Trump’s Possible FTC Pick Likely to Uphold Data Security Agenda

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By Jimmy H. Koo and Daniel R. Stoller

FTC data security enforcement won’t slow down under a new chairman and companies should stay the course in their data security and privacy efforts, privacy attorneys told Bloomberg BNA.

President Donald Trump is poised to bypass Federal Trade Commission Acting Chairman Maureen K. Ohlhausen and tap antitrust attorney Joseph Simons, a Washington-based partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP and co-chairman of the firm’s antitrust group, to lead the government’s main data security agency, according to Bloomberg News. Before joining Paul Weiss, Simons served as director of the FTC’s Bureau of Competition.

But even if Ohlhausen doesn’t remain in the chairman’s seat, her initiatives to provide companies with more insight into what the agency considers reasonable data security, and to require stronger evidence of harm to consumers before taking enforcement action, are likely to continue.

Companies shouldn’t expect the FTC to loosen the reins on data security and privacy enforcement no matter who Trump picks to lead the commission, the attorneys said. Under its FTC Act Section 5 authority, the FTC brings data security and privacy enforcement actions against companies that don’t live up to their privacy and security promises or fail to reasonably protect personal data. Symantec Corp.'s LifeLock, Fandango LLC, and Wyndham Worldwide Corp. are all among the companies that have been subject to FTC data security enforcement actions.

Simons has expertise in antitrust matters that goes directly to one of the FTC’s primary regulatory functions. The FTC also focuses on consumer protection and policing against unfair and deceptive practices.

Although Simons is an antitrust lawyer, he has experience serving at the FTC as director of the Bureau of Competition and will likely “play a very active role in the commission’s privacy and data security agenda,” D. Reed Freeman, partner at Wilmer Cutler Pickering Hale and Dorr LLP in Washington and co-chair of the firm’s cybersecurity, privacy and communications practice, told Bloomberg BNA. Simons “undoubtedly understands” the FTC’s “long-term priorities,” which include keeping a focus on data security and privacy, he said.

Anthony T. Pierce, privacy and data protection partner at Akin Gump Strauss Hauer & Feld LLP and head of the firm’s Washington office, told Bloomberg BNA that the FTC has “an institutional commitment on data security as well as privacy” enforcement. If Simons is nominated and confirmed, the FTC is likely to “stay generally on the current path,” even if there are some minor changes in its approach, he said.

“Data security and privacy are important issues to consumer and business alike,” so the “agency as a whole will continue to focus on these issues,” Pierce said. The FTC “will have no choice” but to focus on data security and privacy enforcement because the issues are constantly changing and impact the economy, he said.

Work of Staff, Commissioners

The commission at present only has two commissioners, Ohlhausen (R) and Terrell McSweeny (D). At full strength, the FTC has five Senate-confirmed members appointed to seven-year terms, with no more than three members from the same political party. Trump selected Ohlhausen to be the commission’s acting chairman but hasn’t made any nominations to fill the three vacancies.

The FTC and the White House didn’t respond to Bloomberg BNA’s email requests for comment. McSweeny also declined to comment on Trump’s possible selection of a chairman. Attempts to reach Ohlhausen were unsuccessful.

Simons didn’t immediately respond to Bloomberg BNA’s email request for comment.

The bulk of the FTC’s work on data security enforcement is done by staff, and that won’t change no matter who Trump nominates as chairman, the attorneys said. Staff will play an important role going forward in upholding the tradition of data security and privacy enforcement, which has been an area “of focus for the commission since its first privacy workshop in 1995,” Freeman said.

Elizabeth E. McGinn, privacy and cybersecurity partner at Buckley Sandler LLP in Washington, agreed that the FTC focus on data security and privacy will continue, given that a “huge staff” focuses on those issues.

Even if Simons is silent on data security and privacy issues, Ohlhausen and McSweeny, who have been active in those areas for years, will take up the charge, Freeman said.

Company Outlook

Companies, meanwhile, shouldn’t let their guard down on privacy and data security, the attorneys said.

Pierce said that privacy and data security investigations or enforcement actions in the courts, such as the U.S. Court of Appeals for the Eleventh Circuit’s LabMD case, “aren’t likely to change” because the FTC “has institutional procedures” that won’t deviate much if Simons is confirmed.

The FTC may have “fewer investigations, more realistic remedies,” and companies may have more of a voice, but businesses “should take all such investigations seriously and tailor their response as necessary,” Pierce said.

McGinn said that a new chairman shouldn’t impact cases under investigation or in the courts. However, changes may be seen “at early stages of cases in how rigorously the FTC purses new investigations or inquiries,” she said.

To contact the reporter on this story: Jimmy H. Koo in Washington at jkoo@bna.com; 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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