Elliot Schwinn is a 1L at Washington College of Law. He graduated from the University of Rochester in 2019 and worked in the antitrust practice group of a law firm before law school. His legal interests lie at the intersection of antitrust, privacy, and tech.
The Cambridge Analytica scandal caused a national outrage which led to the introduction of the “Data Care Act” in 2018. [1][2] The bill would delegate to the Federal Trade Commission (“FTC”) the power to enforce rules requiring online companies collecting user data to have duties of care, loyalty to the user over profit, and confidentiality.[3] Even with the outrage, neither the bill nor the 2019 and 2021 reintroductions received a vote.[4][5][6]
This has not stopped Senator Brian Schatz from reintroducing the bill again.[7] The legislative hurdles the bill faces in Congress are numerous. Notably there are no Republican co-sponsors for the reintroduction in the Senate.[8] Furthermore, in the House, Speaker McCarthy has criticized bipartisan Big Tech regulation in the past, saying he does not want to give agencies like the FTC more power.[9] Finally, in response to the current political climate, the technology sector has focused on lobbying spending to impede regulation.[10] The combination of these three issues create a complicated legislative path to passage.
In addition, there are also legal issues threatening the FTC’s constitutionality that could change how the FTC enforces legislation. In Axon Enterprises, Inc. v. Federal Trade Commission, the plaintiff, who was asked to unwind a merger, argued that the structure of the FTC is unconstitutional on two grounds.[11] Firstly, the FTC violates Article II of the Constitution because the commissioners and the administrative law judges are not subject to at-will removal by the President which improperly insulates the FTC employees.[12] Secondly, the FTC violates the Fifth Amendment’s Due Process Clause by acting as “prosecutor, judge, and jury”.[13] While the Supreme Court is hearing about whether the FTC can preclude judicial review from constitutional challenges, other companies have used similar underlying arguments against the FTC and other agencies.[14][15][16] Taking the lead from Axon, Microsoft in their current merger attempt also argued that the FTC violates the Constitution by usurping power from Article III courts.[17]
If the Supreme Court finds that administrative procedures cannot be used to litigate constitutional questions, every participant in an administrative law procedure could potentially tack on constitutional issues and remove themselves from the agency’s procedures. That would require the Supreme Court to find that the statute creating the FTC’s language and legislative history implied that judicial review of constitutional issues were precluded, while also providing meaningful during or after the agency proceeding.[18] The Ninth Circuit ruled in favor of the FTC, finding that Congress had created implied judicial preclusion after reviewing the Thunder Basin factors.[19] Furthermore, in Humphrey’s Executor v. United States, the Supreme Court found that the President does not have an unlimited right of removal, which hinders the underlying Article II claim made by the companies.[20]
While this issue still needs more scrutiny, the passage of any bill requiring enforcement by the FTC has yet more uncertainty placed upon it. These upcoming legal issues could not only hinder the FTC’s enforcement procedures but could find the FTC entirely unconstitutional. Along with the Congressional hurdles, regulation against the technology sector faces monumental challenges.
[1] Issie Lapowsky, Facebook Exposed 87 Million Users to Cambridge Analytica, Wired (Apr. 4, 2018, 5:43 PM), https://www.wired.com/story/facebook-exposed-87-million-users-to-cambridge-analytica/.
[2] S. 3744, 115th Cong. (2018).
[3] Id. § 3(b).
[4] S. 3744 (115th): Data Care Act of 2018, GovTrack, https://www.govtrack.us/congress/bills/115/s3744 (last visited Mar. 12, 2023).
[5] S. 2961 (116th): Data Care Act of 2019, GovTrack, https://www.govtrack.us/congress/bills/116/s2961 (last visited Mar. 12, 2023);
[6] S. 919 (117th): Data Care Act of 2021, GovTrack, https://www.govtrack.us/congress/bills/117/s919 (last visited Mar. 12, 2023).
[7] Schatz Leads Group Of 19 Senators In Reintroducing Legislation To Protect People’s Personal Data Online, Office of The Honorable Brian Schatz (Mar. 9, 2023), https://www.schatz.senate.gov/news/press-releases/schatz-leads-group-of-19-senators-in-reintroducing-legislation-to-protect-peoples-personal-data-online.
[8] Id.
[9] Ryan Tracy and Julie Bykowicz, House GOP Leader Criticizes Bipartisan Bills Targeting Big Tech, Wall Street Journal (June 16, 2021 4:36 PM EST), https://www.wsj.com/amp/articles/house-gop-leader-criticizes-bipartisan-bills-targeting-big-tech-11623867814.
[10] Anna Edgerton and Bill Allison, Big Tech Spent Millions on Lobbying Amid Antitrust Scrutiny, Bloomberg (July 21, 2021 5:38 AM UTC), https://www.bloomberg.com/news/articles/2021-07-21/big-tech-spent-millions-on-lobbying-amid-antitrust-scrutiny.
[11] Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173, 1177 (9th Cir. 2021).
[12] Id.
[13] Axon Enter., Inc. v. Fed. Trade Comm’n, 52 F. Supp. 3d 882, 886 (D. Ariz. 2020).
[14] Axon Enter., Inc. v. Fed. Trade Comm’n, 142 S. Ct. 895 (2022).
[15] Microsoft Corp., Dkt. No. 9412 at 34 (FTC filed Dec. 22, 2022) (answers to FTC administrative law complaint).
[16] Cochran v. U.S. Sec. and Exch. Comm’n, 20 F.4th 194, 198 (5th Cir. 2021) (arguing the Securities and Exchange Commission violates Article II because administrative law judges are improperly insulated).
[17] Microsoft Corp., Dkt. No. 9412 at 34 (FTC filed Dec. 22, 2022) (arguing the same underlying arguments as their defenses in an FTC administrative proceeding).
[18] Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 207 (1994).
[19] Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173, 1189 (9th Cir. 2021).
[20] Humphrey’s Ex’r v. United States, 295 U.S. 602, 629 (1935).
