FTC Mulling Next-Gen Tech, Policy

WASHINGTON — Eleven years ago, the Federal Trade Commission (FTC) held a series of hearings to determine where the nascent commercial Internet was going and what the FTC should do from a regulatory point of view.

The FTC gathered legal, regulatory and consumer experts to predict what the 2006 Internet might look like. Some things they got right: the plague of spam, they predicted, would get worse.

Others they got wrong or never saw coming. It ignored spyware, for instance. No one even mentioned network neutrality.

Now, the commission is back for another go on what’s over the horizon. It is holding hearings hearings this week for the next “Tech-ade,” as the agency call it.

“That technology is changing rapidly is no secret; it is simply transforming the way we live,” FTC Chairman Deborah Platt Majoras said in her opening remarks, “In such a dynamic environment, developing sound public policy is a daunting challenge.”

Over the next three days, the FTC has scheduled sessions on social networking, user-generated content, the instant information culture, RFID technology , convergence and the e-commerce marketplace of the next 10 years.

Majoras said the hearings on the campus of George Washington University are a key part of the agency’s response to the challenges ahead.

“Over the next decade, these technologies and others undoubtedly will have a tremendous impact on how we live our lives,” Majoras said. “This week, we will focus not only on how technology might change, but also on how it will impact consumers every day and how consumer protection policy must adapt in response.”

Majoras added that while predicting which technologies would be marketplace winners, the FTC has learned since 1995 that privacy, security and protection of children are enduring issues.

She added that another lesson learned is Congress doesn’t necessarily need to pass new laws to respond to new challenges.

“The Commission’s existing legal authority is often elastic enough to cover a specific case,” she said, citing the agency’s track record on spyware.

Congress has been been debating some type of spyware legislation for last the four years. The FTC, meanwhile, has gone after spyware as an unfair and deceptive trade practice.

Last week, adware company Zango (the former 180solutions) agreed to return $3 million in “ill-gotten gains” in a settlement with the FTC.

According to FTC, Zango used third party affiliates offering free software to install Zango adware on consumers’ computers, often without their consent. Once installed, the adware generated unwanted pop-up ads and was almost impossible to uninstall.

The Bellevue, Wash.-based Zango also agreed not to download its adware without consumers’ consent and to provide consumers with a way to remove the adware from their computers.

“We needed no new legislation,” Majoras said. “We’ve established the principles that consumers own their computers and [adware makers] have to provide the ability to uninstall the software.”

In his opening remarks, FTC Commissioner Jon Leibowitz was less effusive about the Zango settlement.

“Consider a company like [Zango], which placed 6.9 billion pop-up ads – 6.9 billion – on consumers’ computers, a vast number without notice or consent,” he said. “Right now, all we can do is get disgorgement of profits. We can’t fine the malefactors at all. What kind of deterrence is that?”

Leibowitz said any congressional action should give the FTC the power to fine adware companies that engage in deceptive practices.

He also wants the FTC to begin naming names, publicly announcing which companies are fueling the demand side for spyware.

“In the Zango case, we’re taking a good first step – sending letters to the advertisers who used Zango to deliver pop-ups so they’ll know – if they didn’t already – how their ads are delivered.”

Leibowitz didn’t limit his remarks to adware, also taking the opportunity to bring up questions about network neutrality, pointing out that almost 98 percent of Americans receive their broadband connections from either a telephone or cable company.

Transparency, disclosure and competition are all at stake, he said.

“The last mile of the Internet to the consumer is its least competitive,” Leibowitz said. “If these companies are able to discriminate — treating some bits better than others – there is a danger that their market power in the last mile can interfere with the growth, character and development of the Internet.”

Leibowitz called himself “lucky because I can raise these questions without providing answers.

That’s the job of the crystal ball experts the FTC has called to Washington.

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