic processes to look at an issue, first determine what are the problems that we're trying to solve. when we talk about privacy sometimes we talk about empowering consumers to have more control over data about them. sometimes we talk about data breach, the risk that day-to-day concerns you might be shared, shared is the wrong word. might be stolen, and that might put you at risk. those are related issues but they are not the same. congress i expect will be doing a lot of really important consideration of what the problems are that we trying to solve and then what are the best tools to solve them, and then importantly with congress, to what extent can we get a sufficient level of consensus to arrive at kind of a national
solution? the questions about, should the ftc be given more authority or what have you, are in a sense secondary. they are secondary to this important value judgments that congress needs to make. >> what sort of value judgments would you say are kind of the first and foremost that congress might want to look at when it comes to crafting this? i know their push for doing it in a pretty short amount of time. senator wicker who indicated an interest in ensuring the senate commerce committee nature says he wants it along the books by the end of 2019 which is tricky. if you were pointing to some of the key value judgments that you look at, what would you initially say, in terms of the powers of the ftc, are there any you would grant? i know you mentioned secondary but in terms of rulemaking or civil penalty authority and things like that, are the things you personally would think congress may be would want to do? is that you wanted to say given the value question? >> guest: again, i think the
value judgment is what has to come first and you have to decide, as in the case with the new regulation what are the market failures we've identified and what are the best and most efficient ways to address those market failures. one thing i have said publicly that i hope remains part of this debate is that kind of taking off my consumer protection hat and putting on my competition hat, we need to keep in mind the importance of competition. you always want to protect consumers but you also want to keep in mind the fact that sometimes regulatory schemes can have a negative impact on competition. they can entrench incumbents. that may be worth it. it may be that the problem is worth solving such that we will take a little competition out of the market but it's something we need to keep in mind. >> i know chairman simon talked about that well. do you think that's happening in europe right now with the
privacy rules they've been grappling with? to what extent is an issue right now with what the approach they've taken there? >> guest: let me put it this way. that's a concern i've articulated. there were early reports about the impact on ad tech after gdpr came out which is what you are referring to. there was a study that i saw last week about the impact on venture capital investment in the text based in europe versus the united states. what ultimately results i don't yet know, but competition is always something you need to keep in mind when you're looking at it regulatory scheme. >> host: so commissioner phillips, what's the current privacy law in the united states, and how does it compare to the gdpr in europe? >> guest: so i have to start
my answer by voluntary that i am not going to speak that much with respect to europe. what i'll say for the united states is the following. we have a risk-based privacy scheme in this country that we developed over really half a century. it includes a variety of different laws. the first kind of robust privacy law per se that we think about would be fcra, the fair credit reporting act which is been on the books for half a century. the ftc has had since the 1930s the consumer protection authority that i described that unfairness into such an authority and we use that and privacy related matters. there are also a bunch of other statutes that target particular areas of risk where congress has determined that we need a law. so protecting children, children's online provides the protect act or hipaa. you have to fill out hipaa forms
when you go to the doctor. so what we have is a scheme that says we want to protect children or would want to protect information about health in particular, or financial information, gramm-leach-bliley would be another example of this. what we have now is sort of a risk-based system. in europe the gdpr is a kind of broader look. it's not as focused on specific areas of risk. what that reflects is i think to some extent a different lens through which europeans have viewed the issue of consumer privacy. so in the united states going back to the founding of the republic, privacy has always been a really important value to us. the fourth amendment, right, protects an individual against the government from unreasonable searches and seizures. and you see laws built around the fourth amendment, sort of giving even more heft to the values that it embeds, developing over history of the republic.
you see in fourth amendment jurisprudence continuing recently a case called carpenter involving cell site location, the development over time law to protect privacy but historically in the united states what you thought about consumer privacy more as a consumer protection issue. less as a matter of a constitutional right. in europe they think of consumer privacy, individual relationship vis-à-vis the firms with which it does business or what have you, more as a fundamental right. and so their prescriptions to deal with privacy issues have sort of started there, whereas with traditional have looked to risk, look to harm and we built a statutory scheme around it. >> given the different
philosophies in europe and the u.s., how does the transatlantic privacy shield hacked into that and what's been the ftc's role and how has the administration been doing in terms of fulfilling its commitments on that and is there anything you point that you think we should be doing more of, anything along those lines? i know you've been in brussels i believe in your few short months as commissioner and have an active on some of this, so in terms of the privacy shield what do you think in terms of the significance of there? >> guest: and calling for the ftc to continue to perform its role and making sure we're all very excited of herbal and privacy shield is the one the most important things that i've tried to do in my tenure thus far at the ftc. for the viewers it probably helps to get a little bit of background. europe has had some form of consumer data privacy regulation for quite some time, since the mid-'90s. and their regulations have required companies that want to take the data of europeans and
move it offshore to, on some level, be in compliance with the regulators and their regulatory scheme. this is manifested in the number of ways. the way it works now in the united states is that companies can agree to abide by certain principles with respect to the treatment of data, and with that agreement they enable themselves legally to transfer data out of europe to the united states. that agreement into which or to which companies can sign up, we call the privacy shield. it's been in place for a few years. so the privacy shield process involves companies applying to the commerce department, which does sort of a series of quality controls or whatever you want to call them. then the company will warrant that they are part of the privacy shield. then we do the enforcement. so we have a number of ways that
we make sure that companies that make promises about privacy shield live up to the promises. and where they don't we punish them for that. so they are really what i would describe as four pillars to our privacy shield enforcement regime. the first thing is that, as a mentined before, the commerce department does sort of quality control on the intake for the process. we get referrals from them with a spot problems. number two, we have priority treatment for any claims coming from the europeans. if the europeans to see a problem with a company, we will take a look at that and we will take a look at the first. the third thing we do, we conduct privacy investigations of our own under a number of the statute we discussed earlier. where a company we are looking at has signed up to privacy
you have spoken a lot about the consumer welfare standard and what that really means. i wanted to touch on that given there have been other folks who have really tried to put that on the radar of of some candidates going into the 2020th election and talking about potentially new ways of looking at antitrust, potentially to maybe even break up some of the big tech companies. he's said many different things over the last year or two on that. how do you see that debate and what is the significance of the consumer welfare standard when it comes to antitrust? >> guest: let me take the questions separately because i think they are both big questions. which one do you want me to do first? >> probably what has been set in terms of moving away from the consumer welfare standard. whether there's any sort of need to look at things differently or any concerns with trying to move
that away from how we have reviewed things. >> guest: there's the question where having a much deeper and much louder debate about antitrust policies and we have that i remember in my lifetime. the last time i think we did this is scheduled for the really back in the late '70s and early '80s. it's actually really interesting to go back and look at that time about what folks were saying in terms of how we think about things today. in the 1970s we always talk with things like economic malaise. things were not going well in american industry. you had the growth of foreign firms that were beginning to enter the u.s. markets, call that globalization and a lot of real concerns about the competitiveness of american industry. part of that problem which a lot of folks recognize at the time
right and left from ralph nader to robert bork was that the antitrust laws were really unclear. people had trouble planning around them and worth than that they both deter inefficient conduct. they've encompassed in doing things that would help consumers, workers, and so forth and actually ended up perversely encouraging from a lot of things that were bad for everybody. give an example of this. the law used to be quite hostile both to horizontal mergers, that is mergers among competitors, and vertical mergers, mergers among different companies in the supply chain. the result wasn't less mergers. it was worse mergers. you have what are called conglomerates, large companies, itt is a great example. the nixon administration got in a lot of trouble with trying to meddle in antitrust enforcement with itt. large firms that had subsidiaries that nothing to do with one another.
so you could realize efficiencies and a really hard to manage. so american firms are making bad business decisions and at the same time foreign firms sometimes supported by foreign government help were stepping up to compete. if you looked at a parking lot in 1978, the year robert bork wrote, and you look at a lot today, they would look very different. not just in the design of the cars but also in the brand. this is a classic example of this, the rise of japanese automobiles. it has bought a lot more competition to the american market. we faced a situation in the late '70s and early '80s where people were really concerned about the lack of competition in america, and the lack of clarity in antitrust law and the decisions it was forcing firms to make or leaving fronts to make were very much part of that discussion. a lot of people spent a lot of time.
they had a lot of debates, a lot of discussion. they did a lot of learning and they sort of settled on where we have been for the last 40 years, which is economically grounded consumer welfare standard when we look at how do something affect consumers, less how it affects competing firms. >> host: commissioner phillips, do you have concerns about antitrust and the technology companies and the growth of the big five? >> guest: to me, part of what we see in technology markets in the united states overtime reflects really robust forms of competition. one of the things we learned in the time i described earlier is that a competitive market isn't necessarily expressed in a multiplicity of firms. a competitive market can be expressed in terms that are
constantly innovating, even when they are fewer and as we know, and as the law allows, there are companies that grow to tremendous scale because they provide tremendous value to consumers often a very low cost. they can be very efficient and they can compete others out of the market. that said, when you look at antitrust questions and you see large players in the market, you want to make sure that what they're doing is competitive, that they are not undertaking strategies that are anti-competitive, that violate the law and that might be adopted sort of to keep others out of the market in an unfair way. >> earlier this month president trump did kind of engine three of the big technology companies. he talked about google, amazon and facebook, and said quote, i do have a lot of people talking about monopoly when they mention those three in particular and seem to call for that type of
antitrust scrutiny. what do those words mean to you? what is the broader discussion surrounding those companies? especially when the president is talking about that type of scrutiny, what does that mean for you as a federal regulator overseeing some of those issues? >> guest: look, the ftc as an independent agency and we have a tradition of looking at conduct and not companies. i'll say it again, the fact that our firm is large, under our law, doesn't necessarily make it a bad firm. it doesn't make its conduct illegal, but there are times when firms, to protect the place in the market, engage in conduct that is illegal. and that's something we need to keep track of. >> host: commissioner phillips, you are holding a privacy hearings in the next couple of months. is there an agenda for in
antitrust hearings at the ftc? >> guest: anti-trust is a big part we're doing. we are taking a look at a variety of topics, take a look at the consumer welfare standard in these hearings, looking at the role of labor, looking at vertical mergers. monopolies a word you often hear. every child in america grows up trying to get boardwalk and park place together. it's a converse of monopoly. it's one buyer. >> host: so a google or facebook buying up a lot of small tech companies, is that the type of thing you're looking at trends are not in terms of mergers and acquisitions. let me take an example from which i don't have a really good actual, practical sort of -- let me give you a hypothetical for which i don't have a practical example.
let's say there was a small mill town and even two mills. everyone in the town was employed in those mills. they would compete for workers. if the mills decided to merge and it wasn't easy for people to leave the town or go elsewhere to work, commute, that sort of thing, then it would be one firm buying that labor. that would be an instance where we be concerned about labor monopsony. a buyer of labor where you have less competition on the buying. i'll give another sort of area where people popular he talked about monopsony say 15
years ago, 20 years ago. walmart, walmart is a big fire up a lot of products. it is by no means the only bibit because they are so large they can get for themselves really good deals. some announcing he will be part of the hearing you are holding a in antitrust. >> host: what else will be part of this hearings just to clarify? >> guest: off the top of my head we have thrown kind of a wide net. we look at artificial intelligence. we look at intellectual property. we will look at something in antitrust world we have been calling common ownership. the hearings are taking a very broad look at a lot of topical issues both in antitrust and consumer protection, including privacy. >> with the big social media firms one thing that some folks have pointed to in the last year or so especially has been the concept of bias, whether any of the big social media companies have bias. something against conservatives, some see other biases. some see the embedded in the algorithms. is that something ftc would look at when assessing the
competition or any other aspects of how these companies operate given that's been very prominent especially in the house in the last year there's been multiple hearings where that's been the subject of questioning. what is the ftc's role on that and what you make of some of those allegations of bias? >> guest: so look, i understand why people are concerned about biases in general. media bias has long been something of folks have articulated concerned about. it may be that there are biases. what i'm also though very concerned about is using antitrust as a tool to address those biases if they exist. the reason i worry about that is, first of all, we have a first amendment. an second of all and relatedly the judgment whether the content that someone posts or produces will is biased on a question
requires many judgments about what information there ought to be. it requires judgments about what is biased and not biased reporting. it may require judgment about, gosh, we don't see enough of that perspective in the news, maybe we need more. in a democracy with a free press we need to be very careful about using tools of law enforcement to address problems like that. with respect to the ftc, i don't know that we have either any particular capability or any mandate to do so. >> host: how valuable do you think the facebook hearing were this summer on capitol hill? >> guest: i thought they were quite valuable actually. i thought it was a good opportunity for members to learn
about something that they were talking a lot about. it was a good opportunity for a very prominent firm to explain more to members. one of the great benefits of congress and congressional oversight of the economy, the state in general, is that it helps highlight issues of interest to the public. i don't know for a fact but i suspect part of the reason we're having such an important conversation as were having about privacy is related to that. >> host: noah phillips is one of three republican commissioners on the federal trade commission. there are two democrats as well. commissioner phillips spent seven years as chief counsel to u.s. senator john cornyn on the senate judiciary committee. john hendel covers technology for politico. gentlemen, thank you for being on "the communicators." >> thank you so much. >> c-span, where history unfold daily.
in 1979 c-span was great as a public service by america's cable-television companies and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court and public policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. >> views or anything different about the challenges we face today compared to those of the past? >> what's different today is the iphone which i gave mine away before i sat down. this would revolutionize all forms of activity including all of our politics. the principle of the same. let me give you a story that
illustrates today's. susan collins is i guess you would fairly say the most moderate republican senator. she was invited to go to northeastern university to speak not long ago. several students told the administration that if she were allowed to speak with that meeting within first they would disrupt her speech. the administration caved in to that request, and susan met within which she didn't really think she should have to do. and then she made the speech. what the administration did was to allow the students to exercise what they would call the hecklers veto. it allowed those students to prevent or to threaten to prevent a united states senator with whom they disagreed speaking on their college campus. what the administration did that was wrong was caving in to that. what should have said is you may
not attend. you may cross your arms. you may even turn around and look the other way. you might even his and bill occasionally but if you disrupt her speech and you prevent other some hearing her, you will be punished because you have no right under the first amendment to do that spirit you can watch this entire program on free speech on college campuses with tennessee senator lamar alexander and deputy attorney general rod rosenstein tonight ginny at eight eastern on c-span. >> up next federal reserve vice chair for supervision randal quarles outlined proposed changes to the central banks stress testing program which measures for the financial firms have enough money to withstand economic downturns. we will hear from a panel of economists and regulatory attorneys that talk about the state of financial regulations. this event was organized by the brookings institution.
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