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By Jimmy H. Koo
President Donald Trump Jan. 25 tapped Republican Federal Trade Commissioner Maureen K. Ohlhausen to be the commission’s acting chairman.
Ohlhausen will step into the post now filled by FTC Chairwoman Edith Ramirez, a Democrat, who announced Jan. 13 that she will resign Feb. 10.
Although Ohlhausen briefly mentioned privacy and data security in the FTC statement announcing her appointment, the FTC shouldn’t be expected to change its data security enforcement activity, D. Reed Freeman, a privacy partner at Wilmer Cutler Pickering Hale and Dorr LLP in Washington, told Bloomberg BNA Jan. 25.
Any changes will be “on the margins, and any changes will be more business friendly,” Freeman, who co-chairs the firm’s cybersecurity, privacy and communications practice, said. The FTC “is a consensus-driven organization and generally continues its mission for privacy and data security through Republican and Democratic administrations.”
However, Julie Brill, a former Democratic FTC commissioner and a partner at Hogan Lovells LLP in Washington, expects Ohlhausen to “drive the agency in a different direction.” For example, Ohlhausen will likely focus on issues surrounding substantial harm to consumers, said Brill, who co-leads her firm’s global privacy and cybersecurity practice group.
“In the cybersecurity and privacy realm, I believe Acting Chair Ohlhausen will be more exacting in her standards for enforcement actions, ensuring that any case that moves forward is founded on demonstrable and tangible harms,” Brill said. “One of her early policy initiatives may be to bring more clarity to the agency’s ‘reasonableness’ standard in the context of data and device security cases.”
Companies under the FTC’s jurisdiction—from internet giants Amazon.com Inc. and Facebook Inc. to smaller businesses such as medical testing company LabMD Inc.—have struggled with what level of data security they must provide to convince the FTC that their efforts to protect personal data are reasonable.
In the absence of direct statutory or regulatory authority over data security, the FTC has relied on Section 5 of the Federal Trade Commission Act, a catch-all prohibition against unfair and deceptive trade practices, to carry out data security compliance actions. LabMd is in litigation with the FTC in federal appeals court over whether the commission must demonstrate actual consumer harm from a data breach to take action against allegedly lax data security practices.
Speaking Jan. 23 at the State of the Net Conference, Ohlhausen said that, if tapped to head the FTC, she would “start a dialogue on defining ‘substantial harm.’”
Trump probably didn’t have an easier pick than Ohlhausen, who is the only Republican commissioner, Freeman said. Prior to joining the FTC, Ohlhausen was a partner at Wilkinson Barker Knauer LLP, where she headed the firm’s FTC practice focusing on privacy, data security and cybersecurity matters.
“This was expected by many close observers of the FTC,” Brill told Bloomberg BNA Jan. 25.
Ohlhausen, who began her term as commissioner in 2012, said in a statement that she is “deeply honored that President Trump has asked me to serve as acting chairman of the FTC and to preserve America’s true engine of prosperity: a free, honest, and competitive marketplace.”
Following Ramirez’s departure, Trump will have the opportunity to nominate three additional commissioners and a fourth by the end of 2017, after Democrat Terrell McSweeny’s term expires in September. The five Senate-confirmed members are appointed to seven-year terms, and no more than three members of the commission may be from the same political party.
Although it remains unclear who Trump will pick to fill the vacancies, enforcement trends aren’t expected to change in the immediate future, attorneys have said.
Although Ohlhausen disagreed with Ramirez on certain things, “enforcement actions are generally unanimous,” Robert P. Davis, antitrust counsel at Venable LLP in Washington and a former adviser to former Democratic FTC Chairman Jon Leibowitz, previously told Bloomberg BNA.
With assistance from Daniel R. Stoller in Washington
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