This post was originally published as a Seyfarth Legal Update.
In a January 11, 2023 op-ed published in the Wall Street Journal, President Joe Biden urged “Democrats and Republicans to come together to pass strong bipartisan legislation to hold Big Tech accountable.” He warned that the “risks Big Tech poses for ordinary Americans are clear. Big Tech companies collect huge amounts of data” about technology users, including “the places we go,” and argued that “we need serious federal protections for Americans’ privacy. That means clear limits on how companies can collect, use and share highly personal data,” including location data.
Potential Privacy Rules—Legislation or Regulation?
With Republicans taking charge in the House of Representatives and Democrats retaining control of the Senate in the upcoming legislative term, it seems an inauspicious time for passage of comprehensive national privacy legislation. The American Data Privacy and Protection Act had broad bipartisan support and appeared to have momentum in Congress in the latter half of 2022, but foundered in large part due to resistance from California privacy regulators concerned that federal legislation would preempt the California Consumer Privacy Act (CCPA).
Inaction by Congress is not going to stop privacy regulation in the United States, however, and without a comprehensive national policy, businesses face an increasingly complex patchwork of laws and rules. In addition to California’s privacy law, enacted by that state in 2018, the Virginia Consumer Data Protection Act took effect on January 1, 2023, and similar laws in Colorado, Connecticut, and Utah will take effect during the year. Meanwhile, the Federal Trade Commission (FTC) appears poised to issue its own privacy rules after announcing that it was “exploring rules to crack down on harmful commercial surveillance and lax data security” in an August 2022 Advance Notice of Proposed Rulemaking.
The FTC’s notice met fierce opposition from members of Congress and industry participants during the public comment period, which closed in November 2022. Three Republican senators submitted a letter warning that new FTC privacy rules would “only add to the compliance burden facing small businesses” and that “Congress is the only appropriate venue for developing rules for data privacy and security and to set a truly national standard.” The Alliance for Automotive Innovation submitted a comment encouraging the FTC to eschew rulemaking in favor of working with Congress to develop a comprehensive national privacy law, while the National Automobile Dealers Association submitted a comment questioning whether privacy issues even fell within the scope of the FTC’s authority to regulate unfair or deceptive acts or practices.
After reviewing the public comments it has received, the FTC may decide to issue a formal notice of proposed rulemaking; at least three FTC commissioners appear to agree that national privacy regulation is needed. With state privacy laws and potential FTC rulemaking threatening to impose an increasingly heavy regulatory burden on businesses, Congress may have no choice but to act in 2023.
“Big Tech,” Antitrust Enforcement, and Automakers
Meanwhile, as reflected in President Biden’s January 11 op-ed, “Big Tech” remains a bipartisan target of choice for perceived anticompetitive abuses; this focus on “Big Tech” could have an impact on automakers, as well. In a high-profile November 2, 2022 letter sent to FTC Chair Lina Khan and Jonathan Kanter, head of the Antitrust Division of the U.S. Department of Justice (DOJ), Senator Elizabeth Warren called for increased oversight of “Big Tech’s expansion into the automotive industry,” warning that in her view, technology companies “are leveraging their market power in the mobile operating system, digital app markets, and data infrastructure spheres to become the dominant players in the automotive sphere.”
According to Senator Warren, these companies are using “all-or-nothing” bundling tactics to expand their anticompetitive grasp of the automobile market; for example, by Google requiring automakers to purchase an entire suite of services to access popular apps like Google Maps. She also expressed concern that “Big Tech is also laying the groundwork for potentially anticompetitive uses of data generated by its new role in the automobile industry” developing autonomous vehicles, and warned that if these technology companies use their access to massive quantities of location and other vehicle data “to obtain an advantage over companies that are shut out of the market, the effects will be difficult to reverse.”
Senator Warren urged the FTC and DOJ to exercise their oversight authority to deter such abuses, and to review with skepticism potential acquisitions by “Big Tech” companies of emerging companies developing competing technologies. Congress substantially increased the budgets of both the FTC and the DOJ Antitrust Division at the end of 2022, and automakers should anticipate increased scrutiny for “Big Tech” partners in 2023.