How the FTC’s new technology office will regulate Big Tech

The Federal Trade Commission is tasked with protecting U.S. consumers from unfair business practices, and in recent years it has set its sights on regulating Big Tech.

A new Office of Technology, announced last month, will be at the forefront of such efforts.

Marketplace’s Meghan McCarty Carino spoke with Stephanie Nguyen, the FTC’s chief technology officer, who will be leading the new office. She said the office’s work will be critical when you consider how tech has seeped into every corner of the economy.

The following is an edited transcript of their conversation.

Stephanie Nguyen: If we think about the distinction between what is a tech versus a nontech company, that’s becoming less relevant, especially in our constantly connected world. It’s really hard to find a company who doesn’t have some tech component to their business model and how they function. It cuts across sectors and industries, from health care to transportation to consumer applications. And that’s why the Office of Technology will be a key nexus point for our consumer protection and competition work.

Meghan McCarty Carino: Last year, we spoke to FTC Chair Lina Khan about modernizing the office with regards to antitrust laws and data privacy. How does the Office of Technology fit into those goals?

Nguyen: The way that I think about this is sort of in three ways. First is building a core group of expert staff and piloting this team across the agency. We’re really embracing more interdisciplinary collaboration, having technologists work across consumer protection and competition bureaus. And this really reflects the needs of consumers. Beyond the ability to read code and parse out complex information from documents and data, we really want people who know these communities and know how humans interact with technology and not just study this work from afar.

The second is really thinking about our processes. We have to establish core triage points with the Bureau of Consumer Protection and the Bureau of Competition on casework. And finally, focusing on the work that we’re doing and how we are building scalable methods and processes. For instance, you know, in our casework, we draft specifications and our civil investigative demands, or subpoenas, to obtain the information we need, and when we get it, actually help and work with our attorneys to understand what it says. For instance, how are you developing and implementing algorithmic pricing models? And can you provide the inputs and variables and parameters of those algorithms?

McCarty Carino: So you are building your team right now. Who are you looking for, and what comes after that?

Nguyen: Definitely. And I also wanted to just add here that hiring technologists in government is not a new development here. All these other places around the world are also thinking about how do we bring in technologists to work on how we regulate the economy? Back in the Obama administration, U.S. digital service was created with [Bureau of Alcohol, Tobacco, Firearms and Explosives] and [the General Services Administration]. And so there were other ways that technologists had been hired into government to support the mission of different agencies that are trying to enforce their missions as well.

We have a lot of things that we’re looking for here, beyond just technical expertise in terms of being a subject matter expert, perhaps in security, or privacy, or AI, or machine learning. We are looking for: Can they translate complex information to people who may not have that expertise? We are looking for folks who can issue-spot key facts in a bunch of dense documentation. We want people to be rooted in understanding how these harms manifest with humans in everyday life in the marketplace. And we want people to have a sense of thinking about the big picture of business incentives.

McCarty Carino: There’s been this perennial criticism that the government lags behind technology too much, that it has a difficult time sort of competing with the private sector for talent. What can you and the Office of Technology do to change that?

Nguyen: We have an incredible opportunity to tackle some of the most complex problems across some of the most pressing harmful issues over time. Questions like how can we dissect claims about AI-powered products to assess whether it’s snake oil? Or whether automated decision systems for teacher evaluations might adversely impact employment decisions and make inferences that impact compensation and tenure; shifts in digital advertising systems to help the FTC understand the implications of privacy, competition and consumer protection. We believe by leading with the mission and continuing to build a team of strong technologists and actually implement the work, that that will be a pretty strong way to recruit.

McCarty Carino: You mentioned AI, and that’s something I want to drill down on a little bit more because it seems like kind of a perfect encapsulation of the challenges of a really disruptive technology that is moving really, really quickly. It feels like there’s just been an explosion of growth in artificial intelligence tools. AI chatbots, for example. These have huge potential to disrupt not just the tech sector, but the entire economy. What are you watching there in this kind of rapidly evolving landscape?

Nguyen: Sure, while, I can’t comment on any particular matters, in general, I will say that we are looking at a large swath of different developing technologies, including artificial intelligence. We’re looking at AI in terms of fraud, deepfakes and other AI-based synthetic media that are becoming easier to create and disseminate, which poses major risks, especially around fraud. The rise of sophisticated chatbots carries similar risks, even though they made hold promise. And the FTC has documented and already seen a staggering rise in fraud on social media — a rise that is attributed in part to the use of sophisticated algorithms designed to target us with ads. In terms of deceptive design patterns, we’re seeing firms deploy different types of A/B testing, keystroke tracking and mouse tracking and other techniques to develop patterns designed to manipulate consumers. We’re also looking at discriminatory outcomes. Algorithmic decision making can be useful in mitigating human bias. But we have serious concerns that it can instead potentially replicate and entrench this bias. As we note in a previous report on representative datasets, faulty classifications and flawed design can lead to discriminatory outcomes. These outcomes can have grave consequences for consumers, like being denied health care or housing or employment.

McCarty Carino: What is deceptive design? I know this is something that you guys are looking at. And what are some ways that it is used?

Nguyen: I will say that there is not a universal definition for what this is. But to give a very concrete example, the Federal Trade Commission proposed a “click to cancel” provision, which requires sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. Sometimes, especially gym memberships or other subscriptions and reoccurring payments, it is near impossible to cancel and 10 seconds to actually just click a button and sign up and begin paying with your credit card. This type of pattern in general leaves consumers unable to easily leave a program and potentially, you know, charges them much more money than they would have otherwise, because they need to fill out a paper form, find a printer, print it out, put it in an envelope and send it to a random warehouse where it turns into a black box of maybe somebody might cancel it based on that note, or maybe not. These are the types of things that might leave consumers in unwanted position. This is not something that they wanted to begin with. This is not what they expected. It’s something that I believe the FTC has been on top of and has been really interested in following over time.

McCarty Carino: And how can the government keep up with the speed at which tech like this seems to be integrated into our economy?

Nguyen: First, it is establishing the structure of this team in order to expect the unexpected. We have to start internally in house and have a team who is nimble enough, general enough, with enough expertise to get up to speed on things that we can’t even see is happening right now. And so I think that, you know, the best strategy that we can amplify is really building scalable methods and processes with the team in the Office of Technology, having a strong process to quickly respond and having the right people to do it.

Related links: More insight from Meghan McCarty Carino

Stephanie Nguyen mentioned the FTC is looking to make the subscription cancellation process easier. That proposal was made Thursday, and the agency says companies that violate this potential rule would be on the hook for tens of thousands of dollars in fines, daily.

You also heard Stephanie mention something called A/B testing when she was talking about how companies can use digital design to manipulate or deceive users into parting with their money.

Essentially, it’s a scenario where users are served different versions of an interface or webpage at random.

Their interactions are then analyzed to determine which is more effective, including which is more effective in making more money.

Last year, the FTC settled with Credit Karma for $3 million over claims the company used deceptive design and A/B testing to falsely entice consumers to apply for credit cards many would never qualify for, which harmed their consumer credit scores.