I mean, Alvaro. I know it was you, Alvaro.
Readers might recall my recent discussion of the Federal Trade Commission’s (FTC) new Bureau of Let’s Sue Meta, in which I covered, among other things, the commission’s proposal to modify its 2020 Decision and Order In the Matter of Facebook Inc. (now Meta). The 2020 order included complex behavioral requirements, in addition to a record-setting $5 billion penalty. One supposes that the consumer harm had been inestimable, given that the commission never did estimate it.
As I wrote there, the FTC’s new proposal was puzzling in several regards. For one, most of the purported violations of the 2020 consent order are alleged to have taken place in 2019. Which came before 2020. For another, the commission’s proposal failed to clarify the nexus between the alleged harms (once again, of no estimated magnitude) and a sweeping proposal to restrict Meta’s…
…collecting, using, selling, licensing, transferring, sharing, disclosing, or otherwise benefitting from Covered Information collected from Youth Users for the purposes of developing, training, refining, improving, or otherwise benefitting Algorithms or models; serving targeted advertising, or enriching Respondent’s data on Youth users.
All three sitting commissioners voted for the proposal, but that’s not the source of the current controversy, even if it should be. No, the fracas has to do with Commissioner Alvaro Bedoya’s accompanying statement, in which he—an established privacy advocate—correctly noted that there are certain “limits to the Commission’s order modification authority,” and wondered whether the required “nexus between the original order, the intervening [alleged] violations, and the [proposed] modified order” were in evidence. Or extant. He didn’t see it either. So maybe I’m not blind after all.
I’m not the first to notice the dust-up, but the matter remains open, and the very public discussion remains notable. As reported in Politico, “[a] number of progressive tech policy advocates are furious with FTC Commissioner Alvaro Bedoya’s hesitant stance on the agency’s move to reopen its case against Meta for privacy violations stemming from the Cambridge Analytica scandal.”
For instance, Dan Geldon—Sen. Elizabeth Warren’s (D-Mass.) former chief of staff—wrote “Alvaro – your statement today is insanely at odds with the representations you made to me about backing Lina on Facebook matters prior to your confirmation. Very very disappointing.” It was also, apparently, “inexcusable and unforgivable.” Not just insanely and very disappointing. Failing to receive a prompt response, Geldon added “[v]ery telling that you don’t even respond to text messages now that you don’t need help getting confirmed. That pretty much says it all.”
There wasn’t much sleuth-work involved in digging this up. Bedoya—so far as I know, the only sitting commissioner to have any substantial law firm experience (or to have been in practice more than a decade before appointment to the commission)—was rightly concerned about ex parte communications about a matter open before the commission, so he contacted the ethics experts in the general counsel’s office and posted Geldon’s indignant texts on the FTC’s website: warts, screen-shots of the text messages, and all.
Several things seem conspicuous, besides Geldon’s Everest-high dudgeon about the imperfect realization of a presumed conspiracy. First, Bedoya had voted with, not against, Chair Lina Khan and Commissioner Rebecca Slaughter. That was not enough, apparently.
Second, as my ICLE colleague Geoff Manne noted, there’s a conspicuous suggestion of quid pro quo and, what’s more, prejudgment of various complaints against Meta—or, at least, a conspiracy to prejudge such matters.
Bedoya denies having been party to any such conspiracy, and I believe him. But it seems plain enough that Geldon thought they’d formed a conspiracy, perhaps along with Sen. Warren, Chair Khan, and others.
One might surmise that there was at least an invitation to collude. Here’s my best guess about the, er, misunderstanding:
- Those issuing the invitation did so in general terms—asking, e.g., whether Bedoya was “fully on board” with, say, planned aggressive scrutiny of “big tech,” as the (now) chair contemplated (they had to be general if they had in mind matters not yet opened, and complaints not yet brought);
- Bedoya, a longtime privacy advocate who’d voiced concerns about certain conduct in the tech industry, said something akin to “you bet, hunnert percent, scrutiny it shall be”;
- Someone(s) thought they’d secured a commitment to both vote and sing with the choir, on request; whereas
- Alvaro Bedoya simply thought he’d endorsed rigorous scrutiny without prejudgment of specific matters. Because who would do the other thing? Just a guess, of course.
Note, too, a Bloomberg report that Khan rejected advice from Lorielle Pankey, the FTC’s associate general counsel for ethics, that she recuse herself from another Meta matter. Now, she has been called by the House Judiciary Committee to testify to Congress about that. That is, there’s the specter of another prejudgment issue.
Based on the public record, I think that Bedoya should have voted “no.” Apart from that—and his utterly mysterious position on the anti-consumer Robinson Patman Act—he seems to have done the right thing.
Notes to Geldon: Washington is not the Great White Way; neither Geldon nor Sen. Warren is Lee Schubert; and, in all likelihood, Bedoya will continue to work in this town. Hell, he probably didn’t want to be a starlet anyway.
Prime, Pizza, and ‘Dark Patterns’
Have you read the Iliad? Homer’s epic poem on the Trojan War is one of the oldest works in Western literature, and by no means the shortest. A commonly accepted version runs about 15,700 lines of Homeric Greek verse, and a paperback Penguin Classic edition of a popular translation runs about 700 pages.
So? Bear with me.
On June 21, the FTC filed a complaint alleging that:
For years, Defendant Amazon.com, Inc. (“Amazon”) has knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service (“Nonconsensual Enrollees” or “Nonconsensual Enrollment”). Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as “dark patterns” to trick consumers into enrolling in automatically-renewing Prime subscriptions.
Prior to recent changes, the complaint alleges that “the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them. Fittingly, Amazon named that process ‘Iliad,’ which refers to Homer’s epic about the long, arduous Trojan War.”
Now we get it. Canceling one’s Prime membership is akin to reading a 700-page account of a 10-year war, if not precisely like fighting in a 10-year war. That seems bad, not that I want to dissuade anyone from reading one of the classics of Western lit. But tastes vary, and it is indeed a long book (or 24 “books,” as the poem is organized).
I’ve not tried to cancel Prime myself (because I don’t want to cancel Prime) but others have told me that it’s easily accomplished in a minute or less. And having taken a fresh look at the website, I find that entirely plausible. The commission’s account of the horrors of ancient war—sorry, Prime cancellation—begins on page 43 of the complaint, where we learn that, prior to recent streamlining, cancellation involved navigating the Scylla and Charybdis (sorry, that’s the Odyssey) of “the Iliad Flow,” which “required consumers intending to cancel to navigate a four-page, six-click, fifteen-option cancellation process. In contrast, customers could enroll in Prime with one or two clicks.”
That is, one or two clicks, once they’ve registered with Amazon and taken the time to input the required information. If you express (by clicking) an interest in cancellation, you are asked whether you mean it, presented with a pitch to change your mind, an offer of a discount, and, eventually, an effective click to cancel. To be sure, six clicks is more than two, but I wouldn’t expect it to take 10 years or the death of Achilles.
Does it take 10 minutes? Does it take a single minute or less, as some have said? Does it take the time it takes to read the Iliad (translated into a language I can actually read)? Are we talking about the time required by the median webpage designer, the median consumer, or some substantial class of disadvantaged consumers? Some simple consumer testing might tell us how long it takes the median or modal consumer (or how long it takes on average). It might also tell us what percentage of users attempting to cancel are thwarted—or, at least, diverted—by the “dark patterns.” But the complaint doesn’t say anything about such testing or, if it was done, its results.
While we’re at it, how many millions of consumers were “duped” into signing up for Prime in the first place? “Millions” seems rather vague. Amazon says that it has about 200 million Prime members. One wonders (a) how many (or what percentage) were enrolled (and charged) without their knowledge and (b) how many (or what percentage) of them were unable to withdraw from Prime, having been so duped. Roughly?
The complaint doesn’t say. It does provide examples of the alleged “dark patterns,” but these seem to include both the price of Prime membership and the terms. I don’t recall feeling duped myself, but maybe that goes hand-in-hand with being duped.
Cheek aside, there’s a perfectly good issue here. Presumably, there is some level of difficulty that would be found unduly onerous by the median consumer, and some other level of difficulty that would be unduly onerous for, say, 80% of consumers. At some point, we might find a process so complex and time-consuming as to be practically impossible. We can also imagine a firm that doesn’t provide any functional cancellation mechanism at all, but attempts to bill consumers, without their consent, in perpetuity.
Various cancellation mechanisms might instantiate species of fraud, actionable under the commission’s unfair or deceptive acts or practices (UDAP) authority, as deceptive, unfair, or both. Perhaps some other conduct–say, the settled Vonage matter– was one such case. But the Amazon complaint (at least the non-redacted parts) seems to assume away all the hard questions about Section 5 liability. As the old Johnny Carson show might have boiled it down: how dark is it?
The complaint highlights the inherent ambiguity of “dark patterns”—much discussed, if never clearly defined, practices involving user interfaces, such as web pages. As a 2022 FTC staff report notes:
the term “dark patterns” has been used to describe design practices that trick or manipulate users into making choices they would not otherwise have made and that may cause harm. As the workshop’s panelists noted, dark patterns often take advantage of consumers’ cognitive biases to steer their conduct or delay access to information needed to make fully informed decisions.
The problem is not that we cannot imagine designs that are genuinely deceptive, or misleading and harmful—of course we can. Rather, it’s that the definition seems eminently plastic. What sort of influence is manipulation? Information is limited and so are human information-processing abilities. The provision of truthful and non-misleading information might bias consumers into making choices they would not otherwise make. Advertising a special at my favorite local pizza place might cause me to order a pizza I would not otherwise have ordered (not least because it’s not normally on the menu). Maybe that’s a more expensive pizza than my usual choice. So? Is the price delta the measure of consumer harm? Is there any consumer harm? If my favorite ice cream is on sale, I might be more inclined to buy it, perhaps to the (eventual) detriment of my health. Is an advertisement of the sale a dark pattern? How about the conspicuous placement of the ad at the head of the isle in the grocery store? Or an email notification of the sale on a hot summer day?
Back to the Amazon complaint: Suppose I inquire (by clicking) about canceling my subscription only to be steered to an ad for a discount as an intermediate step to cancellation. Suppose, further, that I really can cancel with a few extra clicks of the mouse. If I accept the discount, and there’s nothing false or misleading about the terms of the discount, have I been “manipulated” into harm? I’ve received a discount. Perhaps I will accept the new terms because Prime really seems attractive after all, given the new price. Or it seems worthwhile given new information, or newly salient information, about benefits provided by Prime. If the information of which I’m conscious is limited, and the user interface makes certain information salient, is that a bad thing? Is it so plainly and uniformly bad that it should be prohibited by law?
With 200 million Prime members, it seems likely—perhaps a statistical “certainty”—that some non-zero number of consumers is unable to navigate cancellation. That would be true no matter what the interface, and no matter who designed it. FTC staff sometimes have trouble navigating the FTC’s own website (don’t ask me how I know). And no doubt, some consumers—perhaps many—might prefer a more streamlined cancellation process, even if they’re capable of navigating the current one. But some might prefer the discount. Which ones, if any, should be satisfied by regulatory fiat?
With or without any background in the behavioral and brain sciences (full disclosure, in my misspent youth, I was an associate editor for a journal called Behavioral and Brain Sciences), I can imagine good “dark patterns” cases plainly actionable under Section 5 of the FTC Act and established case law. But it’s hard to fit this complaint into any such mold.
Perhaps there’s a good question here about new standards to fit new commercial practices, but the 2022 FTC staff report doesn’t provide any such thing, and I don’t see it in the complaint either. Maybe there’s a good case buried by the complaint. Or maybe the case is “let’s sue GAFAM again.”
Administrative Law Recommenders
Back into the weeds of process–and even org charts–we go. The commission on June 2 announced another round of revisions to its rules of practice, publishing those revisions (but no request for public comment) in the Federal Register. A prior round of agency rule changes revised the process for Section 18 rulemaking; that is, for the adoption of consumer-protection regulations under the Magnuson-Moss amendments to the FTC Act. Those revisions were adopted by a 3-2 vote, with Commissioners Christine Wilson and Noah Phillips dissenting.
Their dissent is instructive, so I commend it to you. By way of contrast, I suppose I also recommend the commission’s (majority) statement on the rule change, in which it said that the changes would “modernize the way it issues Trade Regulations rules under Section 18 of the FTC Act.” Wilson and Phillips pointed out that the changes diminished both the transparency of the rulemaking process and the opportunity for independent input, and eliminated the requirement of an expert staff report (and for Bureau of Economics review of a preliminary staff report), as we noted in ICLE’s comments on the commission’s Advance Notice of Proposed Rulemaking on Commercial Surveillance and Data Security.
The new rule change does several things. For one thing, it seems to turn the FTC’s administrative law judge into an administrative law recommender. “The Commission is revising part 3 so that the ALJ will issue a ‘recommended’ decision after each administrative hearing, rather than an ‘initial” decision.’” Under the old system, a decision by the ALJ became “the decision of the agency without further proceedings,” unless the FTC elected to review the decision, or a party sought review before the agency. So, for example, if the commission lost before its ALJ, it could appeal to itself, where it would likely (always) find a sympathetic face in the mirror. (See Illumina/Grail). The ALJ also loses its ability to grant a summary decision.
Nominally, quite a few changes take place, although it seems that the ALJ is still called an ALJ, rather than an administrative law recommender. So, what’s the difference? In some cases, the requirement that the commission vote one more time. There’s still a vote to issue a complaint, and there’s still a vote if the commission seeks to review, and modify or overturn the ALJ, but there wasn’t a vote to turn the ALJ’s recommendation (formerly, initial decision) into a decision if the commission did not want to appeal/review it, and now there is. With streamlined internal process, that’s not much of a difference, but it’s there.
And what’s the point? Some have conjectured that this is an attempt to fend off constitutional challenges to the FTC’s administrative process, say, on grounds that internal adjudication violates the separation of powers (à la Axon). Perhaps that’s right, but if it is, the rulemaking seems a tenuous move; the changes are not purely nominal, but they are largely nominal.
More likely, this is to further consolidate the commission’s authority over administrative proceedings, just as the 2021 amendments consolidated the commission’s (and the chair’s) authority over Section 18 rulemaking. And, like the prior amendments, to diminish the scope and import of information and perspectives contrary to those the commission prefers. At the least, there will be no need to overrule decisions by Administrative Law Judge D. Michael Chappell, as there will be no such decisions. There will simply be FTC decisions that decline, in whole or in part, to follow the ALJ’s recommendations.
One more thing that seems to me a bit odd: the new rules create a new Office of Technology. That’s fine, in itself. I’m wondering about the addition of “the Chief Technology Officer and Deputy Chief Technology Officer to the list of officials who have delegated authority to modify the terms of compliance with compulsory process and extend certain deadlines relating to compulsory process.” As the commission notes, “[t]his change will put the Chief Technology Officer and Deputy Chief Technology Officer on equal footing with other designated officials like the Director and Deputy Director of the Office of Policy Planning who already have this delegated authority.”
Here’s the thing: the director and deputy director of the Office of Policy Planning, like the director and deputy directors of the Bureau of Competition, are lawyers. Their expertise within the field of law may vary, and they may have degrees in, say, economics, as well as law. But they’re all attorneys, licensed to practice law.
The FTC has employed chief technologists, among other tech (a broad term) experts (a malleable one) since at least 2011. Some of those chief technologists have been visitors from academia. For example, Ed Felten—chief technologist from 2011 to 2012—is (and had been) a professor of computer science and public affairs at Princeton University. Others, such as Neil Chilson, have brought expertise in both antitrust and computer science. Experience has varied, along with prior positions and degrees. Most have brought something substantial to the table, although there are always potential questions about staffing, budgetary commitments, and tradeoffs, both across FTC bureaus, divisions, and offices, and within the vast realm of “technology.”
Still, there’s been no established qualification for the position, and at least one chief technologist, several years out of college, had no degree—not even an undergraduate degree—in any technical field, nor any evident tech accomplishments in industry, as well as no degree (or other apparent background) in economics, and no law degree either. A question for the General Counsel’s Office, among others: If a chief technology officer or deputy chief technology officer modifies the terms of compliance with compulsory process, but is not a member of the bar in any U.S. jurisdiction, is that the unauthorized practice of law?
Reports of Competition Advocacy’s Death Are Greatly Exaggerated
FTC staff recently filed comments in opposition to a North Carolina bill that would shield the University of North Carolina health system from antitrust scrutiny. Yay! These are analogous to advocacy comments I was happy to praise in my very first Truth on the Market post in October 2022. As I said at the time:
FTC staff filed comments urging New York State to reject a Certificate of Public Advantage (“COPA”) application submitted by SUNY Upstate Health System and Crouse Medical. The staff’s thorough comments reflect investigation of the proposed merger, recent research, and the FTC’s long experience with COPAs. In brief, the staff identified anticompetitive rent-seeking for what it is. Antitrust exemptions for health-care providers tend to make health care worse, but more expensive. Which is a corollary to the evergreen truth that antitrust exemptions help the special interests receiving them but not a living soul besides those special interests. That’s it, full stop.
So, no, I’m not being ironic, much less sarcastic, in praising this resurfacing of the FTC’s competition-advocacy program, which was lauded by former General Counsel Alden Abbott here. The program was for several decades a vigorous and effective means of policy reform, providing research-based competition-policy input to federal and state lawmakers and regulators. Would that it were still. It’s been largely moribund since January 2021, but it lives on, here and there.
The specific issue addressed in the recent comments–certificates of public advantage (COPAs) or, more broadly, statutory antitrust exemptions for health-care providers—has been a matter of concern for decades. You can find related advocacy comments from the last decade and the one before that, at least.
Legion departures aside, there remains excellent staff experience and expertise in that building with the horse in front. Their good work should be fostered, not put at risk by regulatory frolic and detour.
Shameless Plug on Negative Options
TechFreedom filed a coalition letter responding to the FTC’s request for comments on proposed amendments to the commission’s Negative Option Rule. In brief, the comments raised concerns about the scope of the proposed amendments, and their relationship to the FTC’s established remedial powers. You can read about the comments here or here. Signatories include a former FCC commissioner, a former FTC general counsel, and other former FTC officials and staff, including yours truly.