FTC Signals Increased Scrutiny of Technology Sector Through Establishing the Office of Technology

On February 17, 2023, the Federal Trade Commission (“FTC”) announced the creation of the Office of Technology (the “OT”), which will be headed by Stephanie T. Nguyen as Chief Technology Officer. This development comes on the heels of increasing FTC scrutiny of technology companies. The OT will provide technical expertise and strengthen the FTC’s ability to enforce competition and consumer protection laws across a wide variety of technology-related topics, such as artificial intelligence (“AI”), automated decision systems, digital advertising, and the collection and sale of data. In addition to assisting with enforcement matters, the OT will be responsible for, among other things, policy and research initiatives, and advising the FTC’s Office of Congressional Relations and its Office of International Affairs. 

Over the past two years, the FTC has sought to clamp down on what it perceives to be technology-related harms and abuses through enforcement actions, proposed rulemaking, and issuing recommendations and guidance.

• We have recently written about the FTC’s enforcement action against GoodRx alleging violations of Section 5 of the FTC Act and the Health Breach Notification Rule stemming from GoodRx’s alleged use of third-party advertising technologies on its websites and mobile applications. 
• The FTC has also attempted to enjoin Meta’s acquisition of the virtual reality company Within Unlimited; however, the FTC’s request was recently denied. Notably, the FTC’s press release announcing the formation of the OT specifically mentions that it will be “tracking emerging technologies like augmented and virtual reality.” 
• On August 11, 2022, the FTC announced its advance notice of proposed rule making (“ANPR”) concerning “commercial surveillance and data security practices.” While a proposed rule has not yet been finalized as of the date of this post, the FTC’s Fact Sheet on the ANPR emphasizes the FTC’s focus on products and services that “track and surveil consumers’ online activities.”
• On June 16, 2022, the FTC issued a report to Congress recommending the development of a legal framework to ensure that AI tools do not cause additional harm. As we previously discussed, a few months earlier, the FTC entered into a joint settlement agreement with companies using AI technology, based on the alleged collection of personal and health information on their mobile app and website in violation of the Children’s Online Privacy Protection Act Rule (COPPA Rule). In what has been termed “algorithmic disgorgement,” the settlement agreement required the companies to destroy any data that was collected in violation of the COPPA Rule and any algorithms derived from such data.
• On September 15, 2021, the FTC announced its expansive view on the reach of the Consumer Health Breach Notification Rule to “health apps.” We explored that guidance here.
• On June 22, 2021, the FTC entered into a settlement agreement with a fertility tracking company based on allegations that it disclosed sensitive health information, including the fact of a user’s pregnancy, to third party advertising technology companies through software development kits (”SDKs”) installed on its app in violation of the Section 5 of the FTC Act and the then-operative EU-US Privacy Shield.

It appears clear based on the FTC’s increased scrutiny of these technology issues coupled with the establishment of the OT that the FTC will continue to focus its efforts on the technology sector. What remains unclear is how much power the OT will wield within the FTC.

Epstein Becker Green will be closely following these developments. For additional information about the issues discussed above, or if you have any other questions or concerns regarding the FTC, please contact the Epstein Becker Green attorney who regularly handles your legal matters, or one of the authors of this blog post.