In the great George Orwell novel “Nineteen Eighty-Four,” the Ministry of Truth is a vast bureaucracy that ironically exists to falsify historical events in the service of political ideology. Its headquarters is an 80-story building of 3,000 rooms, and its outside walls bear the words “War is Peace,” “Freedom is Slavery,” and “Ignorance is Strength.”
The cautionary tale should be read again to judge the significance of the Federal Trade Commission’s (FTC) recent prosecution of the country’s largest Internet companies for engaging in the allegedly deceptive practice of failing to abide by their own privacy policies.
None of these cases have been pressed to trial and none have been defended. Instead, over the past two years, these cases have produced a dozen settlements that give the FTC broad access to the information that the companies collect, and broad control over the policies that the companies adopt to store and use information.
The FTC’s most recent settlement was announced on May 7, and as expected, is typical of earlier settlements. It requires MySpace to clearly state its privacy policies, establish a comprehensive privacy program, hire a third-party to conduct regular audits of its compliance with its privacy program and deliver the results of the audits to the FTC. The settlement terminates a short 20 years from now.
The Federal Trade Commission Act itself does not give the agency authority to require companies to adopt privacy policies or to take action against a company that regards privacy policies as harmful to consumers or the economy. In essence, the FTC has wormed its way into the privacy business by agreement, rather than by legislation.
Consumers, for the most part, have applauded these settlements because they have been sold as a means to protect them from the revolutionary Internet companies they invite into their homes, and through which they transmit their most private thoughts. But a quick re-reading of “Nineteen Eighty-Four” should remind consumers that the prospect of Big Brother overseeing and controlling information flow is even more terrifying than a company using private thoughts to target advertising or design new products.
To put this in perspective, consider the battles that the traditional press fought under the flag of the First Amendment. The press established that all prior restraints are presumptively unconstitutional. It prevailed in arguing that public officials rarely can use libel laws to publish comments of public concern. It quashed subpoenas that sought their work product and forced the government to open its doors to public scrutiny.
Things might have been different if the press had settled in Near v. Minnesota, New York Times v. Sullivan, Branzburg v. Hayes and Richmond Newspapers v. Virginia, agreeing to sin no more, to establish comprehensive policies to advance government objectives and to allow government monitoring to assure compliance.
Internet companies, many say, are not the press and should not be extended the same First Amendment protections. They are utilities or monopolies, and regulation, so the argument goes, is the only way to ensure that they can be stopped from harming the public good.
But as the daily newspaper grows thinner and its circulation grows smaller, as the Internet gets faster and its content richer, as Google chases Yahoo! and Facebook chases Google and Twitter and Pinterest chase Facebook, that argument loses much, if not all, of its force. The news today is supplied by Internet companies and the competition among those companies is fierce.
The FTC settlements threaten to bring all this to a halt. They require enormously expensive privacy standards that only big companies can afford and they impose a level of governmental oversight that no innovative information company will be able to survive. This is what the current regime at the FTC wants because it places them in control. “Agreement is Freedom,” “Regulation is Innovation,” and “Public is Private” are slogans writ large in Washington today.