Fordham Law

FTC's Brill Excludes Google, Facebook From Data Broker Push

Center on Law and Information Policy in The Wall Street Journal, March 14, 2014

Federal Trade Commissioner Julie Brill on Friday declined to pull Google Inc. and Facebook Inc. into her crusade to force data brokers to reveal more about their surreptitious information collection and use practices, saying the focus should instead be on companies such as Experian PLC and Acxiom Corp.

During her keynote address at a symposium on the “Internet of Things” held by the Center on Law and Information Policy at Fordham Law School, an audience member asked Brill if she considered Google, Facebook, Twitter Inc. and Inc. to be data brokers, which are traditionally defined as companies that compile vast troves of consumer data and sell these profiles to third parties for analytical, marketing and other purposes.

While the commissioner didn't reveal whether or not she agreed with the characterization, she did respond that her focus for the time being is on entities that “self-identify” as or can clearly be classified as data brokers, specifically mentioning Experian, Acxiom, Alliance Data Systems Corp.'s Epsilon unit and Merkle Inc.

“I think we can start to develop important transparency tools by looking at those entities,” Brill said. “I personally understand that there are a lot of people who say, 'Look, if you start worrying abot data brokers, you're talking about everybody ... who's doing anything on the Internet.' [But] I don't think we need to go there to start solving problems for consumers.”

Brill has been one of the most vocal critics of the data broker industry. The sector has drawn intense scrutiny from the commission and lawmakers due to its business model, which involves quietly amassing consumer data from various sources, often without the individual ever realizing that the collection is occurring.

“There's a bunch of [data brokers], but most people have never heard of them, and that’s because they're not consumer-facing,” Brill said Friday.

The commission is expected to release a report within the next month based on the results of its ongoing probe into the data broker industry, and Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., followed up his own inquiry by proposing a bill with Sen. Ed Markey, D-Mass., in February that would prohibit data brokers from collecting or soliciting consumer information using deceptive means.

While Brill acknowledged Friday that such legislation would help rein in the industry's unchecked practices, she stressed that it is imperative that the companies themsleves “start to realize that they need to solve some of these problems, otherwise others are going to step in and solve it for them.”

To help spur the industry into action, Brill launched an initiative in June, which she has coined “Reclaim Your Name,” which is aimed at creating a comprehensive database that would enable consumers to find out how brokers are collecting and using their data and provide them with the chance to correct errors in information used for substantive decisions such as credit and hiring.

So far, only Acxiom has responded to Brill's call by launching a Web-based tool called “About the Data” that allows consumers to view and correct information in their profiles that is used for marketing purposes, prompting Brill to continue to push for the industry to inject more transparency into its practices.

According to the commissioner, the increased openness is not only necessary to allow for the continued operation of the thriving data broker industry, but also to ensure the success of the burgeoning “Internet of Things,” which is the term for the growing world of devices such as cars and appliances that are being linked up to the Internet.

“If the data broker industry wants to build consumers' trust — and gain the benefits of this trust — I believe the industry needs to take some affirmative steps to change its relationship with consumers,” Brill said. “It is critical to making the industry a trustworthy participant in the data-driven ventures that the Internet of Things could spawn.”

Brill urged both data brokers and the developers of Internet-connected devices to apply the best practices described in the commission's 2012 privacy report to the data collected by the products. She specifically pushed them to ensure that privacy protections and ethical considerations are built into their products, that they do everything “technically practical” to strip data of identifying markers, and that they work to develop “shorter, clearer and more standardized notices and machine-readable notices.”

“It's not a question of whether the fair information practice principles apply, because they clearly do, but rather how we will apply them,” she said, pushing back at suggestions that the emergence of the Internet of Things and big data analytics should prompt companies to focus less on basic privacy principles and more on developing safeguards based on the risk that the proposed use of the data would pose to consumers.

“I'm very much in favor of encouraging companies to think deeply about privacy risks, but it's essential for consumers to be involved in decisions about data use,” she added.

During the past year, the commission has ramped up its focus on these uses of consumer data, bringing its first Internet of Things enforcement action against TrendNet Inc. in September and holding a workshop on the topic in November.

At the symposium Friday, Fordham CLIP Director Joel Reidenberg asked Brill how the commission intended to regulate the growing industry moving forward, and if the commission's unfairness authority under Section 5 of the FTC Act could be applied to the contested practices.

"Unfairness may have a role to play, but it's so context dependent," Brill said. "I can't sit here and say our use of unfairness jurisdiction will solve all the issues. I think we are using it judiciously and appropriately, and thinking hard about when it can serve the purpose of focusing on kind of a new use."