U.S. to Probe Tech Companies Over Data Collection Practices

(Bloomberg) -- The U.S. Federal Trade Commission plans to investigate technology companies’ collection and use of consumer data, stepping up pressure on companies like Google, Facebook Inc. and Amazon.com Inc. that depend on amassing vast amounts of information on users.

FTC Chairman Joe Simons told Congress that the agency plans to use its authority to demand companies provide information about their data practices, according to a document obtained Thursday by Bloomberg News. He didn’t name the companies that would be examined.

The study would mark the latest move by the agency to increase scrutiny of big technology firms and the power they wield in various markets, from online retail to digital advertising. Last month, Simons created a task force to investigate potentially anticompetitive conduct by tech giants following years of criticism that enforcers haven’t done enough to rein in big platforms like Alphabet Inc.’s Google.

The FTC has authority under a measure known as Section 6(b) of the FTC Act to collect non-public information from companies. The agency would then publish a “special report” that can lead to voluntary industry guidelines and best practices. The studies also can be used in antitrust investigations, though don’t always have a law enforcement purpose, according to the FTC’s website. The FTC used this authority in 2013 to investigate companies that buy and assert patents, known as patent trolls.

Demand Answers

The agency can demand answers to specific questions, and companies can seek to quash a request the way they can with a subpoena. The FTC, though, can file suit to compel an organization to comply with the request.

After an oversight hearing last year, Republican Senator John Thune from South Dakota asked Simons in writing whether the FTC would use its 6(b) power to look at the data collection practices of Google, Facebook and Amazon, saying the agency could provide "some much needed transparency to consumers about the data practices of large technology companies."

Simons said he agreed with Thune in his written response, which was submitted earlier this month. "We are developing plans to issue 6(b) orders in the technology area," Simons wrote.

Politico reported on the FTC’s plan earlier.

--With assistance from Ben Brody.

To contact the reporters on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net;Daniel Stoller in Washington at dstoller1@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net;Keith Perine at kperine2@bloomberg.net

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