Senator Hawley Proposes to Overhaul the Federal Trade Commission

For years, Big Tech has gone unchecked due to inaction, weak enforcement, and a lack of accountability at the Federal Trade Commission (FTC). Today U.S. Senator Josh Hawley (R-Mo.), Congress’s leading voice on tech accountability, is proposing to overhaul the agency by restructuring it to meet the needs of today’s digital markets.

Senator Hawley’s proposal would relocate the FTC to the Department of Justice, making it directly accountable, while strengthening its market analysis and enforcement powers.

While others have proposed creating new unaccountable bureaucracies to address the challenges of digital markets, Senator Hawley takes a bolder approach. His plan overhauls the FTC and focuses its mandates squarely on digital markets, enforcement, and market analysis.

Senator Hawley said, “The FTC isn’t working. It wastes time in turf wars with the DOJ, nobody is accountable for decisions, and it lacks the ‘teeth’ to get after Big Tech’s rampant abuses. Congress needs to do something about it. I’m proposing to overhaul the FTC to make it more accountable and efficient while strengthening its enforcement authority. This is about bringing the FTC into the 21st century.”

Full details can be found here.

Background

• For years, the FTC has stood by as actors in digital markets violated the law to obtain monopoly power.
  • In a competitive market, extraordinarily high profit margins should not persist because those margins stimulate entry of new competitors over time, causing lower prices. Yet digital markets have been persistently dominated by a few actors who boast extraordinarily high profits. And we are seeing the same pattern in other industries. This trend toward monopolization has occurred on the FTC’s watch.
    • In 2017, the European Union fined Google $2.7 billion for inserting anticompetitive biases into its search algorithm and lying about it. A leaked FTC report has revealed that the FTC knew about this conduct as early as 2012 but did nothing. The FTC’s inaction allowed Google to entrench its market share for years using deception.
    • Google and Facebook have acquired hundreds of companies in the last two decades, yet the FTC never once intervened to try to block any of these acquisitions. Google and Facebook are now some of the biggest companies in the world. Last year, the FTC fined Facebook for flagrantly violating an earlier consent decree—but the fine the FTC touted as a “record” was just 2.5% of the revenue Facebook brought in while violating the earlier decree.
  • The reality is the FTC is not putting even its current resources to effective use because the FTC is poorly designed.

Senator Hawley’s proposal details several ways to overhaul the FTC:

• Accountability
  • Restructure the FTC to operate within the DOJ
    • The FTC would be headed by a single Director (like the FBI), instead of a multi-member commission
    • The Director would report to the Associate Attorney General
    • The Director would be Senate-confirmed for renewable 5-year terms
    • The FTC would gain new market analysis authority to direct its enforcement, assist the Antitrust Division, and inform Congress
  • Transfer all authority to review mergers and acquisitions to the Antitrust Division of the DOJ
• Create more tools for robust enforcement
  • Create authority to enforce rules requiring interoperability, data portability, and data minimization
  • Create civil penalties for first-time offenses
  • Give the FTC greater research and reporting mandates
  • Give state attorneys general concurrent enforcement authority
• Ethics
  • Impose greater ethics requirements and prohibit senior officials from working for or representing large companies for a cooling-off period
• Fix constitutional problems