Just a reminder that tomorrow the Federal Trade Commission (FTC) will be hosting the 3rd workshop in its ongoing event series, "Will Journalism Survive the Internet Age?" This workshop will feature various experts discussing the FTC's 47-page "staff discussion draft," which outlines "Potential Policy Recommendations to Support the Reinvention of Journalism." In these two recent essays, I discussed the controversy surrounding some of the recommendations in that discussion draft:

• Growing Opposition to FTC "Saving Journalism" Media Takeover Blueprint, by Adam Thierer, June 9, 2010


• FTC Draft Plan to "Save Journalism" Drawing Scrutiny; Raising Concern, by Adam Thierer, June 4, 2010

According to this press release announcing the event,"The workshop is free and open to the public, but space is limited and attendees will be admitted on a first-come basis. The workshop will be held at: The National Press Club, 549 14th Street NW, 13th Floor, Washington, DC. Members of the public and press who wish to participate but who cannot attend can view a live webcast. A link will be available on the day of the workshop at: http://www.ftc.gov/opp/workshops/news/index.shtml."

Unless I am missing something, the FTC has still not posted an agenda or list of speakers, which is a bit strange. But apparently Rick Edmonds of the Poynter Institute will be participating. He's got a nice piece up over at Poynter Online ("FTC Future-of-Journalism Inquiry Wraps Up With Little Momentum for Major Intervention") summarizing some of what he'll say tomorrow. I particularly liked his conclusion, which echoes the call Berin Szoka and I have made for allowing continuing marketplace evolution and experimentation:

As I've noted here before, the Federal Trade Commission (FTC) has an ongoing proceeding asking "How Will Journalism Survive the Internet Age?" The agency has hosted two workshops on the issue and a third is scheduled for June 15th at the National Press Club. Recently, the FTC released a 47-page staff discussion draft entitled "Potential Policy Recommendations to Support the Reinvention of Journalism," which outlines dozens of proposals that have been set forth in recent years to "save journalism," "reinvent media," or support various forms of so-called "public interest programming." [I've embedded the document down below.] Although the FTC makes it very clear on the first page of the discussion draft that it "does not represent final conclusions or recommendations by the Commission or FTC staff [and] it is solely for purposes of discussion," the document is drawing scrutiny and raising concern since it might foreshadow where the FTC (and Obama Administration) could be heading on this front.

Some of those raising a stink about the FTC draft include: Jeff Jarvis ("FTC Protects Journalism's Past"); Rob Port ("Federal Government Considering "iPad Tax" To Subsidize Journalism"); Mark Tapscott: "(Will Journalists Wake up in Time to Save Journalism from Obama's FTC?"); and Andrew Malcolm of the Los Angeles Times ("Obama's FTC Plan to Reinvent America's News Media"), who says, "this FTC study is rated R for anyone who thinks the federal government, the object of copious news coverage itself, has no business deciding which sectors of the private media business survive and thrive through its support, subsidies and encouragement with things like tax incentives. Yet that's what this Obama administration paper is suggesting as another of the ex-community organizer's galactic reform plans." Ouch!

Just the other day, leaders from the House and Senate said they planned on updating the Communications Act. Maybe they've finally started listening to us - we proposed doing this back in 2005, with PFF's Digital Age Communications Act (DACA). Or, perhaps the FCC's so-called "Third Way" doesn't look like the "no-brainer" that the agency spun in its press releases. Well, whatever their intentions may be, it certainly couldn't arrive at a better time.

The framing is all important, of course. Art Brodsky of Public Knowledge (ostensibly one of the groups "writing" the next Act) says Americans shouldn't worry about the FCC's "Third Way." In his view - "The government is not taking over the Internet. What the government is doing is engaging in traditional consumer protection, traditional regulation of a telecommunications service that will get people to the Internet." PK seems happy with this model - whether done at the FCC, or at Congress' hands.

Hmmm...Getting people to the Internet? Traditional, simple stuff. Sort of like strolling to the store, or peddling to the park. Or, like in childhood, making a call from tin cans and string - which is what'll result if PK and their ilk have their way.

It's hard protecting the First Amendment. Especially so in an environment where government sees the limitation in actually the opposite way - a positive right. Something it can use to "nudge" speakers toward their "better angels," which, in their view, rests more comfortably with the "public interest."

Perhaps no organization knows how hard it is better than the ACLU. For almost 40 years, the Left's leading defender of the First Amendment broached no restrictions on perhaps the toughest of First Amendment issues (outside of their "Skokie moment") - campaign finance contributions.

Their policy stated:

Limitations on contributions or expenditures made by individuals or organizations for the purpose of advocating causes or candidates in the public forum impinge directly on freedom of speech and association. Their implementation poses serious dangers to the First Amendment. They should be opposed in candidate as well as referenda elections.

I'm recuperating today after wrist surgery #2 but I just had to say something about a hugely important proposal introduced today that would bring us one step closer to information socialism. No, I'm not talking about the discussion draft privacy bill released today by Reps. Boucher & Stearns (which Adam and I already commented on here) but about the amendment introduced today by Sen. Udall that would "require credit-rating agencies to divulge credit scores, free of charge, to consumers when they access their free annual credit report."

Actually, there is an important analogy between the two bills: both will have populist appeal because they can claim to giving consumers a "right" to "their" information--but both would impose real costs that will ultimately be borne by consumers. On the privacy side, Adam Thierer and I have warned repeatedly that data collection is critical to the online advertising that supports the publishers of the Internet's cornucopia of content and services. Everyone takes this for granted but few of us really think about the quid pro quo at work: users receive "free" content and services in exchange for seeing advertising and sharing data about their browsing habits, which makes advertising more relevant to them, more effective for advertisers, and therefore more profitable for publishers.

Unfortunately, a similar free lunch mentality is at work with credit scores. If we think about them at all, most of us probably resent and/or fear them. Yet credit scores, and the entire credit reporting system, are truly one of the wonders of information capitalism and a boon for consumers. Before they developed, lending decisions were far riskier because lenders didn't really know whom to trust with their money. Thus they had to build in a risk premium into their interest rates to account for the fact that some users might default or fall behind on payments. This punished good borrowers and rewarded bad ones. Getting a loan was difficult, often required special connections, and was often arbitrary and thus sometimes downright discriminatory.

This situation was bad for everyone. While nobody likes being in debt, we often forget how radically empowering credit can be in allowing us to expand our opportunities in life.

Please join us for this Progress & Freedom Foundation luncheon briefing today at 12-2 pm in the Capitol Visitor Center, Room SVC 208/209 at E Capitol St NE & 1st St NE. I'll be moderating a discussion of the growing powers of the Federal Trade Commission (FTC) and what it might mean for consumers, advertisers, media creators, and the Internet.

If you can't make it in-person, you can listen live here.

As I've discussed here, here and here, financial reform legislation passed by the House (HR 4173) and now under debate in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, COPPA, and child nutrition, affecting media online as well as offline. Unfortunately, as Adam and I have noted, there seems to be a disconnect at the FTC between concerns over the future of struggling media creators and efforts to step up regulation on a number of fronts, especially privacy. The FTC has also asserted expanded authority to regulate "unfair" competition in its lawsuit against Intel, based solely on the FTC's Section 5 unfairness authority rather than traditional antitrust law. PFF has assembled a group of expert panelists--veteran FTC practitioners, scholars and insiders--to discuss these issues and more. Here's our panel:

• Jack Calfee, Resident Scholar, American Enterprise Institute for Public Policy Research (AEI) & author of Fear of Persuasion: A New Perspective on Advertising and Regulation (1998)


• Maureen Ohlhausen, Partner, Wilkinson Barker Knauer, Consumer Protection Law and Competition Law practices, & 11-year FTC veteran


• Jim Davidson, Chair of the Public Policy group, Polsinelli Shughart PC


• Stu Ingis, Partner, Venable LLP

To Register: Please RSVP online here (for free).

Please join us for this Progress & Freedom Foundation luncheon briefing on Friday, April 16, 12-2 pm in the Capitol Visitor Center, Room SVC 208/209 at E Capitol St NE & 1st St NE. I'll be moderating a discussion of the growing powers of the Federal Trade Commission (FTC) and what it might mean for consumers, advertisers, media creators, and the Internet.

As I've discussed here, here and here, financial reform legislation passed by the House (HR 4173) and now under debate in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, COPPA, and child nutrition, affecting media online as well as offline. Unfortunately, as Adam and I have noted, there seems to be a disconnect at the FTC between concerns over the future of struggling media creators and efforts to step up regulation on a number of fronts, especially privacy. The FTC has also asserted expanded authority to regulate "unfair" competition in its lawsuit against Intel, based solely on the FTC's Section 5 unfairness authority rather than traditional antitrust law. PFF has assembled a group of expert panelists--veteran FTC practitioners, scholars and insiders--to discuss these issues and more. Here's our panel:

• Jack Calfee, Resident Scholar, American Enterprise Institute for Public Policy Research (AEI) & author of Fear of Persuasion: A New Perspective on Advertising and Regulation (1998)


• Maureen Ohlhausen, Partner, Wilkinson Barker Knauer, Consumer Protection Law and Competition Law practices, & 11-year FTC veteran


• Jim Davidson, Chair of the Public Policy group, Polsinelli Shughart PC


• Stu Ingis, Partner, Venable LLP

That's basically what FTC Chairman Jon Leibowitz told the Association of National Advertisers when he spoke to their "Advertising Law & Public Policy" conference last Thursday. As I noted last week, there's intense pressure in Congress to pass a financial regulatory overhaul and, unfortunately, the version passed by the House in December--Rep. Barney Frank's "Wall Street Reform and Consumer Protection Act of 2009" (H.R. 4173)--would also grant the Federal Trade Commission vast new powers for all its regulations, not just those relating to the non-bank financial institutions it currently regulates. In particular, HR 4173 would:

• Make it far easier (and not just faster) for the FTC to issue all kinds of new regulations on its own, without a specific Congressional mandate to do so and instead of relying on case-by-case enforcement to punish "unfair" or "deceptive" acts and practices;


• Reduce public input into those regulations;


• Impose heavy civil penalties on companies before notifying them that a practice might be "unfair" or "deceptive";


• Prosecute those who merely provided "substantial assistance" to someone engaged in "unfair" or "deceptive" acts or practices; and


• Sue on its own authority, instead of through DOJ (as now).

I summarized my concerns about this bill in this short interview with PFF's new communications director, Mike Wendy, last week--listen here.

Leibowitz has lobbied hard to have his agency put on steroids (as former FTC Chairman Jim Miller put it), asking for all these things, as well as more funding, at the first Senate hearing on Hr 4173 back in February. (Conveniently, he was the only witness!) He repeated his calls for these powers on Thursday but tried to allay fears about how they'd be used.

In an alert entitled Widespread Data Breaches Uncovered by FTC Probe, the Federal Trade Commission has warned the public that the FTC has had to notify "almost 100 organizations that personal information, including sensitive data about customers and/or employees, has been shared from the organizations' computer networks." FTC Chairman Jon Leibowitz warned, "we found health-related information, financial records, and drivers' license and social-security numbers--the kind of information that could lead to identity theft."

This probe represents a welcome change in both the attitude and the approach of the FTC. This probe shows that the FTC is now taking the risks created by distributors of file-sharing programs seriously, and it is assessing them by doing what distributors themselves refuse to do: by actually studying what is happening on file-sharing networks. Had the FTC adopted the attitude and the approach now taken by Chairman Leibowitz back in 2004--when Congress first asked the FTC to investigate whether distributors of file-sharing programs had actually eliminated defects in their programs that were known to cause inadvertent sharing--years of misery, national-security violations, leaked risk-assessments that could increase the lethality of terrorist attacks on American cities, corporate data-breaches, gross breaches of personal privacy, widespread piracy, identity theft, and medical identity theft could have been avoided.

I thus congratulate Chairman Leibowitz, the new Administration, and the FTC for their new attitude and new approach towards the serious problem of inadvertent sharing. As they build upon this initial success, I hope that they will keep the following points squarely in mind:

First, inadvertent sharing is a far more serious threat to ordinary families than it has ever been to "organizations." As Chairman Leibowitz correctly noted "health-related information, financial records, and drivers' license and social-security numbers" are "the kind of information that could lead to identity theft." They are also the kind of information likely to be stored on most ordinary home computers. Indeed, there is no way to contain the threat that inadvertent sharing poses to both sensitive governmental and corporate data unless ordinary consumers and families are also protected--the recent disclosure of ongoing investigations by the House Ethics Committee makes this brutally clear.

Second, inadvertent sharing of sensitive personal files is but the most obvious manifestation of a far larger problem: inadvertent sharing of any type of file--including copyrighted music, movies, images, games, or software--that would be illegal or dangerous to "share" with thousands or millions of anonymous strangers. Right now, far too many families are inadvertently sharing not only more than the 1,700 copyrighted songs that put Jammie Thomas-Rasset on the wrong end of a 1.9-million-dollar jury verdict, but also entire collections of family photos that file-sharing pedophiles are using to identify and target attractive children (p.11).

Third, historically, inadvertent sharing has been "inadvertent" only from the perspective of users of file-sharing programs--and those who suffer as a result of their mistakes. By contrast, from the perspective of many distributors of file-sharing programs, inadvertent sharing appears to be frighteningly deliberate: for example, the distributors of the file-sharing program LimeWire have repeatedly deployed "features" that were known to dupe many users of such programs into inadvertently sharing tens of thousands of personal files--including their entire collections of music and movies.

The FTC's new probe into inadvertent file-sharing should be welcomed and applauded. It could turn out to be the beginning of the end of a seemingly deliberately created crisis that should have been remediated eight years ago--when the computer-science study Usability and Privacy first warned all competent developers of file-sharing programs about reality and the consequences of inadvertent sharing.

The Washington Post is not known for its antitrust skepticism, so it is to be commended for its even-handed editorial last week regarding a recent FTC action against Intel, one of America's great technology concerns ("Keeping Competition, and Intel's Prices, in Check," Dec. 27, 2009).

The FTC, apparently unable to make a substantial antitrust complaint stick against Intel, has instead brought an administrative complaint against the company under Section 5 of the FTC Act. According to the FTC's Chairman, Jon Leibowitz, the standard required to sustain out a full-blown antitrust case are just a little too rigorous, so the Commission is taking something of a short cut. As the Post concluded, the approach is, to say the least, "potentially worrisome."

To be fair, Section 5 does, as a legal matter, give the Commission authority beyond that which is conferred by the antitrust laws. But as a practical matter, the Commission's past efforts to read its Section 5 authority expansively have been rejected by the courts as excessive. This seems just another such case.

Oddly enough, the conduct that so troubles the Commissioners involves discounts that Intel has given its customers in order to retain market share, i.e., Intel is charging too little, the FTC believes, for its microprocessor chips. Of course there is a prohibition on "predatory" pricing encompassed within the antitrust laws, but the showing required to make out such a case is quite substantial - deliberately so in order to ensure that only conduct that is harmful to consumers is proscribed. The FTC apparently is not content to live by that standard.

More troubling still is that the FTC is considering potential "remedies" that are, in the words of the Washington Post, "disconcertingly intrusive." Indeed, as the Post warned, the remedies being considered may actually lead to higher prices for computer chips and, accordingly, higher prices for consumer electronic equipment that employs such chips. As a consumer, forgive me for not feeling protected by the FTC's rash action.