While we live in an era of skepticism about government and its institutions, it is important to note the important work undertaken by the Federal Trade Commission, an underappreciated regulatory body that safeguards both competition and consumers.
Although it does not make headlines every day, few other agencies impact as many Americans on a daily basis as the FTC. However, a rapidly evolving business environment is making the FTC's task more difficult. Change flowing from the evolution of the Internet has stimulated rapidly changing business models. Whether this means Google and Facebook funding free services with targeted advertising, Uber disrupting local transportation, or Amazon selling below cost tablets that utilize its cloud computing infrastructure to drive demand for its online marketplace, we have entered a new era of technology and business model complexity.
As the nation's consumer protection and competition regulator, the FTC must respond to this dynamic marketplace and advise business leaders on what practices are legitimate and what constitutes unfair or deceptive commercial activity. The FTC's 20-month investigation of Google was a tangible example of the agency grappling with the challenges of applying long-standing competition and consumer protection laws in an Internet age.
Fortunately, the FTC has some particularly forward-thinking commissioners and a bevy of dedicated career staffers. In particular, it appears the new agency chair, Edith Ramirez, intends to focus the agency on confronting the problems of the digital age, while at the same time allowing industry the needed space for new technology and business models to flourish.
Because a new chairmanship provides a unique opportunity to review and refocus priorities I offer a few recommendations for where Chairwoman Ramirez and her colleagues might concentrate the FTC's work on high-tech issues.
First, the complexity of our nation's underlying patent and copyright regimes have made complex, fast-moving technology markets ripe for anticompetitive gaming. The most visible manifestation of this is the smartphone marketplace, where market participants are engaged in a high-stakes game of patent warfare, which harms innovation and passes on billions of dollars in annual costs to consumers. The problems, however, go far beyond one market.
Patent trolls are using questionable patents and the promise of expensive litigation to extort billions of dollars from American enterprise, from high-tech goliaths to local coffee shops. Furthermore, in a troubling recent development, established companies are deputizing patent trolls, sometimes in collusion with their competitors, to attack competitors and make it difficult for new entrants to compete. The strategic exploitation of IP is not limited to patents; federal courts are now encountering copyright trolls extorting settlements from innocent individuals, and sophisticated market players are using copyright uncertainty to attack innovative Internet platforms and impede consumer adoption of new technology.
Although the FTC cannot rein in all intellectual property abuse, the agency, which has broad investigatory powers, can conduct investigations to determine how intellectual property is being misused in the marketplace. The patent troll workshop it conducted in December is a good start. Once the information is in hand, the agency should not be shy about applying competition law where it can to help remedy the most egregious abuses of the system.
Second, for thirteen years running, the FTC has received more consumer complaints about identity theft than any other topic. Therefore, further examination and a search for better solutions is overdue. Increasing numbers of consumers expect companies and the government to play a role in keeping them safe from hackers and predators who have the potential to inflict truly serious harm, and the FTC is uniquely situated to address the issue.
The FTC was successful in convening an ongoing standards process to address the issues surrounding "do not track." To continue serving consumers, it should now place a greater focus on ID theft and security. By continuing the national conversation about the emerging threats to consumers and how companies can best protect their customers, the FTC has an opportunity to lead on online security matters.
Third, the agency should give greater attention to encouraging disruptive competition, which will lead to more choices and lower prices for consumers. Encouragingly, the agency recently filed comments to the Colorado Public Utilities Commission advising that its proposed regulations would harm consumers by making it impossible for startups like Uber to operate. Whether it is food trucks, mobile payment apps or ride-sharing networks, as new Internet-enabled business models have proliferated, there has been a perceptible increase in legacy industries using political connections to foist anticompetitive regulations on new competitors. Given its consumer focus and economic expertise, the FTC should play a leadership role in encouraging competitive markets.
Last but not least, the FTC needs to futurize. A report last year by Pro Publica showed how the FTC's internal technology needs updating. If the agency is going to issue recommendations about mobile apps, for example, its staff members shouldn't have to visit a basement lab to use app-enabled smartphones. Their computers should be able to access a full range of modern software options. Although this seems minor in comparison to the other suggestions, it is fundamentally important. The agency responsible for overseeing high-tech industries cannot effectively execute that task without itself being on the forefront of technology.
Although this to-do list is ambitious, from all indications, Chairwoman Ramirez has the right experience and frame of mind to reshape the agency to reflect the needs of our time. By tackling the anticompetitive abuse of intellectual property, increasing the focus on online security, embracing a pro-disruption competition policy, and futurizing the Commission, she can demonstrate that the FTC is evolving with our high-tech times.