The FTC “must aim to strike the right balance – one that promotes innovation and protects privacy.”
Speaking at the Aspen Forum in August, FTC Chair Edith Ramirez marveled that, while technology gallops ahead in new and exciting ways, “the overarching challenge – fostering technological innovation and growth while protecting consumers’ privacy – is a familiar one.”
“As new technologies and business models continue to emerge,” Ramirez lamented, “we hear with increasing frequency the claim that technological innovation and big data have rendered certain fundamental tenets of privacy, particularly the idea of consumer consent, outdated and ill-suited for today’s digital world. Rather than focus on consent, these big data advocates argue, we should apply use-based approaches that set specified limits on businesses’ ability to use the data they have collected but allow everything else.”
Striking down the strawman, the FTC chair told the audience that she disagreed: “the principles of transparency and choice that undergird privacy laws around the world – as well as the approach the FTC advocates – continue to play an important role in protecting consumer privacy.”
“As consumers use more digital devices and the sophistication of big data analytics increases,” Ramirez contended, it has also “become significantly easier to identify individuals based on information not traditionally categorized as personal information, making it more difficult to protect their privacy.” Because she believes that it is easier to “identify consumers, we [the FTC] now regard data as personally identifiable when it can be reasonably linked to a particular person, computer, or device.” Even more innocuous data meets this test, Ramirez said, like “persistent identifiers, such as device identifiers, MAC addresses, static IP addresses, and retail loyalty card numbers.”
Her approach was apace with the general FTC staff and leadership tendency to treat pretty much any piece of data as personally identifiable. That tendency means that their concerns about Big Data analytics are going through the roof.
Big Data “has the potential to weaken the effectiveness of consumer choice,” Ramirez stated. Big Data is “big” due to “the scale and variety of information that companies can accumulate. But its significance is also magnified because of the sophistication of the analyses that can be applied to seemingly benign bits of information to make inferences about individuals, often sensitive inferences, and draw conclusions about their lives,” which can lead to “significant consequences for consumers.”
Since companies can use Big Data analytics to infer things about American consumers without them knowing or consenting to it, the FTC chair asked, how can the FTC “ensure the effectiveness of consumer choices? Given the multiplicity of actors involved, how can consumers possibly understand where their information is going and what it is going to be used for?”
She fell back on tried-and-true FTC expectations of private industry -- “companies need to practice privacy and security-by-design, consider ethical issues in using big data, and refrain from collecting and storing consumer data that they do not need” – but stressed that companies need to focus more on providing sophisticated tools to allow consumers to express their individualized preferences.