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Don’t expect changes to the FTC’s data privacy rules anytime soon

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It was the beginning of a long, complicated process that could potentially rewrite data privacy rules in America, limiting what companies can collect and sell, and potentially the core of many major tech companies, such as Facebook, Google, and Amazon.

The FTC is likely to borrow from the European Union’s legal framework known as GDPR or General Data Protection Regulation. Those guidelines set a framework for which personal data may be collected by companies. It is considered the strictest privacy law in the world. Meanwhile, more than 50 countries, ranging from South Africa to France, are looking for ways to control over the digital information produce for their citizens and businesses.

Not that this will all happen overnight. If the government generally moves slowly, the FTC can be downright freezing. Unlike Congress, it has limited power and new rules should be linked to existing rules on unfair or deceptive practices. And its leadership is shifting with presidential administrations, which can slow or halt the progress of initiatives. But for now, the FTC is investigating extensive changes to current privacy lawsusing the model that is popular in many European countries as a guideline.

Duane Pozza, former deputy director at the Federal Trade Commission and current partner at the law firm Wiley Rein, warns that such changes, while they could be years away from implementation, would have a huge effect on consumers, businesses and investors.

“They’ve spread the net quite widely in terms of the questions they’re asking,” he says londonbusinessblog.com. “If you read between the lines of the questions, at least the majority of the FTC is thinking about introducing rules that are closer to what you see in Europe. They will look at the lessons learned from how the GDPR has been implemented.”

What do these changes mean for consumers and businesses? It could go in many different directions, but here’s what Pozza had to say.

The effect on the consumer

The FTC tries to gather information about many different types of data collection practices. And the final outcome will depend a lot on the timeline, as the agency’s Democratic majority holds very different views on privacy than Republican commissioners.

“One direction they’re considering is that they’ve asked about what’s called” comment and choice for privacy policy, which is the idea that you get a disclosure, then click on it, then that outlines what the company should do,” Pozza says.

If that policy violates the FTC’s deceptive practices rules, it will be easier for the FTC to act, given its limited power. But it could then introduce new rules about how data is collected.

The effect on companies

While the threat of federal intervention may seem dramatic, most companies are already adjusting their privacy policies because of a growing number of states who have already addressed the issue.

“This is a reminder that companies need to pay close attention to their data management practices and have a handle on the type of data they collect,” Pozza said. “They have to think about things like whether they need it and whether they can de-identify it, not so much because of the rules, but because of data hygiene.”

In short, any company that collects data should monitor the progress of the FTC in rewriting rules, as it could lead to rules that directly affect it. The big fear is that the FTC rules will not be consistent with existing state rules, which could prove very disruptive.

The effect on financiers and venture capitalists

Forget Bitcoin: Personal data has been the real next-generation currency for years. But as startups specializing in the information space seek funding, venture capitalists will have to consider possible long-term effects of the new rules on those companies. Significant changes can affect a VC’s departure and the profitability of those companies.

“They need to be aware of the type of business and data collection they’re investing in,” Pozzo says. “There could be a lot of rules.”

That means it’s more important than ever for investors to conduct their due diligence on how companies manage their data and how their internal legal or privacy frameworks are set up. “They should really scare companies to see what they’re doing to comply with the rules,” he says.

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