On a January 11, 2023 editorial published in Wall Street Journal, President Joe Biden urged “Democrats and Republicans to unite to pass strong bipartisan legislation to hold Big Tech accountable.” He warned that “the risks Big Tech poses to ordinary Americans are clear. Big tech companies collect massive amounts of data” about technology users, including “where we go,” and argued that “we need serious federal protections for Americans’ privacy. This means clear limits on how companies can collect, use and share highly personal data,” including location data.
Potential Privacy Rules: Legislation or Regulation?
With Republicans incumbent in the House of Representatives and Democrats retaining control of the Senate in the next legislature, it seems like an inauspicious time to pass comprehensive national privacy legislation. The American Data Privacy and Protection Act had broad bipartisan support and appeared to have momentum in Congress in the second half of 2022, but it foundered largely due to resistence of California privacy regulators feared that federal legislation would undermine the California Consumer Privacy Act (CCPA).
Congressional inaction won’t stop privacy regulation in the United States, however, and without a comprehensive national policy, companies face an increasingly complex patchwork of laws and regulations. In addition to California’s privacy law, which that state enacted in 2018, the Virginia Consumer Data Protection Act went into effect on January 1, 2023, and similar laws in Colorado, Connecticut, and Utah will go into effect during the year. Meanwhile, the Federal Trade Commission (FTC) appears poised to issue its own privacy rules next announcing that it was “exploring rules to crack down on harmful commercial surveillance and poor data security” in an August 2022 Notice of Proposed Rule.
The FTC’s notice met with fierce opposition from members of Congress and industry participants during the public comment period, which ended in November 2022. Three Republican senators filed a letter warning that the FTC’s new privacy rules “would only increase the compliance burden facing small businesses” and that “Congress is the only appropriate forum to develop rules for data privacy and security and to establish a truly national standard”. The Alliance for Automotive Innovation presented a comment encouraging the FTC to eschew regulation in favor of working with Congress to develop a comprehensive national privacy law, while the National Automobile Dealers Association introduced a comment questioning whether privacy issues fell within the scope of the FTC’s authority to regulate unfair or deceptive acts or practices.
After reviewing the public comments it has received, the FTC may decide to issue a formal notice of proposed regulation; at least three FTC commissioners appear to agree on the need for national privacy regulation. With state privacy laws and potential FTC regulation threatening to impose an increasingly heavy regulatory burden on businesses, Congress may have no choice but to act in 2023.
“Big Tech”, antitrust enforcement and automakers
Meanwhile, as reflected in President Biden’s Jan. 11 op-ed, “Big Tech” remains a bipartisan target of choice for alleged anticompetitive abuses; this focus on “Big Tech” could also impact automakers. In a high profile on November 2, 2022 letter Sent to FTC Chair Lina Khan and Jonathan Kanter, head of the US Department of Justice’s (DOJ) antitrust division, Senator Elizabeth Warren called for increased oversight of “Big Tech’s expansion into the auto industry,” warning that in his view, technology companies “are leveraging their market power in the mobile operating system, digital app markets, and data infrastructure spheres to become the dominant players in the automotive sphere.”
According to Senator Warren, these companies are using “all or nothing” bundling tactics to expand their anticompetitive grip on the auto market; for example, from Google requiring automakers to purchase an entire suite of services to access popular apps like Google Maps. He also expressed concern that “Big Tech is also laying the groundwork for potentially anti-competitive uses of the data generated by its new role in the auto industry” by developing autonomous vehicles and warned that if these tech companies use their access to massive amounts location and other vehicle data “to gain an edge over companies that are shut out of the market, the effects will be hard to reverse.”
Senator Warren has urged the FTC and DOJ to exercise their oversight authority to discourage such abuses and to skeptically view potential acquisitions by “Big Tech” companies of emerging companies developing competing technologies. Congress substantially increased the budgets of both the FTC and the DOJ’s Antitrust Division in late 2022, and automakers are expected to provide more scrutiny for “Big Tech” partners in 2023.