The FTC Is Powerless to Regulate Facebook Right Now. Ask Chuck Schumer Why.

Senate Minority Leader Chuck Schumer, D-N.Y., is holding up what would be an easy confirmation for nominees to run the Federal Trade Commission, according to sources with knowledge of the situation. The agency has been operating with only two commissioners on its five-member panel since last February, amid constant delays to get a new team in place.

The situation took on new resonance this week, after revelations of Cambridge Analytica harvesting data on 50 million Facebook users, and questions about whether Facebook violated privacy rules in the process. The FTC is reportedly investigating the data release. But there’s essentially nobody running the agency at the moment, as the commissioners are lame ducks without the power to dictate policy to career staff.

“We need actual leadership, stability, and executive management at the FTC,” said a Senate source familiar with the proceedings. “It could be done tomorrow.”

Schumer is blocking the confirmation of four commissioners — Republican chair Joseph Simons, Republicans Noah Phillips and Christine Wilson, and Democrat Rohit Chopra — all of whom won unanimous support in the Senate Commerce Committee in February. The reason is mostly parochial: The fifth nominee is Schumer’s chief counsel, Becca Kelly Slaughter. Schumer didn’t recommend Slaughter for the second Democratic slot on the panel until late January, and she’s still going through a federal background check and has yet to be formally nominated by the White House.

Traditionally nominees for independent agencies get confirmed in pairs, so members of both parties have an interest in voting yes. Schumer wants to wait until all five can be voted on, so Slaughter isn’t orphaned. Senate leaders have offered a compromise: Immediately confirm Simons, the chair, Chopra, the Democrat, and potentially Phillips, while holding back one or two Republicans to pair with Slaughter when her nomination is ready. “If Schumer agreed to that deal, [Majority Leader Mitch] McConnell would take it,” said the Senate source.

Schumer hasn’t taken it. That puts the FTC in limbo, at the mercy of the vetting process for Slaughter, which may not wrap up until mid-May or later.

McConnell spokesperson Don Stewart told The Intercept that “Democratic holds” were the factor preventing any nominees from moving forward. Schumer’s office did not respond to a request for comment.

The FTC is the main federal agency with supervisory authority over consumer protection, data privacy, cybersecurity, and antitrust enforcement. Among other responsibilities, it governs the tech industry, and has been hearing loud criticism for its relative silence.

That’s in part because the agency’s leadership has been so rudderless. Democrat Terrell McSweeny’s term has already expired; she’s just sticking it out until replacements are confirmed. Republican chair Maureen Ohlhausen was recently named to a federal judgeship and is preparing for confirmation hearings and her post-FTC life.

Ohlhausen is reflexively anti-regulation, and under her leadership technology companies have predictably run wild. The FTC allowed Amazon to acquire Whole Foods after a short review and a three-sentence statement. It neglected to review Facebook’s purchase of the upstart social media app called tbh, or any of Google’s litany of acquisitions in 2017. It has declined to weigh in on an important Supreme Court case involving American Express that could degrade antitrust enforcement of tech companies if they benefit consumers with “free” access.

Under a 2011 consent decree, the FTC prohibited Facebook from allowing third-party apps to scrape personal user data.

The Facebook situation is particularly perilous. Under a 2011 consent decree, the FTC prohibited the social media site from allowing third-party apps to scrape personal user data. Cambridge Analytica paid people to use a personality test app, acquiring the data of the friends of those who downloaded it. Though an obscure, unadvertised setting allowed Facebook users to opt out of such data sharing, 50 million people likely had no idea Cambridge Analytica obtained their information.

The consent decree authorizes the FTC to fine Facebook $40,000 per violation per day; if applied to 50 million users, the potential exposure equals at least $2 trillion. This is likely not limited to Cambridge Analytica, as Facebook’s policies on third-party developers acquiring user data are famously weak. “We had no idea what developers were doing with the data,” said former Facebook operations manager Sandy Parakilas to The Guardian. Plus, Facebook routinely provides this kind of “social graph” information — likes, friend connections, and other data — to advertisers. Surveillance is effectively Facebook’s business model.

McSweeny, the Democrat on the FTC, said in a statement that the Facebook issue highlighted how consumers need stronger protections over and control of their data. But as a lame-duck commissioner, she won’t be involved in adjudicating the matter. And it’s unclear whether the FTC did anything to monitor Facebook’s adherence to the consent decree since 2011. The most important federal agency in the tech space is flying blind.

“Facebook and the other platforms are a threat to American democracy,” said Matt Stoller of the Open Markets Institute, an anti-monopoly group. “It is vital that all senators recognize that and take steps to address the crisis.”

The process of restocking the FTC has been repeatedly delayed, making it the only major federal agency without new leadership 14 months into Donald Trump’s tenure. Trump dragged his feet in nominating replacements, and then the nominations were caught up in a spat between the White House and Sen. John Cornyn, R-Texas, over funding for Hurricane Harvey victims in his home state. Cornyn’s former staffer Noah Phillips is one of the four FTC nominees.

“He’s holding up the confirmation process for one person when we need a commission more than ever.”

Once that matter was resolved, Schumer’s reluctance to let nominees through until Slaughter can advance with them has delayed the matter even further. “He’s holding up the confirmation process for one person when we need a commission more than ever,” said a source close to the proceedings. “There’s a lot of bipartisan agreement that we need a working FTC.”

Even Senate Republicans would prefer Simons, the nominee for FTC chair, running the agency. Simons said in his confirmation hearing that he would vigorously monitor tech platforms for anti-competitive and illegal conduct. Insiders see him as far stronger on these issues than Ohlhausen.

Plus, with lame-duck leadership, the bureaucracy at the FTC has been stagnant. A chair picks the heads of the FTC’s various bureaus and sets the agenda for the commission, which a chair on their way out the door cannot do. “You need a permanent chairperson to get the bureaucratic structure up,” said the Senate source. “Right now they’re not listening to anyone.”

Recent comments from Schumer have led some to believe that he’s doing more than putting the career prospects of a staffer ahead of the country. In an interview with Re/code released last week, Schumer said that companies like Facebook should police themselves. “It’s up to tech to do more, and I do think they’re making an effort not only because it’s the right thing to do, but because I think they know down the road their survival depends on it,” Schumer said. He also called Facebook “a very positive force” and that he was “sympathetic” to their situation.

The events of the past few days have blown up Schumer’s Facebook-friendly position. “It’s clear these platforms can’t police themselves,” tweeted Sen. Amy Klobuchar, D-Minn., ranking member on the antitrust subcommittee of the Senate Judiciary Committee. It’s hard to avoid wondering whether Schumer’s delay of FTC nominees is as much about buying time for the tech platforms as it is for his staffer Becca Slaughter.

Schumer is already on thin ice with some of his caucus for giving the green light to moderates to endorse a bank deregulation measure. Running cover for tech platforms amid Democratic frustration over a major data privacy scandal has added to this consternation.

The FTC issue, at least, could be warmed over by simply letting a couple nominees through. “A good first step would be to immediately confirm the nominations of Joe Simons and Rohit Chopra to the FTC.” said Open Markets’ Matt Stoller. “We need a staffed agency.”

Top photo: Senate Minority Leader Chuck Schumer, accompanied by Sen. Dick Durbin, D-Ill., speaks with reporters following the weekly policy luncheons on Capitol Hill on March 20, 2018 in Washington, D.C.