Consumer Data Privacy, the FTC, and the Major Questions Doctrine are on a Collision Course

It might sound like a wonky topic, but you need to understand what is happening right now when it comes to consumer data privacy.

It’s times like these I wish I were more into sports, any sport, or maybe even just really good at a game that involves strategy, like chess. But unfortunately for all of you my hobby is politics and I don’t have the time to consume much else in detail.

Due to that, you aren’t going to get the metaphor you deserve to open this article.

But politics is like a sport. Each team has a game plan, various players are expected to fulfill their respective roles in the grand scheme of things, and at times, there’s a climax when the ball really is up in the air and you can’t tell which team is going to win or lose.

I need you to understand that is what is happening right now when it comes to consumer data privacy. I know, I know, this sounds like a wonky topic—how exciting can it be?

Listen to me: very.

The fact of the matter is that really big political decisions—ones that determine whether we move toward or away from capitalism, ones that decide just how much control the government is going to have over our economy and therefore our prosperity—they fly by night. This is intentional. They know you’re not watching.

But I am. So allow me to explain the policy superbowl showdown that is currently playing out and how it could impact you.

The Ball

At hand we have what I will refer to as the ball: consumer data privacy. Americans actually rank this issue as one of their top concerns, and it makes sense. We increasingly live our lives online. And that means tech companies have unprecedented access to practically all facets of our lives.

Consumers worry about that level of access and just how securely companies are storing their data, not to mention how they’re selling it and using it for or against us. The Pew Research Center found that, “majorities think their personal data is less secure now, that data collection poses more risks than benefits, and believe it is not possible to go through daily life without being tracked.”

These concerns are even more heightened when the conversation turns to children. Parents increasingly worry about their child’s privacy online, as well as the impact that social media in particular may have on childhood development.

All of these concerns are well-founded. No matter what our federal government wants us to believe, privacy is an essential and important civil liberty that, if lost, can lead to the loss of overall liberty, finances, and reputation. It absolutely should be safeguarded.

The Playbook

Where there’s a potential problem (and power grab), especially one that involves children, you can always count on the government to insert itself. To that end, several states have passed or are considering passing bills that would limit the data collection tools at the disposal of tech companies. So far, the “solutions” these states are coming up with are bad news bears—both from a constitutional and a free market perspective.

In California, three new bills specifically violate the First Amendment in their content moderation demands of tech companies, box parents out of conversations around cyberbullying, and make it impossible for companies to offer run-of-the-mill service suggestions on their products. Texas and Florida passed similarly problematic bills, which courts have already found unconstitutional.

While this is obviously bad territory, Big Tech frankly has few people coming to its rescue. Conservatives hate the tech industry because they believe it censors their content and elevates one-sided perspectives. Democrats hate the tech industry because they believe it doesn’t censor people enough or shut down dissent that breaks with the official narrative being pushed by “experts” at the moment.

But, to be very clear, we don’t set public policies because we’re mad at a business—or at least that shouldn’t be the way we approach these matters. Instead, we need laws that protect a free market economy while offering a fair and consistent playbook by which companies can operate—and that guarantees the civil liberties of all Americans. When it comes to consumer data privacy, that playbook simply has not been provided yet (we’re still relatively new at this whole internet thing).

While you will rarely find me advocating for the federal government’s involvement in an issue, when it comes to the internet these are matters that must be handled nationally. Asking tech companies to jump through different random hoops in every state is untenable and would lead to far less competition, innovation, and options in the sector.

The Teams

Now that we’ve covered the ball and the playbook (or lack thereof), allow me to introduce our two major teams in this saga.

First, you have Congress—the people who are supposed to be making the laws at the federal level. Mostly, they don’t do that anymore, they just appear on TV and chase talking point clips to drive donations. But, the issues around the tech sector have reached a fever pitch in recent years and it seems that enough lawmakers now agree they need to address the data privacy issue.

The bill under consideration is called the American Data and Privacy Act, and it’s a mixed bag. The focal point of a playbook for data collection should be on providing remedies for specific harms rather than merely outlawing tools, providing consumers with data portability, notifying consumers of data breaches, creating a private right of action, and safeguarding children online without limiting parental choice.

Still, Congress could work to implement suggested changes to the bill that would move it in the right direction. And at the end of the day, a body of our elected officials should be the ones debating these solutions and ultimately making such decisions.

However, their priorities have been elsewhere. Recently Congressional leaders used every ounce of power and every minute on their clock to shove the Inflation Reduction Act through before a scheduled recess. That means it will be a while before they can turn their attention back to this matter, and in their absence, the other team is gunning for a power-grab.

The Federal Trade Commission (FTC) is a federal agency made up of unelected bureaucrats. Purportedly they exist to protect “consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.” But at the moment, the agency is run by a full-on socialist who hates the market, hates industry, and has it out for the tech sector in particular.

This week, the FTC announced it was “exploring rules to crack down on harmful commercial surveillance and lax data security.” They also began seeking public comment on the “harms stemming from commercial surveillance and whether new rules are needed to protect people’s privacy and information” under an Advance Notice of Proposed Rule making.

Netchoice, a free market tech trade association (where I am a Fellow) released a statement reacting to the announcement, saying “Notably, the two Republican commissioners dissented against the proposal. This latest power grab by FTC Chair Lina Khan represents an unauthorized and ill-advised rulemaking process that ignores the will of the people and undermines the ongoing efforts of Congress to address this issue in a constitutional manner.”

Many expressed concern over this power grab by the FTC, and it’s pretty obvious why anyone who supports free markets and capitalism would be weary of Chairman Khan’s FTC inserting itself in the market through this vehicle.

The Referee

Fortunately, there is a referee in this whole situation, and in recent years, it’s shaping up to be a pretty good one: the US Supreme Court.

Recently, SCOTUS handed down an epic decision in a case known as West Virginia v. Environmental Protection Agency. While this case revolved around a separate matter, the implications of that decision could have monumental impacts on others in the same vein.

The case revolved around policies the EPA was setting in the market based on an old law—an old law that did not specifically give this agency the power to make such laws. As The Washington Post wrote at the time the ruling would “tackle to what extent federal agencies can make decisions on how to implement laws for issues of major national significance, including rules about vaccine mandates, eviction moratoriums and tech regulations, like data privacy and net neutrality.”

In that case, SCOTUS ultimately ruled that the agency could not make up authority not explicitly given to it by Congress and basically reasserted what all constitutionalists already believed to be true: Congress has the power to make laws–not unelected bureaucrats. Neither can those bureaucrats just assert such power when Congress isn’t doing what they want.

More importantly, in its ruling, the court invoked the major questions doctrine. This important legal precedent instructs judges to evaluate statutes to avoid a “recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

That’s not the only time this court has brought up the major questions doctrine in recent years, continuing to bake the principle into our law: Congress makes laws, not unelected bureaucrats at federal agencies.

So there’s reason to hope that, even if the FTC does attempt to seize control of the market through rule-making on consumer data privacy, the Supreme Court would likely strike down such laws as unconstitutional based on the major questions doctrine. Checkmate. Or touchdown. What have you.

And that’s the game. At stake: the free market and internet as we know it. Place your bets.

Hannah Cox is a Fellow at Netchoice, an organization working to make the internet safe for free enterprise and free expression.

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Hannah Cox
Hannah Cox
Hannah Cox is a libertarian-conservative writer and co-founder of BASEDPolitics. She's also the host of the BASEDPolitics podcast and an experienced political activist.