1 1 FEDERAL TRADE COMMISSION 2 3 I N D E X 4 5 6 WELCOMING REMARKS PAGE 7 MS. HARRINGTON 3 8 CHAIRMAN MAJORAS 5 9 10 PANEL/PRESENTATION NUMBER PAGE 11 1 19 12 2 70 13 3 153 14 4 203 15 5 254 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 2 1 FEDERAL TRADE COMMISSION 2 3 4 IN RE: ) 5 PROTECTING CONSUMERS ) 6 IN THE NEXT TECH-ADE ) Matter No. 7 ) P064101 8 ) 9 ---------------------------------) 10 11 MONDAY, NOVEMBER 6, 2006 12 13 14 GEORGE WASHINGTON UNIVERSITY 15 LISNER AUDITORIUM 16 730 21st Street, N.W. 17 Washington, D.C. 18 19 20 The above-entitled workshop commenced, 21 pursuant to notice, at 9:00 a.m., reported by Debra L. 22 Maheux. 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3 1 P R O C E E D I N G S 2 - - - - - 3 MS. HARRINGTON: Good morning, and welcome to 4 Protecting Consumers in The Next Tech-Ade. It's my 5 privilege to introduce our Chairman, Deborah Platt 6 Majoras, who is leading the Federal Trade Commission 7 into the next Tech-ade. She has been incredibly 8 supportive of all of the efforts to make these hearings 9 happen, and I'm just very proud that she's our boss, and 10 I'm very happy to introduce her to kick things off. 11 Thank you. 12 CHAIRMAN MAJORAS: Thank you very much, and good 13 morning, everyone. It is a great pleasure to welcome 14 those of you who are gathered here at George Washington 15 University in Washington, D.C., this morning, and to 16 extend a special welcome to those who are watching us 17 from places around the globe. We welcome you to 18 Protecting Consumers in the Next Tech-ade. 19 Our distinguished panelists have come from 20 across the nation and around the world to share their 21 extraordinary expertise on a wide range of technology 22 and consumer protection issues, and we are deeply 23 appreciative. Your time and efforts will assist the 24 Federal Trade Commission and other policymakers in 25 serving consumers. For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 4 1 That technology is changing rapidly is no 2 secret. It is simply transforming the way we live, and 3 in such a dynamic environment, developing sound public 4 policy can be a daunting challenge. These hearings are 5 a key part of the FTC's response to this challenge. No 6 doubt many of you have been to conferences at which the 7 focus has been on how technology itself may change, and 8 I anticipate that we will learn about a dazzling array 9 of amazing and startling technologies, many of which you 10 can perhaps see for yourself at the Tech Pavilion, but 11 our primary focus will be different. 12 Over the next decade or tech-ade, as we have 13 dubbed it, these technologies and others undoubtedly 14 will have a tremendous impact on how we live our lives. 15 This week we will focus not only on how technology might 16 change, but on how it will impact consumers every day 17 and how consumer protection policy most therefore adapt 18 in response. 19 Our ultimate goal is to identify the future 20 challenges and opportunities in fulfilling our core 21 mission of protecting consumers. At the Federal Trade 22 Commission we recognize that being prepared for the 23 future is critical if we are to foster confidence in 24 consumers, that they will benefit from new technologies 25 while being protected from undue risks that they may For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 5 1 create. 2 Our hearing's built on a solid foundation 3 erected through past Federal Trade Commission's efforts. 4 In the mid 1990s, then Federal Trade Commission chairman 5 Robert Pitofsky recognized that we were entering an era 6 in which technology was changing at an increasingly 7 rapid pace and that this could have a profound impact on 8 consumers. 9 He also recognized the importance in such an 10 environment of reviving the FTC's historical role as an 11 agency that analyzes and reports on novel and difficult 12 consumer issues; thereby assisting policymakers in their 13 legislative, regulatory and law enforcement decisions. 14 So in 1995, the FTC held hearing entitled 15 Protecting Consumers in the Global High Tech 16 Marketplace, more commonly known as the Global Hearings, 17 and for the Commission and the public, the Global 18 Hearings served two important functions. First, they 19 ushered in a new era in which the agency has engaged in 20 significant policy study, analysis and reporting, a role 21 that we have continued and expanded over this past 22 decade. 23 Second, the Global Hearings provided much of the 24 framework for our consumer protection agenda for this 25 past decade, a result that we hope to replicate for the For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 6 1 next decade through these hearings. 2 Following the Global Hearings, Commission Staff 3 issued a report in 1996 concerning technological 4 advances and the future of consumer protection policy, 5 and some of the key conclusions were that new 6 technologies were developing at a rapid pace and that 7 these were going to result in significant marketplace 8 changes for consumers, that new technologies were being 9 used to perpetuate old-fashioned scams. New 10 technologies were elevating some policy issues, privacy, 11 security, and protecting children to the forefront of 12 public debate, that the challenge for consumer 13 protection agencies which respond at a time when 14 resources were stretched thin. 15 As the new marketplace took shape, that both 16 private and public sector interests would be served by 17 making sure that sound consumer protection principles 18 were already in place, and finally, that consumer 19 protection was most effective when government, business 20 and consumer groups could all play a role together. 21 Now, a decade later these predictions may seem 22 obvious, but that's because their insights turned out to 23 be correct. Our agenda, for instance, is now heavily 24 focused on privacy and security concerns and the 25 protection of children. Privacy and security issues For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 7 1 have become such a key part of fulfilling our consumer 2 protection mission that we recently created a new and 3 separate division within the Bureau of Consumer 4 Protection, the division of privacy and identity 5 protection, and it focuses exclusively on these issues. 6 Of course the 1996 Global Hearings Report did 7 not predict all consumer protection problems that the 8 technology would create. For example, it did not 9 foresee consumer protection problems like spam and 10 spyware and viruses. Still, the fact that many 11 predictions broadly have been proven to be true creates 12 confidence that these hearings similarly will be 13 valuable in helping us develop good policy going 14 forward. 15 Given the passage of more than a decade since 16 the Global Hearings, the time has come to undertake 17 another comprehensive and systematic assessment of 18 potential technological developments and their 19 implications for consumer protection policy. As we scan 20 the horizons to perceive consumer protection challenges, 21 we look to the wisdom of the past to inform us for the 22 further. 23 Across the street from my office stands the 24 National Archives with its inscription "the past is 25 prologue," and as it teaches, understanding our past For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 8 1 experience with technological advances and consumer 2 protection, both our successes and our failures, can 3 provide valuable insight into where we go from here. As 4 philosopher George Santayana once warned: "Those who do 5 not learn from history are doomed to repeat it." 6 There are at least four lessons from the past 7 that we should bring to bear as we consider the 8 implications of technological innovation for consumer 9 protection policy: First, that technological change is 10 difficult to predict; second, vigorous competition in 11 the marketplace is necessary to ensure that consumers 12 obtain the maximum benefit from new technologies; third, 13 the consumer protection concerns that technological 14 advances create often can be addressed with existing 15 legal tools and without the need for new laws and 16 regulations; and fourth, there is a powerful 17 relationship between technology and consumer 18 expectations. 19 Baseball manager and sometime philosopher Yogi 20 Berra once explained: "Things are hard to predict, 21 especially the future." 22 Trying to predict the course of technological 23 advancements and their impact on consumers in particular 24 can be quite humbling, even for the experts. Here are a 25 few examples from our past. In 1876, a Western Union For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 9 1 internal company memorandum opined that "this telephone 2 has too many shortcomings to be seriously considered as 3 a means of communication." 4 In the 1920s, an investment banking firm advised 5 its client not to invest in radio because "the wireless 6 music box has no imaginable commercial valuable.