Trump May Deal ‘Wild Card’ FTC Appointments

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By Daniel R. Stoller

Nov. 21 — President-elect Donald Trump may rely on a former GOP member of the Federal Trade Commission to help decide who will fill slots at the privacy and data security regulator.

A lot may be at stake for companies under the FTC’s jurisdiction. Agency staff have been actively pursuing data security enforcement actions, suggesting oversight of the internet of things and working to protect consumers, particularly children, from online threats. But, the FTC commissioners set much of the public agenda and have ultimate authority to authorize litigation and approve settlements.

Trump may ask former FTC commissioner Joshua Wright, who is advising the Trump transition team on antitrust issues, to help decide appointments to the commission. Wright is an antitrust enforcement skeptic and earned a reputation as the FTC’s most conservative commissioner during his brief tenure there under President Barack Obama.

It is unclear whether Trump would favor appointing commissioners more versed in the competition side or the consumer protection side of the FTC’s mission but it would make sense that as a businessman such as Trump would lean towards the antitrust side. However, it is the consumer protection side of the agency where privacy and data security enforcement functions rest.

D. Reed Freeman, partner at Wilmer Cutler Pickering Hale and Dorr LLP in Washington, told Bloomberg BNA that it is a “wide open field” of whom will be appointed to the FTC. It is expected, however, that President-elect Trump would pick at least “one commissioner that is a well known antitrust lawyer” and one with a “background in consumer protection issues.”

Wright told Bloomberg BNA that he had no comment on any specific FTC commissioner candidates and declined to comment more broadly on desirable characteristics and privacy and data security expertise needed to make a good FTC commissioner candidate.

Attorneys and academics contacted by Bloomberg BNA said it was too early to predict with any reliability whom Trump may nominate for FTC commissioner slots. Trump’s potential FTC commissioner appointments are “a wild card right now,” Freeman said.

Short-Handed Commission

At full strength, the commission has five Senate-confirmed members appointed to seven-year terms. One of the commissioners is named as chairman by the president without further Senate approval. No more than three members of the commission may be from the same political party.

Presently, the FTC has three members: Chairwoman Edith Ramirez (D), who has continued serving as a holdover appointment; Maureen K. Ohlhausen (R), whose term expires Sept. 25, 2018; and Terrell McSweeny (D), who is confirmed as a commissioner through Sept. 25, 2017.

Trump could immediately move to appoint Ohlhausen as chairman of the commission. Even if Ramirez discontinues her holdover status and returns to the private sector, the commission could continue to make decisions with just a two-member quorum.

Benjamin R. Dryden, senior counsel at Foley & Lardner LLP in Washington, told Bloomberg BNA Nov. 21 that Trump ran “on a dual promise to promote” U.S. industry and to protect “individuals from corporate abuses.” The president-elect and his transition team will “need to find commissioners who will find the right middle ground between these two important goals,” he said.

Any future Trump FTC appointee will have a background in “business, economics and antitrust” and will more than likely come from “the private sector, academia or center-right think tanks,” Dryden, who specializes in antitrust issues, said.

FTC Tenure

Obama appointed Wright as a GOP member of the commission and the Senate approved the appointment in January 2013. Wright stepped down from the FTC in August 2015—four years before his term was slated to end—and returned to the law school faculty at George Mason University. He’s also a Senior of Counsel at Wilson Sonsini Goodrich & Rosati, whose clients include tech giants such as Alphabet Inc.'s Google, Amazon.com Inc. and LinkedIn Corp.

Wright ran into issues during his confirmation hearing because of academic research in defense of Google that was funded by groups that received funding from the company. He was questioned on this involvement at his FTC confirmation hearing and promised to recuse himself from Google-related cases for two years.

Wright is an antitrust enforcement skeptic and earned a reputation as the FTC’s most conservative commissioner during his brief tenure there. Wright opposed many antitrust enforcement actions but is known for taking a pragmatic approach to analyzing antitrust issues.

On privacy and security matters, Wright almost always voted with the majority on enforcement action decisions. In December 2013 on the occasion of the 100th anniversary of the commission, he outlined to a House Energy and Commerce subcommittee the FTC’s long history of privacy and data security work and noted that the FTC had brought actions that protected the privacy choices of well over one billion people.

Not Huge Privacy Advocate

In an August 2014 interview with the American Bar Association Section on Antitrust Law, Wright was skeptical of incorporating privacy considerations into a merger analysis. But “in some cases, we can think about privacy as a form of non-price competition,” he said.

On the enforcement of a non-regulatory data security standard he pointed to the body of FTC settlements, saying they “articulate cost-benefit and negligence-style frameworks that I think are certainly sufficient to provide information to businesses about how the agency views their data security obligations.” However, it may be useful, “not just for the business community but also for the agency, to synthesize and offer high-level principles that would provide additional guidance,” Wright said.

Wright dissented from the commission’s January 2015 approval of an internet of things report, saying there was insufficient analytical support for the report. Even thought the report called for a relatively light touch approach to oversight and that reliance on existing consumer protection law was sufficient, Wright challenged whether the recommendations might hinder competition and innovation.

In May 2016, USTelecom, a telecommunications advocacy group, submitted to the Federal Communications Commission (FCC) a white paper by Wright critically analyzing the FCC’s broadband privacy rule proposal. Wright concluded in his statement that the FCC broadband privacy rules would harm the “privacy interests of consumers” because it fails to consider “important economic costs and benefits affecting consumers, ISPs, and innovation.”

With assistance from Liz Crampton in Washington

To contact the reporter on this story: Daniel R. Stoller in Washington at dStoller@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

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