>> next on "the communicators," ftc commissioner maureen ohlhausen on issues involving the federal trade commission and the internet. then louisiana governor bobby jindal's remarks at the values voter summit. after that, live at nine a.m., the washington institute symposium on u.s. relations with the middle east. >> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> host: and joining us this week on "the communicators" is the senior republican on the federal trade commission, maureen ohlhausen.

commissioner ohlhausen, thanks for joining us. first of all, the commission is turning 100 years old this month. >> guest: yes. >> host: what's the mission of the federal trade commission? >> guest: well, thank you for having me here. i'm delighted to talk about the mission of the federal trade commission. our birthday's actually this friday, the 26th, and i'll be hosting a celebration at the commission. but our mission is twofold. it's to prevent unfair acts or practices and unfair methods of competition, but to do that in a way that doesn't hurt legitimate business, and we try to keep those two goals in mind as we do our work. >> host: well, this is "the communicators," so we want to talk about some of the communications issues that we off talk about, and how do you fit that mission into potential regulation of net neutrality? >> guest: so net neutrality is an issue, obviously, that's been a very hot topic in washington for the past several years. and back -- so i had a previous role at the federal trade

commission, i was head of the office of policy planning, and we looked at these issues in a report on broadband connectivity competition policy that we issued in 2007. and some of the issues that that report looked at was whether the antitrust laws which we enforce as well as consumer protection laws could promote some of the values that the net neutrality proposals are trying to safeguard. so, for example, making sure that consumers get the type of broadband service they've been promise by their providers. also that the market remains competitive and there aren't anticompetitive prohibitions put in place. and so that is a question, i think, that continues to play out. how is the best way to safeguard consumer interests here. and one of the things that i've been talking about is the importance of making sure that innovation can thrive. business models have really changed over time. they've changed substantially

even since the internet started. you look at how things have evolved, we want to be sure we maintain flexibility of business models as well as safeguarding consumer interest. and in my view, and i speaking just for myself, i do think the antitrust laws and consumer protection laws have been well suited to protect both of those values, inknow sayings in the business model -- innovation, as well as consumer interest. >> host: so you do see a role for the ftc in net neutrality regulations. >> guest: one of the interesting things i've seen is the d.c. circuit, actually the part of the open internet order it upheld is the transparency requirement. so companies have to say how they're doing traffic management, how they're going to manage these kinds of issues. and if they make a promise, if they say that's what they're going to do and don't adhere to that promise, that's a very straightforward consumer protection kind of issue, a deception issue. so i do think there's an important role that the ftc can play in this space.

>> host: joining our conversation is brian fung who covers technology for "the washington post". >> thanks for having me, peter. commissioner, i'd love to ask you some more questions about net neutrality, but before i do, i wanted to return to a point that peter brought up about the hundredth anniversary of the ftc. i understand you're a bit of a student of history -- >> guest: yes. >> the ftc, to my understanding, was created as a bid to kind of prevent monopolies and ward off anti-competitive behavior. how did the ftc become consumer protection, so focused on consumer protection issues? >> guest: so it's very interesting because originally we covered unfair methods of competition. but early on, so the ftc came into being in 1914, we opened our doors in 1915, and even in the early cases starting in the '20s, you started to see that the commission was expanding the definition of unfair methods of competition to include things like false advertising.

but the problem that arose was if you had a monopoly provider and it was engaging in false advertising, it was hard to say it was hurting competition because there were no other competitors in that space. eventually, the supreme court struck down the ftc's method of unfair competition to reach things like false advertising. so in 1938 there was the wheeler-lee amendments that gave the unfair and deceptive acts and practices authority. >> back to net neutrality for a minute, is there a distinction to be drawn between the infrastructure layer of the internet and the service layer of the internet where companies like google and facebook operate, and should those be regulated differently? >> guest: so the ftc is not really -- we're more of an enforcement agency than a regulator. and so what i look at are twofold. one, is there an impact on competition, right? is there some sort of bottleneck that has been created that is causing something

anti-competitive to happen, especially if it hurts consumers, right? in the antitrust laws we're not interested so much in harm to a competitor, we're interested in harm to competition overall that would reduce consumer welfare. so even though one competitor may be advantaged and one disadvantaged, only if it hurts consumer welfare, that's not an anticoncern. on the consumer-facing side, that's where our protection authority comes in. so if a consumer has been promised one level of service and they're not getting that, that's, i think, an appropriate area for us to look at. but i don't approach it as saying is there a perfect, you know, regulatory structure for the internet? that's not really how the ftc approaches things. we're looking at is something hurting competition, is something interfering with the ability of consumers to get the benefit of the bargain that they entered. >> and what do you make of sort of the potential for internet

providers to use their gatekeeper power to harm consumers? is that a possibility and something that you worry about? >> guest: it certainly is a possibility, and the question is, is it on balance such a possibility that should be prohibited outright like a pro se prohibition you should the antitrust laws or something that could sometimes hurt consumers, sometimes be beneficial and that on balance we don't really know until we have the facts in front of us? that's much more of a reasoned approach under the antitrust laws. so far i haven't seen something that says we know this will always be wad so that -- be bad so that it should be prohibited, per se. >> earlier this week ftc wrote to the fcc weighing in on this question of the deployment of broadband particularly to rural and underserved areas. and one of the things that came up in that was, you know, if the

fcc moves to reclassify broadband as a common carrier under title ii of the communications act, that that could reduce the ftc's authority to regulate broadband providers given that common carriers are given a carveout, essentially, from ftc authority. so do you worry about the ftc sort of losing the authority to regulate broadband providers if chairman tom wheeler moves to reclassify broadband? >> guest: personally, i do worry about that, and i'll tell you why. we do have a common carrier exemption to our authority, and so if an entity is a common carrier providing common carrier services, we can't bring actions against them. and one of the things that i found is that the ftc's been a very active enforcer in the broadband space, so we brought the first online privacy case

back in 1999 to u.s. cities. so it's almost 20 years later, we've still been very active in that space. and i already talked about the ability under the transparency requirement of the open internet order for a broadband provider to be held to its promises to consumers about the broadband service that it's providing. if that broadband service is reclassified as a common carrier service under title ii, i i think that would seriously call into question the ability of the ftc to bring those kinds of actions. so my concern is really not so much for the ftc, but for the loss to consumers from having the ftc's, you know, active oversight in an area where we've been very effective, we've brought a lot of cases, we have tried to safeguard consumer interest in broadband as so much of a consumer's life, transactions, interactions have moved to the internet. >> host: commissioner ohlhausen, is this something that the five

ftc commissioners have discussed on a regular basis? >> guest: so we have the sunshine act requirement, so we can only five of us, or a quorum get together to discuss things under certain, under certain rules in place. but it's certainly something i've tried to talk about a lot and to try to raise awareness about in the net neutrality debate. i think some of my colleagues -- commissioner wright has testified regarding net neutrality as well. >> host: i want to go back to brian's question about infrastructure. right now do you see antitrust consumer protection problems with the infrastructure of the internet? >> guest: so that's a very broad question, do i see problems with the infrastructure of the internet. what i would say is i would be interested in seeing -- the question for me is, if there are these problems and if they occurring now, is antitrust the right tool to address them?

and this idea that the kind of vertical integration can be beneficial to consumers or not be beneficial to consumers if it's anticompetitive, the right approach, i think, is on a case-by-case basis to see is there a problem occurring, and is that something that is anticompetitive and we could bring an enforcement action under that. so i would be interested in knowing. right now i haven't seen a lot, i know that there are disputes, right? some companies say we want it to look this way, we don't want fast lanes, we don't want this or that, but one of the other interesting things i think is being discussed right now is what if consumers are asking for that? what if the consumer is saying i want a service, i want to be able to get that kind of priority service for i'm a big gamer, and i want that, or i have a medical application, and i want to be sure my medical information is transmitted at a high priority. is that an antitrust problem, is that reflecting consumers'

responses, consumers' desires? so i have a little trouble sort of stepping back saying, you know, generally this is good or generally this is bad. i think we have to look at it on case-by-case basis, and that is the value of antitrust and consumer protection, is that's the approach we take, a case-by-case basis. >> so some folks who have addressed this question, you know, take the position that antitrust analyses don't necessarily capture all of the potential harms that could come about as a result of allowing, you know, isps to abuse their gatekeeper position. recently tim wu, the columbia law professor, testified before the house oversight committee saying, you know, there are a lot of social harms that may not be captured by an antianalysis. what do you make of that? -- antitrust analysis?

>> guest: certainly, an antitrust analysis is focused on welfare, looks at economic effects. but quality is also an issue. and i think to turn that around a little bit, it's also to say are there types of variety, types of services that consumers want that they will not get provided to them in the marketplace? and i think that's the way to look at it is rather than saying, well, theoretically there could be a loss of this or a loss of that, i think the question is if that's something consumers really want, won't they ask for that? if it's not there in the marketplace, doesn't that create the opportunity for a provider to say that's going to be my specialty, that's how i'm going to capture, you know, serve this audience and capture market share is providing what consumers want here. because i think that's important to consider as well. and kind of going back to this, well, what if consumers want prioritization for certain services. are we denying them to have the ability to even have that in the

marketplace? >> host: commissioner ohlhausen, back to antitrust and consumer protection. a couple of mergers are in the works, comcast/time warner cable, at&t and directv. is this something that the ftc has addressed, looked at? do you have concerns about those mergers when it comes to the issues that the ftc has focused on? >> guest: so those are before the department of justice antitrust division, so i don't want to say anything about a pending merger before another agency. but i will say the ftc has reviewed mergers in the broadband cable space, and there have been, you know, previous oversight by the ftc in this area, and we would look at a merger on a case-by-case basis to say is this going to hurt competition, what will be the outcome on prices, availability, quality, all those types of factors, so that's the type of thing that goes into an antitrust analysis. >> host: recently, you wrote to ntia to submit your comments on data breaches and privacy.

what did you tell the national telecommunications and information agency, administration? >> guest: so i wrote comments of my own in my own name, so it's just my views, but i talked about big data, and i talked about big data is the tool. and it can be used well, and it can be used poorly. there are many men -- benefits that can come from consumer data, great new insights in many areas, some top of mind for me are in health care, other kinds of research in reaching underserved population, providing new insights in some of our more difficult-to-solve problems we face as a society. but are there risks from big data as well? i think that's true. i think you can take pieces, previously kind of separate pieces of information and assemble them into a profile that may give sensitive insights into a consumer. and the question for me is you have all these benefits, and you have some risks. what do you do then? and i often talk about my approach to regulation which i

would like to call regulatory humility which is the idea that we understand the technology well, we get a good sense of the benefits, we get a good sense of the risks. as a regulator or an enforcer, i need to educate myself and say is, okay, what risks are actually happening or likely to happen, and then how do we target our approach to address those risks while not reducing the benefits to consumers? so i think that's one of the approaches that is important in privacy in a big data space, is to say there are a multito do of benefits -- multitude of benefits, there are some risks, what approach should we take. so i talked about focusing particularly on harms, kind of a risk-based approach that said is there a particular use of this kind of data that could cause substantial harm to consumers, and that's where we should focus our attention and enforcement efforts. >> host: are there enough protections for personal privacy right now? >> guest: so there are more protections than people might realize. in the u.s. we don't have an

overarching privacy law like they have in europe. we have a law of sectoral regulation, so we have regulation for health information, we have regulation for financial information, we have regulation for communications information, and what doesn't fall in that bucket comes under the ftc, the ftc's authority. so we've been a very active enforcer in the area of privacy and data security. but i do think there's more to be done. one of the things that has certainly been in the news a lot recently is all these data breaches. big company data breaches, many, many consumers are affected, and so the ftc has tried to through our own fairness authority make it clear to companies that if you have information about your customers that the release of which could cause substantial harm to them, like financial harm, medical information, those types of things, that you need to take reasonable precautions to safeguard that data. and so we've been, we've brought more than 50 data security cases, pushing thosing to

remind -- those to remind companies this is an important thing to make sure you're not doing an unfair practice. >> your agency has also been active in going after companies that have been collecting data from consumers without necessarily their permission or consent. that's also come up recently in, you know, cases involving facebook and okay cupid where they've performed what they call psychological tests on users without necessarily having told them explicitly what was going on. do companies that perform those types of tests have an obligation to obtain informed consent from consumers? >> guest: well, to take the first part of your question, first, and then i'll turn to the second, so we have brought enforcement actions existence companies that are collecting -- against companies that are collecting what we consider sensitive information about consumers without their consent. we brought a complaint against a flash light app, and the consumers didn't know the

functionality of the flashlight, they thought, well, this is good, this is a flashlight, it was also collecting precise location information, and that was being shared. we consider that financial information, medical information, information about children to be the kinds of sensitive information for which companies should get express consent before they collect it. so we have broad enforcement in that area. then turning to to your question about the testing, under our authority we would have to approach that under unfairness. so the question would be did it cause a substantial harm to consumers that a consumer could not avoid and that is not outweighed by benefits to competition or to consumers. so that's the type of analysis we would have to apply and see whether there was substantial harm. and under the ftc's unfairness statement, we have said substantial harm is financial, medical, health and safety, things involving children. but more suggestive types of harm such as emotional harm

wouldn't be considered substantial under our test. >> there are, i believe there is a complaint at the ftc relating to the facebook psychological study. can you provide an update on that? where are we -- where does that sort of complaint stand? >> guest: so any ftc investigations are nonpublic, so i can't really provide any information. >> okay. so one of the things that the ftc has gone public with recently is a court decision about a company called butterfly labs which was selling bitcoin mining computers to consumers, and the ftc alleges that the, that butterfly labs was not providing those computers on a timely basis. can you tell me a little bit more about that case and what you were alleging in that? >> guest: so it's an interesting case because of i the technology that it's, that is involved,

right? the bitcoin mining machines. i think that's what makes it interesting, but what makes it very routine is the allegations were they weren't providing the machines to people who had ordered them. so we looked at their shipping records, and they had taken orders, they had taken money, and they had to ship them occupy out. that was really the gravity of our complaint, was that the company wasn't fulfilling orders and wasn't providing consumers the benefit of the bargain. the consumer paid for it, they expected to get it, and they didn't get it. while it was interesting it was providing bitcoin mining machines, it was whether they were fulfilling those orders and where they worked at all. >> host: another case that was recently settled was the google case with children, $19 million. >> guest: app purchases, right. >> host: right. how does that develop? how do you find out about it? >> guest: so we had a number of cases in this area. so we settled the case with apple. we have active litigation with

amazon and now we also settled a case with google all revolving around the introduction of in-app purchases. the way we became aware of this was there was quite a lot of attention paid to this issue because participants were start -- parents were starting to complain and say how did i suddenly have $300 worth of smurf fairies on my account? where did that come from? many, many consumer complaints in this area, so we looked into it. and what we found, what we alleged in these cases was that the companies failed to give consumers notice that there were in-app purchases in these children's games that would result in real money being charged, being charged to the account holder. so what we required these companies to do in the set elements -- because one is still in active litigation -- was to give a one-time notice per device that say when you enter europe password, it may open a

15 minute billing window subsequent to all other charges will go through without a password. in some of these children's games in particular, it was very clear what was real money and what was play money so that they had to make it more clear to consumers. and the reason i supported enforcement in those areas is i'm very excited about new technology, i'm a big believer in it, i use it myself. it's a big movement towards mobile payments which i think can have terrific benefits to consumers as well as competition, but the basic consumer protections need to go with these new technologies. and one of the basic precepts is that consumers need to know what they're being charged for and what's the triggering event for that charge. so that was, i think, at the heart of those cases. >> host: okay, $19 million. where -- does google cut a check and write it to the ftc? do they refund to the parents? [laughter] >> guest: they refund to the consumers. the ftc does not get the money. that's the idea, that they need to refund to consumers this

amount of money. if some of it isn't, ultimately, refunded to consumers, then we figure out a way to use it to benefit consumers. >> so $19 million, that's for google, you know, probably a drop in the bucket. how do you, how is in any kind of deterrent for future misbehavior? >> guest: so i'll answer that in two ways. first, our lowell is to -- our role is to make those consumers whole, right? so the redress, it has to be a redress, not a punishment. so it has to be focused on making those consumers whole. so the amount would have to be tied to what harm that was done. but i don't think you can underestimate the impact of a company, a well known company of being sued, right? they care about their brand, they care about their reputation. a lawsuit against them that gets, you know, national and international coverage, actually, i think, has a deterrent effect on top of the amount of money that they may have to pay in consumer redress. and we also put them under order.

so they are under an order with the ftc for a number of years subsequent so that we monitor to make sure they are adhering to these kinds of requirements. >> just to follow up on that, technology is changing so quickly these days, and many of these orders last for, you know, decades. should we be thinking about revisiting how long these orders last, and, you know, particularly given how quickly new technologies come on the market and how even business models change on a, you know, month-to-month basis? >> guest: i think that's a good question. our orders are typically 20 years long, and the question is, is that too long. but i also think you need to look at what do those orders require. my view is we're not there as design isers, we're not giving design specifications to a company. it's i it's much more of a performance kind of standard. are you giving consumers appropriate notice before you charge them? those are the kinds of things that an order would require are

you giving them appropriate notice? you decide how the notice should be given. a new technology may have a whole new way to give that notice. we're not trying to dictate or forecast what that might be, but just the basics, are consumers getting the information they need to make that decision. with privacy violations, often times these privacy violations have arisen because there's a flaw in the process, the company for training its staff who has access to the information, why do they have access to it, who are they sharing with, do they have the right protocols in place. so our orders will require a process. are you auditing your security, your privacy and security protocols annually or every two years? it's that kind of thing. >> host: maureen ole hawns, in this wild, wild west that we're living in with regard to technology, we've got the fcc, we've got the department of justice, we've got the ntia, ftc and probably other agencies who

all have a foot in the management, regulation, enforcement, etc., are there turf wars? i mean, how do you, how do you figure out who's doing what? >> guest: so it takes a lot of coordination and discussion. when i used to run the office of policy planning at the ftc, that was a big role that i had, actually, was weighing in with other parts of the government, the federal government and the states, to put forth the consumer's viewpoint is this proposal, is this regulation going to make consumers better off whether it's from a competition standpoint or from a consumer protection standpoint. so i think that's the role the ftc plays is we're not an industry-specific regulator: we're a generalist agency. but our authority is to make sure that consumer interests are protected. so i think the important way to do that is to coordinate with other agencies as much as possible. last year i wrote a paper, gave a speech and wrote a paper about the importance of avoiding

institutional conflict where necessary, where it might arise. and so i do try to minimize institutional conflict. but there are times when the consumer's viewpoint, the approach the ftc can bring to the table does need to play an important role in coordinating with other agencies. >> host: final question, brian fung. >> back to net neutrality, right where we began -- [laughter] many consumers have expressed the opinion that, you know, the fcc ought to apply strong net neutrality rules to make sure isps continue to behave well. in that light, how does the ftc interpret, you know, its mandate, so to speak, when it comes to representing consumers? >> guest: so going back to my original point that what's in place now is that transparency requirement. and the ftc, as long as broadband is not reclassified as a title ii common carrier

service, can pursue those consumer interests, can make sure those promises to consumers are fulfilled. i'm concerned that if that reclassification happens and the ftc is taken, you know, out of the picture, that consumers on balance won't be better off. >> host: maureen ohlhausen, republican commissioner of the federal trade commission, brian fung of "the washington post." >> thank you. >> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> in about 30 minutes, the washington institute will host a daylong symposium on the middle east that focuses on u.s. relations and challenges in the region. watch it live beginning at nine a.m. eastern on c span 2. c-span2.