In 2025, President-elect Donald Trump will have the opportunity to set a pro-consumer, pro-innovation, and pro-growth agenda at the outset of his second administration. As the president-elect prepares to shape key federal agencies, a top priority of the new administration should be to examine recent actions taken by the Federal Trade Commission (FTC) that overstep the agency’s authority and return the FTC to its original mandate.
Since its creation over 100 years ago, the FTC has worked to protect consumers from unfair business practices without unduly burdening companies and economic growth. But in recent years, top political appointees at the FTC have taken actions that both exceed the agency’s authority and ironically undercut its stated goal. Take, for example, the decision made by the FTC to take action against Rytr, a company working to develop new applications of generative AI technology, based on the agency’s assessment that one of Rytr’s products could be used by bad actors. Not only does this action extend well beyond the FTC’s authority to combat “unfair or deceptive practices,” but it also creates a troubling precedent by punishing American innovators without evidence of actual harm or bad intent.
This overreach on the part of the FTC ultimately threatens to discourage American companies from working to develop new, innovative technologies that result in new products for consumers, improved public services, and economic growth. Additionally, by targeting small startup companies like Rytr, the agency risks creating a chilling effect on innovation that disincentivizes investment into research and development, which would only further entrench large industry players.
Unfortunately, this overstep is not an isolated event. In other instances, the FTC has elected to break long-standing agency norms designed to prevent hasty – and harmful – mistakes. Earlier this year, the agency released a report looking at the privacy practices of several video-sharing companies. While this issue merits examination, a quick look at the FTC’s report reveals serious concerns about the agency’s findings, and it’s clear that the report, as well as the FTC’s recommendations in the document, risk undermining policy debates surrounding consumer privacy.
For one, the FTC’s report uses data from 2019 and 2020. The tech industry moves quickly, and five-year-old information about the data collection practices of a select few companies isn’t reflective of the current privacy and security standards many leading American companies have put in place to better protect consumer data. In fact, many social media platforms and streaming services have implemented practices that address many of the concerns raised by the FTC in their report, such as bans on targeted advertising to minors, enhanced user consent mechanisms, and greater transparency in data collection policies.
The FTC’s report used these outdated findings to make far-reaching recommendations that go well beyond existing law. This kind of advocacy is especially concerning given the threats the policy changes proposed in the report pose to consumers and the digital economy. For example, the FTC endorsed controversial policy proposals found in legislation like the Kids’ Online Safety Act (KOSA) that would expand the authority of the FTC to moderate content online. In Congress, this idea has raised serious First Amendment concerns, and lawmakers on both sides of the aisle have taken issue with giving political appointees control of what online content children should and shouldn’t be allowed to see. Other ideas endorsed in the report, including proposed far-reaching restrictions on advertising practices, have raised concerns among policymakers who warn they risk hurting small businesses by taking away key tools that small business owners use to find and advertise to potential new customers.
Of course, the FTC has an important role to play in protecting American consumers. However, government overreach threatens to hurt consumers, small businesses, and U.S. economic interests. The next presidential administration can and should seize the opportunity it has to curtail harmful agency actions and return the FTC to its original mandate.
