During his first year and a half on the Federal Trade Commission, Rohit Chopra has built a reputation as Big Tech’s toughest critic — and today at the GeekWire Summit, he looked back to a decade-old corporate crisis to explain why he’s being so tough.
“If we can rewind a decade ago and think about the roots of the financial crisis, a key part of that problem was the failure of our regulators,” he said on the main stage at the Hyatt Regency Seattle. “A lot of the smoke signals were there, and there were a lot of excuses and a lot of inaction.”
Chopra, who helped launch the Consumer Financial Protection Bureau in the wake of the 2008 financial breakdown that sparked the Great Recession, drew a parallel between banks that were thought to be too big to fail and present-day tech companies that some now see as too big to compete against.
“I see the smoke signals now of really some troubles with Big Tech. … Do we live in a country where you can start a business to challenge them, or do you just have to start one to eventually sell and surrender to them?” he said. “I hope that some of the lessons from the financial crisis do inform how we think about some of these problems in industry structure, and make sure that we are holding everyone accountable, big or small.”
Chopra worries that his colleagues on the FTC are being too soft on anti-competitive practices by the likes of Facebook, which agreed to a $5 billion settlement to resolve a probe into its data privacy practices; and Google and YouTube, which will pay $170 million for collecting personal data from children without their parents’ consent.
He argues that those penalties are too paltry for companies taking in billions of dollars in revenue annually. What’s more, he said, the settlements let individual company executives such as Facebook CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg totally off the hook.
“That sends the wrong message,” Chopra said. “These big dollar numbers don’t fundamentally address the problems at those firms. And they send a message to smaller companies that there’s two types of justice: A small firm gets the hammer, and a large firm gets to write a check.”
Today brought news of yet another privacy misstep — this time by Twitter, which acknowledged misusing email addresses and phone numbers that were provided to the company for security purposes. Twitter said the personal information, which users handed over for two-factor authentication, ended up also being used in targeted advertising programs such as Tailored Audiences and Partner Audiences.
Twitter said that it doesn’t know how many users were affected, and that the personal data wasn’t shared with outside companies. The company said it stopped the practice on Sept. 17.
“We’re very sorry this happened and are taking steps to make sure we don’t make a mistake like this again,” Twitter said in a statement.
Chopra declined to comment specifically on the Twitter case but said “we need to think about why some of these data abuses are occurring.”
“There’s data security, there’s privacy violations,” he said..”My hypothesis, and one thing that I hear a lot from market participants, is the reason for some of this aggressive acquisition of data is because many firms feel desperate to get it all — because if they don’t assemble rich data on every single user, every single firm operating on their platform, they feel they’ll be at a competitive disadvantage.”
Chopra favored conducting tougher investigations, and going to trial with cases if need be. He took special note of the investigations into potential anti-competitive practices at Facebook and Google, currently being conducted by attorneys general in several states.
Although Chopra is one of the Democratic members of the FTC, he said the idea that the commission was divided along partisan lines was “a complete myth.”
“What I think you see is a protection of the status quo vs. a fresh look,” he said. “And I think there is a sense that we do need to take a fresh look about how we look at some of these firms.”
Democratic presidential hopeful Elizabeth Warren played the lead role in setting up the Consumer Financial Protection Bureau, where Chopra cut his regulatory teeth. But Chopra said he doesn’t give a thought to how the FTC’s regulatory role might change if Warren or another Democrat takes the White House next year.
“Whoever is in office, I hope they will be committed to making sure that America maintains its position as one of the most innovative places in the world,” he said. “And the way we will do that is to have a hypercompetitive consumer tech economy.. And the way to do that is also to make sure that the market is free of distortions that can arise from anti-competitive behavior.”
GeekWire’s James Thorne contributed to this report.