FTC calls for aggressive ad industry regulation, but Khan’s tenure is uncertain

The news: The Federal Trade Commission (FTC) strongly criticized the ad industry’s data practices in a report released Thursday, saying social media and streaming platforms have created a “commercial surveillance ecosystem” that collects a “staggering” amount of personal info and fails to protect user privacy.

• In the nearly 130-page report, the agency calls for broad regulation of the advertising industry, saying “self-regulation has been a failure.”
• The criticism comes amid a surge in support for updated federal privacy and social media regulations—proposed laws which reflect a significant amount of ad industry input.

The key points: The FTC report highlights five key findings.

• Companies indefinitely hold onto vast amounts of personal data from users and nonusers that is often collected in ways consumers don’t expect;
• Many businesses sell user data to other advertising companies, increasing privacy risks like identity theft and rapidly spreading personal information across the ad ecosystem;
• Users lack meaningful control over how their data is fed into AI and other automated systems;
• Companies are not properly protecting children’s data—particularly that of teens, who are not covered by current privacy laws—and rely on the excuse that minors are not allowed to operate accounts to disguise their use of services;
• The unregulated state of data gathering allows large platforms to achieve market dominance, further enabling data abuses.

What happens next? The scathing report is one of the most overt calls for regulation in the advertising industry to date, but it also comes at a politically turbulent period, making its implications unclear.

• The future of FTC leadership is uncertain. If Donald Trump is elected US president in November, he is certain to replace agency head Lina Khan, as her attempts to regulate industry have riled Republicans.
• But Khan’s prospects should Vice President Kamala Harris win are also unclear. One of her chief advisors, Tony West, is the former chief legal officer at Uber and has close ties to business figures who have called for Khan to be replaced.
• Those uncertain waters mean the FTC’s report may not have much of an impact until the 2024 election is settled.