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tv   The Communicators Noah Phillips FTC  CSPAN  November 17, 2018 6:33pm-7:05pm EST

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accountability. we will carry out judicious and methodical and fact-based oversight. our investigation will go with the facts lead us and we will act decisively. it's time for a congress that works for all of the people instead of special interests and president trump. these are the promises democrats made it to the people, and these are the promises we will redeem. thank you and god bless. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] >> c-span, were history unfolds daily. created likean was 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.
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host: we want to introduce you to know what phillips, one of --noah phillips, one of three republican commissioners. this is the first time in a long time the ftc has been fully commissioned, isn't it? noah: it's the first time in over 100 years. host: how did that happen? noah: the ftc again in the early 20th century, 1915, when the statute was passed. it had to get five new commissioners. but the way the ftc was designed was to give commissioners staggered terms of seven years. while multiple commissioners come in at the same time, again, the scheme is such you don't have a whole new group of people at one time. but that's what happened this time. here we are 100 years later, and it's the first time since the founding of the agency we have
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five new commissioners at the same time. host: and you just began your new term in may. what is the role of the federal trade commission when it comes to internet regulation? noah: thanks for the question, peter. let me start with the following. the federal trade commission has two important meetings. the first is to protect competition, and the second is to protect consumers. of statutes variety but the ftc act bars on fair -- unfair practices in commerce. that is a flexible standard. it is broad wording in the statute and has been applied over many decades to a variety of different technologies and that can include the internet. peter: and this has changed in the last year, the responsibilities of the ftc? noah: on some ways, yes.
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peter: in what way? noah: under the obama administration, the fcc classified certain internets -- internet service providers as common carriers and subjected them to a series of regulations that we sort of call net neutrality. designed isftc is we don't have authority over common carriers. when someone is designated a common carrier, like a railroad, we maintain jurisdiction. there was jurisdiction that we had. under the new chairman of the federal communications commission, chairman for g.i., the sec undid that net neutrality order through something called the restoring internet freedom or. what that did is put the ftc back in control with the jurisdiction it had a few years before.
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what that means as a practical matter is that with respect to unfairness or deception, we have the authority that we had before. and when players in that space are violating the law, we can go after them. noah: joining us in our conversation is john handle, who covers technology for politico. john: thank you. a real honor to be here on c-span. i want to touch on data privacy. we're going into a new congress right now and there's been a lot of debate on what a potential new privacy law should look like. we have the trump administration gathering comments on this, lawmakers from both parties indicating it's something they want. you have indicated that you don't necessarily think the midterms would sway it one way or another. that's not based on political party but there has been some
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differences in terms of what democrats have pushed. they have pushed for more powers for the ftc, focusing on rulemaking authority and what that would look like. and -- has indicated some republicans are not as enamored with the idea of that, but open to talking. what powers do you think the ftc should have or could have as congress looks at figuring out the balance? noah: john, thank you. let me say the following. policyspect of broader legislation in the united states raises a really interesting series of questions that embed with them a lot of poor value judgments. and i expect that the administration is, an congress will be, waiting a lot of these important things. that's the first step in the process, for more democratic processes to look at an issue.
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first determine, what are the problems that we are trying to solve? when we talk about privacy, sometimes we talk about empowering consumers to have more concern -- control over data about them. sometimes we talk about data breach, the risk of that data that 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. so congress will be doing important consideration of what the problems are we're trying to solve and what are the best tools to solve them? importantly, to what extent him a get a significant level of consensus to arrive at a national solution? the questions about, should the ftc he given more authority or what have you are in a sense, secondary. they are secondary to the poor
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value judgments congress needs to make. john: what sort of value judgments that are first and foremost congress might want to look at? i know they've pushed for doing it in a short amount of time. senator whitaker indicated he wants a law on the books by the end of 2019, which given the complexity of the issues, is tricky. if you were pointing at the key value judgments, what would you initially kind of say and in terms of powers of the ftc, are there any you would grant? you mentioned secondary, but in terms of rulemaking or civil penalty authority, are the things you would think congress would want to do? or is it too early to say? noah: i think the value judgment is what has to come first. you have to decide, as the case with any regulation, what are the market failures that we've identified?
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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 taking off my consumer protection hat and putting on my competition had, we need to keep in mind the importance of competition. you want, you always want to protect consumers, but you also want to keep in mind the fact sometimes regulatory schemes can have a negative impact on competition. it can entrench incumbents. it may be the problem we're solving is such we are willing to take competition out of the market, but it's something we need to keep it in mind. german pie talked about that, as well. do you think that's happening? to what extent is that issue right now with the approach taken there? noah: let me put it this way.
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that's a concern i articulated. there were early reports about the impact on ad tech. after gdp are came out, which is what you are referring to, there was a study of solace week about the impact on venture capitalism in the tech space 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 a regulatory scheme. peter: what is the current privacy law in the united states, and how does it compare to the gdpr in europe? noah: i have to start my answer by volunteering i'm 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 we have
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developed over half a century. it includes a variety of different laws. the first robust privacy law per se we think about would be sick, the fair credit reporting act, which is been on the books for half a century. the ftc has had the consumer protection authority that i've described on fairness and deception. and we use that in privacy related matters. there were also other statutes that targeted particular areas of risk where congress determined we need a law. protecting children, coppa or hippa. everybody is familiar with the that because you have to fill out hippa forms when you go to the doctor. when you say we want to protect children or protect information about health, in particular, or financial information.
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we have now is sort of a risk-based system. gdpr is kind of a broader look. it's not focused on specific areas of risk. what that reflects his a different lens to which europeans have used the issue of consumer privacy. so in the united states going back to the founding of the apublic, privacy has been really important value to us. the fourth amendment protects the individual against the government from unreasonable searches or seizures and you see vols don't around the fourth amendment, sort of giving even more have to to the values that it embeds, developing over the history of the republic. you see in for the madman jurisprudence, the kids call
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carpenter a development over time of the law to protect privacy. but historically in the united states, when you thought about consumer privacy, what are the consumer protection issues? less as a matter of a constitutional right. in europe, they think of consumer privacy in individuals relationship vis-a-vis firms it does business or what have you, it's a fundamental right. and so their prescriptions to do with privacy issues have started their. -- started there. we have looked to risk and harm and build a statutory scheme around that. john: given us philosophies in europe and the u.s., how does the transatlantic privacy shield factor into that? what is the ftc's role? how has the administration been doing thus far in fulfilling its commitments on that? is there anything you can point to it should be doing more of?
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anything along those lines? i know you've been in brussels. a few short months as commissioner, you have acted on that stuff. in terms of privacy shield, what do you think in terms of significance? noah: and calling for the ftc to continue to perform its role and making sure we're all very excited about, privacy shield has been one of the most important things i have tried to do in my tenure thus far. for the viewers, it helps to give background. some form ofs had consumer data privacy regulation for quite some time since the 1990's. regulations have required companies that want to take the data of europeans and move it offshore to be in compliance with their regulators and regulatory schemes.
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for this has manifested in a number of ways. the way it works right now in the united states is that companies can agree to abide by certain principles in respect to treatment of data. and with that agreement, they can, they enable themselves legally to transfer data out of your into the united states -- your into -- europe into the united states. that agreement we call the privacy shield. it's been in place for a few years. the privacy shield process involves companies applying to the commerce department, which does a series of quality controls, whatever you want to call them. and then the company is part of the privacy shield. we have a number of ways we make sure companies that make promises about privacy shield live up to their promises and where they don't, we punish them
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for that. so, they're are really four pillars to the privacy shield regime. the first thing, the commerce department does quality control on the intake for the process. we get referrals from them where they spot problems. we can take a look at things. number two, we have priority treatment from any claims coming from the europeans. if they have a problem with the company purporting to follow privacy regulations, we take a look at that first. the third thing we do, we conduct privacy investigations of our own under the number of statutes we discussed earlier. company is looking at are the looking to comply with present shield? -- privacy shield? and finally, we will use civil investigative demands,
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occasionally to spot check companies to make sure they are doing what they say they are going to do. robust is that this is a scheme of enforcement. my view also is that the commerce department is doing a great job building out their capacity on privacy shield, adding people, adding things they do on the quality control. and i hope that is received well. has obviously been a lot of steps in the last month or two going toward that. the oversight board has been filled out, different things that have been harkening to europe as to how the u.s. approach that. i know that's been a big ftc role, so i wanted to touch on that. in terms of antitrust, i want to switch gears and talk about that. you've spoken a lot about consumer welfare standard and what that really means, and
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wanted to touch on that given there have been other folks in the open markets who have tried to put that on the radar, some candidates going into the 2020 election, talking about new ways of looking at antitrust, potentially to even breakup some of the big tech companies. he's said many different things on that. how do you see that debate? what is the difference of the consumer welfare standard when it comes to antitrust? noah: sure. let me take the question separately because they are big questions. which do you want me to do first? john: probably what he said about moving away from the consumer welfare standard, whether there is need to look at things differently or concerns of how we move forward with that. noah: sure. having a question we're a much deeper and louder debate about antitrust policy than i
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remember in my lifetime. the last time i think we did this as a country was really back in the late 1970's and early 1980's. and it's actually really interesting to go back and look at that time period about what folks were saying in terms of how we think about things today. in the 1970's, we always talked about economic malaise. things work going well -- weren't going well in american industries. youhad the growth of firms, call that globalization. a lot of concerns about the competitiveness of the american industry. part of that problem, which a lot of folks recognized at the time, right and left, everyone from ralph nader to robert bork, was that the antitrust laws were really unclear. people had trouble planning around them. and worse than that, they both
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deterred efficient conduct. they prevented companies from doing things that would help consumers and workers and so forth, and the actually ended up encouraging them to do things bad for everybody. i'll give you an example. the law used to be hostile to horizontal mergers and vertical mergers, burden -- mergers among different companies in the supply chain. the result wasn't less mergers, it was worse mergers. you had conglomerates, large companies, itt a great example. of the nixon administration got into trouble in trying to meddle with the enforcement of itt. large firms that had subsidiaries that had nothing to do with one another. they couldn't realize efficiencies and they were really hard to manage. american firms for making bad business decisions. at the same time, foreign firms,
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sometimes supported by foreign government help, were stepping up to compete. if you looked at a parking lot an1978, the year robert for, you -- robert bork wrote, and you look at the parking lot today, it looked very differently. this is a classic example of this arrival of japanese automobiles. it has brought a lot more competition to the american market. situation in the lights 1970's and early 1980's that people were concerned about the lack of competition. and the lack of clarity in antitrust law and the decisions it was forcing firms to make or leading firms to make were 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 settled on where we
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have been the last 40 years, and economically grounded consumer welfare standard, where we look at, how does something affect consumers? less how it affects competing firms. phillips,commissioner do you have concerns about antitrust and the technology companies and the growth of the big five? me, part ofow, to what we see in technology markets in the united states over time reflects really robust forms of competition. one of the things we learn in the period i was describing earlier was that a competitive market isn't necessarily expressed in a market of firms. they can be expressed even when they are fewer. as the law allows, there are companies that grow to tremendous scale because they provide tremendous value to
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consumers, often at 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 are doing is competitive, that they are not undertaking strategies that are anti-competitive that violate the law, and that must be adopted to keep others out of the market in an unfair way. john: earlier this month, president trump mentioned the three big technology companies, google, amazon, and facebook, and said, "i do have a lot of people talking about monopoly and they mention those in particular that seemed to call for that tech of scrutiny." what do those words mean to you? especially when the president is
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talking about that kind of scrutiny. what does that mean for you as a federal regulator overseeing those issues? noah: the ftc is an independent agency. we have a tradition of looking at conduct, not companies. i'll say again, the fact that the firm is large under law doesn't necessarily make it a bad firm. it doesn't make its conduct a legal. -- illegal. but there are times when a firm, to protect its place in the market, engage in conduct that is illegal and that's something we must keep track of. peter: if you're holding a series of privacy hearings, is there an agenda for any antitrust hearings? antitrust is a big part of what we are doing. we are taking a look at the consumer welfare standards.
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we are looking at the role of labor minoxidil. we are looking at vertical managers -- vertical mergers. monopoly is a word that you often hear. the monopoly is one seller, monop sony is one buyet. peter: so google buying up small tech companies, that's what you're looking at? noah: not in terms of acquisitions. let me take an example that i don't have good, 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 you have two mills. they would compete for workers.
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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, it would be one firm buying that labor. that would be an instance we would be concerned about labor monopsony. so a buyer of labor, where you have less competition on the buyer. you have one buyer of a thing. area wherenother people talk about it 15 years ago, 20 years ago. walmart. walmart is a big buyer. it is by no means the only buyer, but because they are so large, they can get for themselves really good deals. monopsony will be part
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of the hearings on antitrust. what else will be a part of those hearings? noah: off the top of my head, we have thrown a wide net. we look at artificial intelligence, intellectual property, something we've been calling common ownership. the hearings are taking a very broad look at a lot of topical issues, both in antitrust and consumer protection and privacy. john: with the big social media firms, wanting folks have pointed to and w -- in the last year or so have been the concept of bias, whether social media has a bias against conservatives or some sort of biases in the algorithms. is that something the ftc would look at in assessing competition given that's been just very prominent, especially in the house in the last year? there has been multiple hearings where that is the subject of
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questioning for tech executives. what is the ftc's role on that and what do you make of those allegations of bias? noah: i understand why people are concerned about biases in general. media bias has long been media bias is something they have articulated concern about. there are biases. what i am also very concerned about is using antitrust as a tool to address those biases if they exist. and the reason i worry about that is, first of all, we have a first amendment. relatedly,ll, and the judgment whether the content that someone hosts or produces is aghest -- is biased question that on many levels requires certain judgments about what information there ought to be.
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it requires judgments about what is biased and not biased reporting. and it may require judgments 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. i don'tpect to the ftc, know that we have either any particular capability or any mandate to do so. john: commissioner phillips, how valuable do you think the procuring's were this summer on capitol hill? noah: 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. was a good opportunity for a prominent firm to explain more to members. one of the great benefits of congress and congressional
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oversight of the economy and state in general it helps highlight issues of interest to the public. i don't know for a fact, but i suspect part of the reason we are having such an important conversation as we are having on privacy is related to that. of threee commissioners, 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. gentlemen, thank you for being on "the communicators." announcer: c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies. and today, we continue to bring you unfiltered coverage of
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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. announcer: this weekend on "newsmakers," peter defazio of oregon. the is the top democrat on the transportation and infrastructure committee. he talks about the possibility of a bipartisan infrastructure built in the new congress, and is hope for democrats as they prepare to take the majority in the house. newsmakers, sunday at 10:00 a.m. and ask :00 p.m. eastern on c-span. announcer: up next on c-span, the supreme court case that limit fire district versus guido, dealing with age discrimination. suedefighters in arizonawo after they were laid off, claiming discrimination.
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the fire district claimed it was not subject to the law because of the numbers of employees they had. the supreme court heard the case on september 1, before brett kavanaugh was confirmed as a justice. the court decided in favor of the firefighters earlier this month. for your argument next in lemmon firemount district versus guido. court, weleases the have fixated on two words in a two sentence definition of employer. it is ignored how the second sentence relates back to the first. thatmped right back to second half of the second sentence without considering the first half. and ignores how all of this relates to the foundational definition of which the definition of employer is built. predictably, that wreaks havoc with the statutory scheme.


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