President Biden Signs Executive Order Encouraging Greater Regulation of Tech and Communications Companies

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On July 9, 2021, President Biden issued a far-reaching Executive Order seeking to fight market concentration and anticompetitive practices across the entire U.S. economy, stating that "[a] fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers."

Unfortunately, according to the Executive Order, "over the last several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality. Federal Government inaction has contributed to these problems, with workers, farmers, small businesses, and consumers paying the price."

While the Biden Administration's aggressive new stance against market concentration applies economywide, the Executive Order highlights several industries for particular attention and specifically "encourages" a number of agencies to take action to address the administration's concerns—including both the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC).

The actions that the Executive Order encourages the FCC to take include the following:

  • Adopt Net Neutrality rules similar to those under the Obama Administration;
  • Apply rules in spectrum auctions that would "prevent spectrum stockpiling, warehousing of spectrum by licensees, or the creation of barriers to entry," and to improve competition in industries that use spectrum, such as wireless voice and broadband services;
  • Ban unjust or unreasonable early termination fees for communications services in order to make it easier for consumers to switch providers;
  • Require (as had been suggested, but not adopted, under the Obama Administration) that broadband providers publish a broadband consumer label (akin to the "nutrition" label on foods) providing "clear, concise, and accurate information regarding provider prices and fees, performance, and network practices;"
  • Require broadband providers to regularly report price and subscription rates to the FCC for public dissemination; and
  • Prevent landlords and cable and internet service providers from inhibiting tenants' choices among providers.

Notably absent from this list is any suggestion that the FCC develop or impose privacy rules for broadband providers—an action that became highly controversial in 2016 and 2017, when—after the FCC adopted elaborate privacy protections for consumers—Congress invoked the Congressional Review Act to invalidate those rules. Instead, it appears that the Executive Order expects privacy concerns to be addressed by the FTC. However, this could be problematic if the FCC, as the Biden Administration asks, reclassifies broadband internet access as common carrier service.

This is because the FTC, by statute, lacks jurisdiction over "common carrier" services and so would seem to be unable to address the privacy practices of broadband providers to the extent that their services are treated as common carrier services regulated by the FCC. Indeed, this lack of FTC jurisdiction is part of the reason the FCC promulgated the privacy rules noted above, in connection with its earlier, now-reversed decision to classify broadband internet access as a common carrier service.

In addition, the Executive Order encourages the FTC to exercise its rulemaking authority to "address persistent and recurrent practices that inhibit competition," including the following two specific concerns:

  • Unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy; and
  • Unfair competition in major internet marketplaces.

Encouraging the FTC to rely on its rulemaking authority to address these (and other) issues is a significant change in policy that along with the FTC's change in leadership may affect multiple industry sectors. The FTC historically has rarely used its rulemaking powers, although earlier this month it took steps to make agency rulemaking easier.

Furthermore, while there is nothing new about the FTC taking the lead on consumer privacy protection, it is notable that the agency has for decades relied most heavily on its authority to sanction "deceptive" trade practices to address privacy concerns. This has meant that with a few exceptions (notably in the area of lapses of data security practices), as long as a company fairly discloses what information it will collect, what it will do with it, and how it will protect it, the agency has not intervened. The Executive Order, by contrast, encourages the FTC to focus on "unfair" data collection practices that may impair "competition, consumer autonomy and consumer privacy."

With regard to privacy concerns, it is not clear whether this language is asking the FTC to take a broader view of what constitutes an "unfair or deceptive" practice, to instead view privacy issues through the lens of the agency's separate authority to sanction "unfair methods of competition," or both. On the other hand, the Executive Order's encouragement to the agency to address "unfair competition" in "Internet marketplaces" seems to be a more direct call for the FTC to invoke its "unfair methods of competition" authority in those contexts.

A broad interpretation of the agency's "unfair methods of competition" authority—whether in the specific realm of privacy issues or more broadly—could signal much more agency activity in this arena, as we discuss here. What might constitute sanctionable behavior under a relatively untethered interpretation of the "unfair competition" rubric remains to be seen.

We will be closely monitoring the actions the FCC and FTC take in response to the Executive Order.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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