How a Grad Student Scooped the Government and Uncovered One of the Biggest Internet Privacy Scandals
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This isn't the usual sort of story about regulation watered down by intimate ties between government officials and the industry they oversee. Unlike the U.S. Minerals Management Service, where not long ago a number of officials were found to have shared drugs and had sex with representatives of the oil and gas industry, key FTC officials hired by the Obama administration are privacy hawks who worked previously for consumer-rights groups like Public Citizen and the Electronic Frontier Foundation. Under Chairman Jon Liebowitz, a Democrat appointed to the FTC in 2004 and tapped as chairman by President Obama in 2009, the FTC has pushed boundaries; its first privacy technologist, hired shortly after Liebowitz became chairman, was a semifamous activist who made a name for himself by printing fake boarding passes to draw attention to airline security lapses (the FBI, which raided his house, was not pleased). The agency is working with the tech industry to create and voluntarily adopt a Do Not Track option, so that consumers can avoid some intrusive web tracking by advertising firms. And it issued a report this year that called for new legislation to define what data miners can and cannot do.
Yet the FTC is ill-equipped to find out, on its own, what companies like Google and Facebook are doing behind the scenes. For instance, ProPublica discovered that the FTC's Privacy and Identity Protection technologist has a digital hand tied behind his back because the computer in his office has security filters that restrict access to key websites. While Mayer has an ultrafast Internet connection, top-of-the-line computer, an office chair he loves and tasty lunches for free ("Stanford students do not want in any way," he notes), the FTC technologist uses his personal laptop and, because there is no Wi-Fi at the agency, connects to the Internet by tethering it to his iPhone. He browses the Web at cellphone speed. There are no free lunches.
The FTC is headquartered in a landmarked building on Pennsylvania Avenue flanked by two sculptures of a man trying to restrain a muscle-bound horse that is straining to gallop away. The sculptures, completed in 1942, are entitled "Man Controlling Trade," and they explain a lot about the FTC's current dilemma. The notion of controlling trade, popular when the sculptures were erected a half-century ago, is not a vote-winner today. The FTC was an early battleground of the movement that began in the Reagan era to reduce government regulation. The agency had more than 1,700 employees in the 1970s, but is down to 1,176 today, even though the economy has more than doubled in that span. The FTC's responsibilities are vast: It must police everything from financial scams to antitrust activity, identity theft and misleading advertising.
Especially among Republicans, there is little interest in providing more resources. California Rep. Mary Bono-Mack, at a recent hearing on privacy legislation, warned that the government "has this really bad habit of overreaching whenever it comes to new regulations." Although the American Civil Liberties Union may see an epidemic of privacy violations, Bono-Mack said, "I haven't gotten a single letter from anyone back home urging me to pass a privacy bill." The skepticism is not just an outside-the-building phenomenon; it comes from within the FTC, too. One of the agency's five commissioners, Republican Thomas Rosch, dissented from its 2013 budget request, which asks for less money than the prior year budget of $312 million. Rosch said he believed the FTC still wanted too much. "In these austere times we should do more ... with fewer resources," his dissent said.