POLITICO Pro White House preps expansive online privacy bill

The White House is preparing to send a sweeping online privacy proposal to Congress that would restrict how companies like Google and Facebook handle consumer data while greatly expanding the power of the Federal Trade Commission to police abuses — ideas that are likely to incite strong opposition in Congress.

The forthcoming measure — slated for release next month — would require large Internet companies, online advertisers, mobile app makers and others to ask permission from consumers before collecting and sharing their most sensitive personal information, according to three sources briefed by administration officials. Companies that collect data for one purpose would in some cases need to get user sign-off before deploying it in a markedly different way, the sources said.


The draft bill would also enhance the enforcement authority of the FTC, which has become Washington’s de facto privacy cop. Among the proposed changes, the Obama administration wants to give the agency its long-sought ability to fine companies for online privacy missteps, according to the sources. And the measure would strengthen government oversight of data brokers, firms that siphon up and sell vast amounts of consumer information, often behind the scenes.

The White House and FTC did not comment for the story.

President Barack Obama pledged to release a privacy bill earlier this month, stressing during a speech at FTC headquarters that “there ought to be some basic baseline protections across industries.” Those who have seen the draft measure — which they had limited time to review and weren’t allowed to take with them — said they did not believe the White House had a congressional sponsor in mind. They all cautioned the language could change ahead of its official unveiling.

The proposal would impose a range of new requirements on tech giants from Apple to Google as well as big online advertisers and app makers — and it undoubtedly will face an uphill climb on Capitol Hill.

Lawmakers for years have failed to overcome disagreements to pass a comprehensive online privacy bill — even when Democrats were in charge of Congress. Internet and advertising firms have lobbied heavily against new rules that would interfere with their business models, while Republicans have balked at any government regulation of the Internet, especially from the FTC.

Still, the White House appears determined to forge ahead.

Its draft bill defines “personal information” broadly, the sources said, and encompasses data collection by tech companies as well as the buying and swapping of personal data. It says consumers should have control over their information and companies should respect the “context” in which people disclose those details. Many of the provisions come straight from a 2012 White House report calling for an online privacy bill of rights.

The draft measure also gives Web users greater ability to access the information that companies collect about them and correct any inaccuracies, the sources added. But the proposal does not go as far as the “right to be forgotten,” a concept gaining momentum in Europe to let people scrub information about themselves from the Internet.

The teeth of the draft resides with the FTC, which has previously investigated and imposed penalties on companies like Google and Facebook for misleading consumers on how their data is being used.

The agency, under the administration’s proposal, would gain the power to issue civil penalties against companies, sources said. Currently, the FTC can only levy fines when companies break existing privacy or security settlements with the agency. But the bill would empower the FTC to slap businesses with penalties of $16,500 per violation per day for breaking the law, one source indicated. Other portions of the bill would firm up the FTC’s legal authority over nonprofits and telecom companies, the source said.

The telecom provision addresses one of FTC Chairwoman Edith Ramirez’s key concerns in the ongoing debate about net neutrality. If, as expected, the Federal Communications Commission classifies broadband as a utility in a bid to ensure all Web traffic is treated equally, the policy change could have a legal ripple effect that deprives the FTC of its ability to bring certain cases against wireless and broadband providers.

Under the administration’s proposal, the FTC would play a much larger oversight role in regulating specific industries and technologies.

For years, Washington has worked with certain sectors such as app makers and facial-recognition companies to develop voluntary privacy rules in the absence of a binding law. The White House appears to want to strengthen that process, granting the FTC new power to accept or reject those industry codes of conduct, the sources said.

The measure also addresses big data, a priority for the White House, which launched a review last year of companies that amass and sell buckets of consumer information. The administration wants to set up an entity to monitor the industry — perhaps a institutional review board, working with the FTC — but the sources said it was unclear exactly how the mechanism might work.