1

Smith, Michelle

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Sunday, June 27, 2021 12:48 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSunday,June27,2021-00:48Submittedbyanonymoususer: Submittedvaluesare:

FirstName:John

LastName:Borzilleri,MD

Affiliation:Self

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:IfiledtwoquitamwhistleblowercasesregardingthecauseofUSmassivebranddrugpriceinflation,drivenbyapricecollusionpaymentscheme

betweenpharmaceuticalandPBM/healthinsurancecompanieswhichbeganwiththeMedicatePartDprogram.TheextremeconsolidationofthePBM/healthinsurance

industryisarootcauseoftheongoingschemethatiscausingseverepatientandtaxpayerharm.Thedetailsoftheschemeandallthelegaldocumentscanbefoundona

websiteIbeganlastyear-www.drugpricetruth.org.IwouldappreciatetheopportunitytoaddresstheFTCregardingmyinvestigation.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/2
1

From: Glenn Lammi < >

Sent: Monday, June 28, 2021 1:18 PM

To: JulyPublicComments

Subject: comment on item on July 1 open meeting agenda

Attachments: WLF comment FTC July 1 meeting.pdf

Please find attached a Comment of the Washington Legal Foundation related to the July 1 open

meeting.

Thank you.

Glenn G. Lammi

Executive Director | Vice President of Legal Studies

Washington Legal Foundation

Visit us online at WLF.org

Twitter: @WLF
Washington Legal Foundation

2009 Massachusetts Avenue, NW

Washington, DC 20036

June 28, 2021

Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Re: Comment on Possible Rescission of Statement of Enforcement Principles Regarding 

‘Unfair Methods of Competition’ Under Section 5 of the FTC Act

Dear Chair Khan:

Washington Legal Foundation (WLF) appreciates the opportunity to comment on an item set for 

discussion at the Commission’s July 1 open meeting. We also applaud your general goal of bringing 

transparency to the Commission’s work, and this open meeting is a positive step in that direction. 

We must agree with Commissioner Noah J. Philips, however, who on June 25 stated via Twitter: “a 

mere week’s notice on matters requiring serious deliberation . . . undermine[s] that very goal.” Rescinding 

the 2015 policy statement on “unfair methods of competition” under Federal Trade Commission Act § 5 

would represent a significant policy and enforcement shift for the Commission. For the public to participate 

meaningfully in any debate over the Statement’s rescission, the Commission should provide at least 30 

days, if not 60, of public comment.

The published meeting agenda infers that the Commission is considering rescinding the 2015 

Statement because it is purportedly misaligned with “the requirements set out by Congress to condemn 

‘unfair methods of competition.’” We attach to this letter a 2014 WLF Working Paper by William Kolasky 

that probes the legislative intent behind Section 5. That analysis reveals a set of principles that Congress 

sought to advance by outlawing unfair methods of competition. Several of these principles are reflected in 

the 2015 Statement, including that § 5 enforcement should be guided by “the promotion of consumer 

welfare”; that enforcement should target “harm to competition or the competitive process”; and that the 

Commission should apply a framework “similar to the rule of reason” when evaluating acts or practices.

The principles that Mr. Kolasky identifies reflect that Congress meant to both guide and cabin the 

Commission’s discretion under § 5. Rescission of the 2015 statement would greatly expand the 

Commission’s discretion in a manner inconsistent with Congress’s intent. We urge your office to take Mr. 

Kolasky’s findings and conclusions into consideration before taking action on the 2015 Statement.

Respectfully,

Glenn G. Lammi

Glenn G. Lammi

Executive Director and Vice President of Legal Studies

Attachment: “Unfair Methods of Competition”: The Legislative Intent Underlying Section 5 of the FTC Act
Advocate for freedom and justice®

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Washington, DC 20036

202.588.0302

Washington Legal Foundation

WLF

Critical Legal Issues:

WLF

WORKING PAPER SERIES

 “UNFAIR METHODS OF COMPETITION”:

 THE LEGISLATIVE INTENT UNDERLYING

 SECTION 5 OF THE FTC ACT

 William Kolasky 

 Hughes Hubbard & Reed LLP

Foreword

A. Douglas Melamed

Stanford Law School

Washington Legal Foundation

Critical Legal Issues WORKING PAPER Series 

Number 189

December 2014
TABLE OF CONTENTS

ABOUT WLF’S LEGAL STUDIES DIVISION.........................................................................................iii

ABOUT THE AUTHOR.......................................................................................................................iv

FOREWORD ......................................................................................................................................v

ABSTRACT........................................................................................................................................xi

INTRODUCTION............................................................................................................................... 1

I. AN OVERVIEW OF THE LEGISLATIVE HISTORY OF THE FEDERAL TRADE 

 COMMISSION ACT ........................................................................................................................ 4

II. THE PRINCIPLES CONGRESS INTENDED TO GOVERN THE COMMISSION’S

 ENFORCEMENT OF SECTION 5’s PROHIBITION OF UNFAIR METHODS OF COMPETITION ...... 14

A. Section 5 Gives the Commission Authority to Only Regulate Competition,

 Not Monopoly ............................................................................................................... 15

B. Section 5 Protects Competition, Not Competitors....................................................... 20

C. The Enforcement of Section 5 Requires a Rule-of-Reason Analysis in which

 the Ultimate Question is Whether a Practice May Exclude Equally 

 Efficient Competitors.................................................................................................... 27

1. The ultimate test of whether a practice is a fair or unfair method of

 competition is whether it is likely to exclude equally efficient 

 competitors from the market........................................................................... 28

2. Congress intended the Commission to apply a rule of reason 

 in enforcing Section 5 ....................................................................................... 35

3. Section 5 gives the Commission power to prohibit unfair methods of

 competition in their incipiency before they mature into full-blown

 Sherman Act violations...................................................................................... 38

III. THE COURTS’ CHANGING INTERPRETATIONS OF SECTION 5................................................... 42

A. Early Supreme Court Cases Adhered to the Governing Principles Outlined

 in Section 5’s Legislative History ................................................................................... 43

B. Supreme Court Cases in the 1960s and 1970s Departed from the Limiting

 Principles Outlined in the Legislative History............................................................... 46

C. The FTC and Lower Courts Have Returned to a Narrower Interpretation of 

 Section 5 More Consistent with Its Legislative Purpose, but the Supreme Court

 Has Not Yet Spoken ...................................................................................................... 52
Copyright © 2014 Washington Legal Foundation ii

D. Efforts by the FTC to Extend Section 5 beyond Exclusionary

 Conduct to Police Tacit Collusion ................................................................ 56

CONCLUSION ................................................................................................................ 60
Copyright © 2014 Washington Legal Foundation iii

ABOUT WLF’s LEGAL STUDIES DIVISION

The Washington Legal Foundation (WLF) established its Legal Studies Division in 

1986 to address cutting-edge legal issues by producing and distributing substantive, 

credible publications targeted at educating policy makers, the media, and other key legal 

policy audiences.

Washington is full of policy centers of one stripe or another. But WLF's Legal 

Studies Division has adopted a unique approach that sets it apart from other 

organizations.

First, Legal Studies deals almost exclusively with legal policy questions as they 

relate to the principles of free enterprise, individual and business civil liberties, limited 

government, national security, and the Rule of Law.

Second, its publications focus on a highly select legal policy-making audience. 

Legal Studies aggressively markets its publications to federal and state judges and their 

clerks; members of the United States Congress and their legal staffs; government 

attorneys; business leaders and corporate general counsel; law school professors and 

students; influential legal journalists; and major print and media commentators.

Third, Legal Studies possesses the flexibility and credibility to enlist talented 

authors from various backgrounds—from professors to sitting federal judges and other 

federal appointees, to senior partners in established law firms.

The key to WLF’s Legal Studies publications is the timely production of a variety of 

intelligible but challenging commentaries with a distinctly commonsense viewpoint 

rarely found in academic law reviews or specialized legal trade journals. The publication 

formats include the provocative COUNSEL’S ADVISORY, topical LEGAL OPINION LETTER, concise 

LEGAL BACKGROUNDER on emerging issues, in-depth WORKING PAPER, useful and practical 

CONTEMPORARY LEGAL NOTE, interactive CONVERSATIONS WITH, balanced ON THE MERITS, and

law review-length MONOGRAPH.

WLF’s LEGAL OPINION LETTERS and LEGAL BACKGROUNDERS appear on the LEXIS/NEXIS®

online information service under the filename “WLF” and all WLF publications appear on 

our website at www.wlf.org. 

To receive information about previous WLF publications, contact Glenn Lammi, 

Chief Counsel, Legal Studies Division, Washington Legal Foundation, 2009 Massachusetts 

Avenue, NW, Washington, D.C. 20036, (202) 588-0302, glammi@wlf.org. 
Copyright © 2014 Washington Legal Foundation iv

ABOUT THE AUTHOR

William Kolasky is a partner in the Washington, D.C. office of Hughes Hubbard & 

Reed LLP, and is a former Deputy Assistant Attorney General in the Antitrust Division of 

the U.S. Department of Justice. While there, Mr. Kolasky was one of the architects of the 

International Competition Network, a network of over 100 competition authorities 

worldwide designed to promote great international cooperation and convergence 

among those authorities. He has also taught antitrust law for over ten years at the 

American University's Washington College of Law.

Mr. Kolasky regularly represents clients in antitrust litigation before courts all 

over the country. He also represents clients in criminal and civil investigations before 

both the Antitrust Division and the Federal Trade Commission. Mr. Kolasky has secured 

antitrust clearance from the two agencies for more than 100 mergers and acquisitions, 

and has coordinated merger reviews in multiple other jurisdictions around the world. In 

2013, he received the Global Competition Review’s Lifetime Achievement Award for his 

achievement in private practice, government service, and antitrust scholarship.

He was assisted in researching and writing this article by Katherine Steele, Tristan 

Bird, and Stephen Halpin, III, all of Hughes Hubbard & Reed LLP. Mr. Kolasky also thanks 

Marc McClure, whose book, Earnest Endeavors: The Life and Public Work of George 

Rublee, helped inspire this article and who provided valuable research assistance and 

comments on this article.

Comments are welcome as the author considers this a work in progress; please 

send them to kolasky@hugheshubbard.com.
Copyright © 2014 Washington Legal Foundation v

FOREWORD

by

A. Douglas Melamed1

Herman Phleger Visiting Professor

Stanford Law School

Bill Kolasky has written an excellent, important, and carefully researched paper about 

the meaning of Section 5 of the Federal Trade Commission Act. To appreciate its 

importance, one needs to understand the context.

The Sherman Antitrust Act was enacted in 1890. It prohibits certain types of 

anticompetitive conduct. Twenty-four years later, in the aftermath of a Presidential election 

in which the three candidates’ different views about antitrust enforcement figured 

prominently, Congress passed and President Wilson signed the Clayton Act, which prohibits 

anticompetitive mergers, and the Federal Trade Commission Act. Among other things, the 

FTC Act created a new agency, the Federal Trade Commission, and provided in Section 5 that 

“unfair methods of competition in and affecting interstate competition” are unlawful. 

Section 5 further authorized the new Commission to commence adjudicative proceedings 

against any person it has reason to believe has used or is using such methods of competition 

and to issue cease-and-desist orders with respect to such conduct. 

In the 100 years since the passage of the FTC Act, the Federal Trade Commission has 

taken the position, largely without controversy, that it is authorized by Section 5 in effect to 

enforce the Sherman Act and the Clayton Act. The Commission and the Justice Department 

 

1

A. Douglas Melamed retired as Senior Vice President and General Counsel of Intel 

Corporation in June 2014 and will continue serving as Vice President and Senior Corporate Counselor 

at the company through January 26, 2015. He previously served as Acting Assistant Attorney General 

of the United States Department of Justice’s Antitrust Division.
Copyright © 2014 Washington Legal Foundation vi

have thus acted largely in parallel. Both enforce the Sherman Act and the Clayton Act—the 

Commission in administrative proceedings and the Justice Department in federal court—and 

they have adopted and over the years refined a so-called “clearance” agreement to allocate 

enforcement matters between them.

Section 5 of the FTC Act uses language, “unfair methods of competition,” that is 

different from the language of the Sherman Act and the Clayton Act. It is widely understood 

that Congress did not intend to confine the Commission’s cease-and-desist authority to 

conduct that violated the Sherman Act or the Clayton Act, at least as those statutes were 

construed in 1914. 

The Supreme Court stated that explicitly in FTC v Sperry & Hutchison, 405 U.S. 233 

(1972). The case concerned a Commission order finding that Sperry & Hutchison had 

violated Section 5 in connection with its trading stamp business. According to the Court, the 

case raised the question whether Section 5 empowers the Commission to “proscribe an 

unfair competitive practice, even though the practice does not infringe either the letter or 

the spirit of the antitrust laws.” The Court answered that question in the affirmative, largely 

on the basis of congressional committee reports stating that Congress had decided to leave 

it to the Commission to determine what practices are unfair because there were too many 

unfair practices for Congress to define them all and new ones would in any event be devised 

in the future. The Court’s discussion turned out to be dicta, however, because the Court 

affirmed the lower court decision setting aside the Commission’s finding of unlawful 

conduct.

Although dicta, the Court’s discussion of Section 5 might have emboldened the 

Commission. Over the next several years, the Commission brought a number of cases that 
Copyright © 2014 Washington Legal Foundation vii

applied Section 5 to conduct that did not violate the antitrust laws. None of them ended 

well for the Commission. In Official Airline Guides v FTC, 630 F.2d 920 (2d Cir. 1980), the 

court set aside a Commission order prohibiting a monopoly publisher of airline flight 

schedules from discriminating between certified air carriers and commuter airlines. The 

court explained that enforcing the order would “give the Commission too much power.” In 

Boise Cascade v FTC, 637 F.2d 573 (9th Cir. 1980), the court refused to enforce a Commission 

order prohibiting noncollusive, parallel adoption by competitors of practices that the 

Commission believed diminished price competition. The court rejected the argument that it 

should defer to the Commission’s expertise on the ground that that argument was “in 

tension with the acknowledged responsibility of the court to interpret Section 5,” and it 

relied on what it called “well forged” antitrust case law to determine that Section 5 did not 

apply to the conduct at issue in the case. And in E. I. Du Pont de Nemours v FTC, 729 F2d 128 

(2d Cir 1984), the court set aside another Commission order prohibiting certain practices 

that had been adopted without collusion by a number of competing firms and that the 

Commission found led to higher prices. The court said that, while the Commission is not 

confined to “the letter” of the antitrust laws and may proscribe “incipient violations” and 

conduct that is “close to a violation” or “contrary to the spirit” of the antitrust laws, it may 

not proscribe conduct simply because it has an adverse effect on competition. 

That’s where matters stood thirty years ago—a vague understanding that Section 5 

encompasses something beyond the antitrust laws, not even the beginning of a workable 

definition of the bounds of Section 5, and a Commission that had repeatedly been slapped 

down when it tried to push Section 5 beyond the antitrust laws. Thereafter, except for a 

couple of uncontroversial consent decrees in cases involving invitations to enter into illegal 
Copyright © 2014 Washington Legal Foundation viii

agreements, the Commission seemed content to confine its competition enforcement 

activities to enforcing the antitrust laws.

That changed with the N-Data case in 2008. The issue was whether the transferee of 

certain patents violated Section 5 by announcing an intention to license them on fair, 

reasonable, and non-discriminatory (FRAND) terms after the original patent holder had 

committed to a standard-setting organization that they would be licensed for a one-time fee 

of $1000. The Commission agreed that there was no antitrust violation because, even 

though the conduct meant higher prices for licensees, it did not exclude rival technologies or 

otherwise injure competition. Nevertheless, by a 3-2 vote, the Commission accepted a 

consent decree under Section 5. The majority acknowledged that case law permits the 

unfair competition prong of Section 5 to be applied only to conduct that injures competition 

and asserted that competition was injured in that case, but it did not explain how there 

could be injury to competition under Section 5 when there was no such injury under the 

antitrust laws.2

The N-Data case triggered an ongoing debate about Section 5. Proponents of a 

broad reading of Section 5 rely principally on the expansive language of the statute and 

argue that a broad reading is needed to proscribe anticompetitive conduct beyond the reach 

of the antitrust laws. Those who favor a narrow reading of Section 5 argue that, unless the 

vague term “unfair methods of competition” is understood to be cabined by the abundant 

judicial construction of the antitrust laws or some other authoritative legal source, the law 

will be unpredictable and thus more likely to harm than to promote competition; that the 

antitrust laws are sufficiently capacious to reach almost all anticompetitive conduct that 

 

2

The author represented N-Data in that matter.
Copyright © 2014 Washington Legal Foundation ix

warrants government enforcement; and that the FTC and the Justice Department ought to 

apply the same law regarding anticompetitive conduct. Present and former FTC 

Commissioners are on both sides of the debate.

The Commission held a workshop anticipating possible Guidelines about the meaning 

of Section 5, but the Commissioners were unable to reach agreement. A majority of the 

present Commissioners appear willing to apply Section 5 in some undefined way to conduct 

not prohibited by the antitrust laws, but the Commission has brought few cases since N-Data

that attempt to do so. Notably, the debate has been almost entirely about how Section 5 

ought to be construed as a policy matter. There is no consensus about that, and it appears 

that no one knows what Section 5 actually means.

Bill Kolasky’s WLF WORKING PAPER shows a way, perhaps the way, out of this 

unsatisfying stand-off. Like most good insights after they have been articulated, the premise 

of the paper seems both simple and obvious: Instead of focusing on the second-order 

question whether Section 5 is broader than the antitrust laws, we should focus directly on 

the ultimate question of what Congress meant by “unfair methods of competition.” 

After a meticulous study of the legislative history of Section 5, Kolasky concludes 

that, in selecting the statutory language it did and adopting and rejecting various proposed 

changes thereto, Congress embraced important substantive principles that give meaning to 

Section 5 and can guide and cabin the discretion of the Commission and the judgment of the 

courts in applying Section 5. The most fundamental of these principles are that Section 5 

gives the FTC authority to outlaw exclusionary practices, but not exploitative practices; that 

Section 5 is intended to protect competition, not individual competitors; and that Section 5 

proscribes only practices that exclude equally efficient competitors.
Copyright © 2014 Washington Legal Foundation x

Kolasky sets a high bar by drawing parallels at the beginning of his paper to Judge 

(then Professor) Bork’s seminal work on the legislative history of the Sherman Act. Kolasky’s 

WORKING PAPER is unlikely to be so influential, in part because its scope is narrower. Even so, 

it is a timely and thoughtful paper that brings a valuable new perspective to a question that 

has eluded satisfactory answer for decades.
Copyright © 2014 Washington Legal Foundation xi

ABSTRACT

In the debate over the scope of Section 5 of the Federal Trade Commission 

Act, the Section’s legislative history has been largely neglected. Most 

commentators seem simply to assume that the Section’s legislative history 

provides little guidance as to how the FTC should exercise its authority to prohibit 

as “unfair methods of competition” business practices. This same assumption has 

led the Supreme Court in at least one case to suggest in dicta that the 

Commission has broad authority to use Section 5 to prohibit practices that violate 

the “spirit,” but not the letter, of the antitrust laws without explaining what that

means.

Inspired by Robert Bork’s seminal article, Legislative Intent and the Policy 

of the Sherman Act, this WORKING PAPER undertakes a closer examination of the 

legislative history of the Section 5. It shows that while Congress intended Section 

5 to reach beyond the Sherman Act to enable the FTC to prohibit anticompetitive 

practices in their incipiency before they become full-blown Sherman Act 

violations, it intended that the Commission’s authority to do so would be 

constrained by three critical governing principles. First, the Commission would 

have authority only to outlaw exclusionary, not exploitative, practices. Second, 

the Commission would have authority to prohibit only those practices that were 

likely to harm competition and hence consumer welfare, and not practices whose 

only effect was to harm less efficient competitors. Third, the Commission would 

be required to apply a rule of reason analysis, similar to that used under the 

Sherman Act, to declare unfair only those methods of competition “which shut 

out competitors who, by reason of their efficiency, might otherwise be able to 

continue in business and prosper.” This paper’s review of the legislative history 

shows, therefore, that Congress intended Section 5 to be a “consumer welfare 

prescription,” just as Robert Bork found to be the case for the Sherman Act.
Copyright © 2014 Washington Legal Foundation 1

“UNFAIR METHODS OF COMPETITION”:

THE LEGISLATIVE INTENT UNDERLYING

SECTION 5 OF THE FTC ACT

INTRODUCTION

Considering that the Federal Trade Commission (FTC) just celebrated its centennial, it 

is remarkable how much uncertainty remains as to the scope of its authority under Section 5 

of the Federal Trade Commission Act to prohibit “unfair methods of competition.”1 This 

continuing uncertainty has led some to call for the Commission to issue a policy statement to 

define its authority with greater clarity.2

Surprisingly, the ongoing debate over the scope of the FTC’s authority under Section 

5 has taken place without much careful study of the legislative history of the statute itself. 

The commentators on both sides of the debate have largely ignored the Act’s legislative 

history, assuming perhaps that it would provide little guidance.3 If so, their assumption is 

 

1

15 U.S.C. § 45. As examples of the continuing debate over the scope of Section 5, see, e.g., A. Douglas 

Melamed, The Wisdom of Using the “Unfair Method of Competition” Prong of Section 5, GLOBAL COMPETITION 

POL’Y (Nov. 12, 2008), http://www.wilmerhale.com/pages/publicationsandNewsDetail.aspx?NewsPubId=94926

(arguing for a narrow interpretation); J. Thomas Rosch, Comm’r, Fed. Trade Comm’n, The FTC’s Section 5 

Hearings: New Standards for Unilateral Conduct?, Remarks at the ABA 57th Antitrust Law Section Spring 

Meeting in Washington, D.C. (Mar. 25, 2009) (transcript available at www.ftc.gov) (urging a broad 

interpretation).

2

See, e.g., Joshua Wright, Recalibrating Section 5: A Response to the CPI Symposium, CPI ANTITRUST 

CHRON., at 7 (Nov. 27, 2013), www.ftc.gov/sites/default/files/documents/public_statements/recalibratingsection-5-response-cpi-symposium/1311section5.pdf; William E. Kovacic & Marc Winerman, Competition Policy 

and the Application of Section 5 of the Federal Trade Commission Act, 76 ANTITRUST L.J. 929, 930-33 (2010); 

James J. O’Connell, Section 5, 1914, and the FTC at 100, ANTITRUST (forthcoming Fall 2014). 

3

This is not to say that others have completely ignored Section 5’s legislative history. There were, in 

fact, several earlier articles that reviewed it generally. See, e.g., Marc Winerman, The Origins of the FTC: 

Concentration, Cooperation, Control, and Competition, 71 ANTITRUST L.J. 1 (2003); Neil W. Averitt, The Meaning 

of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 21 B.C. L. REV. 227, 229-

38 (1980); Gilbert Holland Montague, “Unfair Methods of Competition,” 25 YALE L.J. 20, 2-6, 51-96 (1915). But 

none of these earlier discussions sought, as this article does, to fit that legislative history into the kind of 

consumer welfare framework Robert Bork did in studying the legislative history of the Sherman Act. See infra 

pp 2-3 and note 4. 
Copyright © 2014 Washington Legal Foundation 2

mistaken. Just as Robert Bork found when he examined the legislative history of the 

Sherman Antitrust Act in his seminal article, Legislative Intent and the Policy of the Sherman 

Act,4the legislative history of Section 5 reveals it was intended to protect competition in 

order to promote consumer welfare, just as the Sherman Act was. 

Over more than five months of debate on the floors of the House and Senate during 

the spring and summer of 1914, Section 5’s proponents emphasized that their purpose in 

outlawing unfair methods of competition was to protect the public generally from the harms 

that flow from monopoly power, rather than to protect smaller competitors from larger, 

more efficient rivals. In response to objections that the term “unfair methods of 

competition” was too vague, they proposed a test for unfair competition similar to what 

Judge Richard Posner has urged be applied to single-firm conduct under Section 2 of the 

Sherman Act.5 Like Judge Posner, they argued that a business practice should be found to be 

unfair only when it employs “methods which shut out competitors who, by reason of their 

efficiency, might otherwise be able to continue in business and prosper,” and should not be 

used to attack “a corporation which maintains its position solely through superior 

efficiency.”6

 

4

See Robert H. Bork, Legislative Intent and the Policy of the Sherman Act, 9 J.L. & ECON. 7 (1966). In his 

article, Professor Bork showed that Congress intended the courts to apply a consumer welfare standard in 

interpreting the Sherman Act. Under this standard, Bork argued that the courts were required “to distinguish 

between agreements or activities that increase wealth through efficiency and those that decrease it through 

restriction of output” and that only the latter could violate the Act’s broad prohibitions of “restraint of trade” 

and “monopolization.” Id. at 9, 16. Just over a decade later, the Supreme Court, in Reiter v. Sonotone Corp., 

442 U.S. 330, 343 (1979), accepted Bork’s reading of the legislative history, agreeing that the Sherman Act was 

a “consumer welfare prescription.” That insight has helped shape antitrust policy ever since.

5

See Richard A. Posner, ANTITRUST LAW 194-95 (2d ed. 2001) (arguing that a practice should not be 

found to violate the antitrust laws unless it “is likely in the circumstances to exclude from the defendant’s 

market an equally or more efficient competitor”).

6

See Memorandum from George Rublee for President Woodrow Wilson Concerning Section 5 of the 

Bill to Create a Federal Trade Commission 3 (July 10, 1914) (unpublished memorandum) (on file with the 

Washington, D.C. office of Hughes Hubbard & Reed LLP). See also 51 CONG. REC. 12,146 (1914) (Remarks of Sen. 
Copyright © 2014 Washington Legal Foundation 3

To avoid confusion at the outset, it should be made clear that this WORKING PAPER uses 

the term “consumer welfare” in the same sense that Judge Bork did in his article on the 

legislative intent behind the Sherman Act. As Kenneth Heyer has explained in an article 

forthcoming in the Journal of Law and Economics, Bork treated “consumer welfare” as 

meaning “total welfare, which is . . . equivalent to consumer plus producer surplus and 

economic efficiency.”7 

As Judge Bork found in the case of the Sherman Act, the legislative history shows that 

the Congress that enacted Section 5 valued competition because of its contribution to 

overall social welfare, not because of its distributional effects in shifting surplus from 

producers to consumers. The proponents of Section 5 assured their colleagues that Section 

5 would not give the FTC authority to condemn competition on the basis of a firm’s greater 

efficiency as unfair, even if it resulted in driving other less efficient rivals from the market, 

leaving a single firm with a monopoly. Nowhere did they suggest that this outcome should 

be condemned because some of the resulting surplus might flow to producers, rather than 

consumers.

The legislative history also shows that Congress did not intend, by proscribing unfair 

methods of competition, to give the Commission authority to regulate a firm’s efforts to 

exploit its power once it had obtained a monopoly, as the FTC mistakenly did in its 2008 

action against N-Data.

8

 Section 5 was intended to give the FTC only the power to regulate 

 

Henry Hollis), reprinted in THE LEGISLATIVE HISTORY OF THE FEDERAL ANTITRUST LAWS AND RELATED STATUTES 4141 (Earl W. 

Kintner ed., 1982).

7

Kenneth Heyer, Consumer Welfare and the Legacy of Robert Bork, 57 J.L. & ECON. (forthcoming 2014, 

issue no. 3) (manuscript at 2) (available at awards.concurrences.com/IMG/pdf/heyer_consumer_welfare.pdf). 

See also Gregory J. Werden, Antitrust’s Rule of Reason: Only Competition Matters, 79 ANTITRUST L.J. 713, 719 

(2014).

8

See Negotiated Data Solutions LLC, FTC Docket C-4234, 2008 FTC Lexis 119 (Complaint) (Sept. 22, 

2008), available at http://www.ftc.gov/sites/default/files/documents/cases/2008/01/080122complaint.pdf.
Copyright © 2014 Washington Legal Foundation 4

exclusionary conduct that might otherwise result in a monopoly, not to regulate exploitative 

conduct once a firm had gained a monopoly. As Woodrow Wilson’s key advisor on antitrust 

policy, Louis Brandeis, phrased it, the goal was “to regulate competition, instead of 

monopoly.”9

With this introduction, the paper turns next to a brief overview of the legislative 

history of the Federal Trade Commission Act generally, and Section 5 in particular. It will 

then examine the legislative history in more detail, focusing in turn on each of the three 

principles governing Section 5 enforcement that emerge from that history:

 First, Section 5 gives the FTC authority only to outlaw exclusionary practices, not 

exploitative practices.

 Second, the purpose of Section 5 is to protect competition, not less efficient 

competitors.

 Third, a business practice may be found to be an unfair method of competition 

only when it employs “methods which shut out competitors who, by reason of 

their efficiency, might otherwise be able to continue in business and prosper.”10

The paper’s final section will briefly review the case law interpreting Section 5. It will 

show that nothing in that case law should prevent the Commission and the courts from 

applying these three guiding principles in order to construe Section 5 in a manner consistent 

with its legislative purpose.

I. AN OVERVIEW OF THE LEGISLATIVE HISTORY OF THE FEDERAL 

TRADE COMMISSION ACT

By 1914, when Woodrow Wilson asked Congress to enact legislation to reform the 

antitrust laws as part of his New Freedom program, the idea of creating a new 

 

9

See Sidney M. Milkis, THEODORE ROOSEVELT, THE PROGRESSIVE PARTY, AND THE TRANSFORMATION OF AMERICAN 

DEMOCRACY 204 (2009).

10See Rublee, supra note 6, at 3. See also 51 CONG. REC. 12,146 (1914) (Remarks of Sen. Henry Hollis), 

reprinted in Kintner, supra note 6, at 4141. 
Copyright © 2014 Washington Legal Foundation 5

administrative agency to assist in enforcing the antitrust laws had been under discussion for 

more than a decade. Theodore Roosevelt, despite his reputation as a trustbuster, never 

liked the Sherman Act. In his very first Message to Congress in December 1901, Roosevelt 

argued that “combination and concentration should be, not prohibited, but supervised and 

within reasonable limits controlled.”11 Two years later, in 1903, at his urging, Congress 

established a Bureau of Commerce within its newly created Department of Commerce to 

collect information about the practices of large corporations. Roosevelt hoped that the 

Bureau of Commerce could use the information to persuade companies to comply with the 

antitrust laws and avoid government enforcement actions.12

Roosevelt continued to believe, however, that the federal government should have 

greater power to regulate the conduct of large companies. Thus, in his final Message to 

Congress in December 1907, Roosevelt urged Congress to amend the Sherman Act so as “to 

forbid only the kind of combination which does harm to the general public,” and to give “a 

grant of supervisory power to the Government over these big concerns engaged in interstate 

business.”13 To accomplish this objective, Roosevelt asked Congress to enact a general 

federal incorporation law under which a new federal board or commission would determine 

whether the applicant for a federal charter stood in violation of the amended Sherman Act 

prior to granting a license, and would enforce compliance thereafter.

When a somewhat watered-down version of Roosevelt’s proposal was introduced in 

 

11Theodore Roosevelt, First Annual Message to Congress (Dec. 3, 1901), 

http://teachingamericanhistory.org/library/document/first-annual-message-to-congress-2/.

12Martin J. Sklar, THE CORPORATE RECONSTRUCTION OF AMERICAN CAPITALISM, 1890-1916: THE MARKET, THE LAW,

AND POLITICS 184 (1989).

13Theodore Roosevelt, Seventh Annual Message to Congress (Dec. 3, 1907), 

http://teachingamericanhistory.org/library/document/state-of-the-union-address-part-i-12/. 
Copyright © 2014 Washington Legal Foundation 6

Congress in March 1908, it met fierce opposition from those who feared it would give 

Roosevelt too much control over business generally.14 Faced with an “avalanche of 

criticism,”15 Roosevelt withdrew his support for the bill, which then quickly died in 

committee.

William Howard Taft succeeded Roosevelt as President in 1909 and immediately 

shifted direction. A former judge, Taft saw little value in trying to jawbone companies into 

complying with the law. He believed that it would be better to enforce the Sherman Act 

vigorously, leaving the courts to decide what was or was not unlawful.16 Taft agreed with 

Roosevelt, however, that the Sherman Act should not prohibit all restraints of trade, but only 

those that unreasonably harmed competition. But to achieve that objective, rather than ask 

Congress to amend the Act, Taft appointed justices to the Supreme Court who shared his 

view of how it should be interpreted. By 1911, when the Standard Oil case reached the 

Court,17 a majority of justices were Taft appointees. As a result, the Court ruled, over an 

angry dissent from Justice John Marshall Harlan, that the Act prohibited only unreasonable 

restraints, rather than all restraints as some earlier decisions had suggested.18

Despite being a victory for the government that resulted in dissolution of the 

country’s most notorious trust, Standard Oil dismayed many progressives, who feared that 

 

14Sklar, supra note 12, at 244 (quoting Amending the Anti-Trust Law, N.Y. TIMES, Mar. 24, 1908, at 1, 

http://query.nytimes.com/mem/archive-free/pdf?res=F50611FA345E13738DDDA80A94DC405B838DF1D3)

(objecting that the bill was “intended to enable President Roosevelt to accomplish by indirection what he very 

well knows he could not get by the express authorization of Congress, the power to regulate and control all 

corporation business of the country by a system of registration or license”).

15Id. at 253.

16William Kolasky, Theodore Roosevelt and William Howard Taft: Marching Toward Armageddon, 

ANTITRUST 97, Spring 2011, at 97, 103.

17Standard Oil Co. v. United States, 221 U.S. 1 (1911).

18See, e.g., United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290 (1897) (holding that the 

statute’s condemnation of ‘every contract . . . in restraint of trade’ encompassed all contracts of that nature, 

not simply those invalid as unreasonable under the common law).
Copyright © 2014 Washington Legal Foundation 7

its “rule of reason” would give conservative judges too much latitude in deciding what 

constituted an unreasonable restraint of trade.19 But it also worried the business 

community, which was concerned that the rule of reason would make it difficult to predict 

what practices would be found unlawful. These similar, but opposing concerns led to calls 

for legislative action from both sides. Five senators, described as “radical Democrats and 

Republican insurgents,” introduced bills to overrule Standard Oil legislatively by proscribing 

all contracts, combinations, and conspiracies in restraint of trade.20 A second group of three 

senators, led by Robert La Follette, introduced a bill that Louis Brandeis helped draft. They 

designed the bill to define more clearly what would constitute an unreasonable restraint of 

trade and to place the burden of showing that its conduct was reasonable on the 

defendant.

21

 A third group, led by Senator Francis Newlands, Chairman of the Committee on 

Interstate Commerce, sought to revive the idea of an interstate trade commission to which 

corporations could submit their proposed “trade agreements” for approval or disapproval.22

With these competing legislative proposals on the table, the election of 1912 became 

a national referendum on how business conduct should be regulated, with each of the three 

candidates advocating very different approaches.23 The incumbent President and 

Republican nominee, William Howard Taft, argued in favor of leaving the law unchanged and 

continuing to rely on judicial enforcement of the Sherman Act as interpreted by the Supreme 

Court in Standard Oil. The Progressive Party candidate, Theodore Roosevelt, renewed his 

 

19 William Kolasky, The Election of 1912: A Pivotal Moment in Antitrust History, ANTITRUST 82, Summer 

2010, at 82.

20Winerman, The Origins of the FTC, supra note 3, at 13.

21Kolasky, The Election of 1912, supra note 19, at 85. 

22SKLAR,supra note 12, at 290. 

23See generally Kolasky, The Election of 1912, supra note 19.
Copyright © 2014 Washington Legal Foundation 8

calls for accepting that modern economic conditions required large corporations and for the 

creation of an interstate trade commission, with powers similar to those of the Interstate 

Commerce Commission, to regulate the conduct of these large companies. Finally, the 

Democratic Candidate, Woodrow Wilson, advised by Louis Brandeis, advocated a third 

approach. He argued that instead of accepting that monopolies were inevitable and trying 

to regulate them as Roosevelt proposed, the government should seek “to regulate 

competition” and thereby prevent monopolies from forming. Wilson, therefore, advocated 

legislation that would define more clearly those practices which tend to destroy competition 

and that would create an administrative “sunshine” commission to expose those practices 

and help prevent them.24 With Taft and Roosevelt dividing the Republican vote, Wilson won 

the election decisively. Wilson took his victory as a mandate to pursue this third approach as 

part of his New Freedom legislative program.

After focusing in his first year on other parts of his New Freedom program, President 

Wilson, in his First Annual Address to Congress in December 1913, began his push for new 

legislation “to prevent private monopoly more effectually than it has yet been prevented.”25 

One month later, in an address to a joint session of Congress, Wilson outlined a two-part 

program similar to the one he had advocated during his 1912 campaign.26 First, he called for 

a “more explicit legislative definition of the policy and meaning of the existing antitrust law.” 

Second, he proposed “an interstate trade commission” to provide “the advice, the definite 

 

24Id. at 86.

25Woodrow Wilson, State of the Union Address (Dec. 2, 1913), reprinted at 51 CONG. REC. 75 (1913).

26Woodrow Wilson, Address Before a Joint Session of Congress on Additional Legislation for the 

Control of Trusts and Monopolies (Jan. 20, 1914), reprinted at 51 CONG. REC. 1962-64, 1978-79 (1914), and 

reprinted in Kintner, supra note 6, at 3746-49.
Copyright © 2014 Washington Legal Foundation 9

guidance and information which can be supplied by an administrative body.”27

President Wilson, at the time he delivered this address, appeared to contemplate 

that his proposed “administrative body” would serve principally to gather information and 

provide advice, but would not have any enforcement authority, and that enforcement of the 

antitrust laws, as clarified by his proposed legislation, would continue to be left to the Justice 

Department and the federal courts. This conception of the new commission’s authority was 

reflected in testimony Louis Brandeis gave on behalf of the Administration before the House 

Committee on Interstate Commerce in February.28 It was also reflected in the Interstate 

Trade Commission bill that emerged from that Committee in April, which the Committee 

chairman, James Covington, introduced on the floor of the House on April 14, 1914.29 

Section 10 of that bill authorized the Commission to conduct investigations “relating to any 

alleged violation of the antitrust Acts” but only at the direction of the President, the 

Attorney General, or either house of Congress. That section further authorized the 

Commission only to “report the facts” relating to the alleged violation and to offer 

“recommendations for readjustment of business in order that the corporation investigated 

may thereafter maintain its organization, management, and conduct of business in 

accordance with law.”30 It gave the Commission no enforcement power.

Brandeis, after testifying before the House Commerce Committee in February, 

returned to his private practice in Boston, leaving one of his colleagues, George Rublee, to 

 

27Id.

28See Bill to Create an Interstate Trade Commission: Hearing on H.R. 12120 Before the H. Comm. on 

Interstate and Foreign Commerce, 63d Cong. 101 (1914) (statement of Louis Brandeis) (“The most important 

function which this commission can exercise is to prevent wrongs and not prepare for the prosecution of 

wrongs.”).

29H.R. 15613, 63d Cong. § 10 (1914), reprinted in Kintner, supra note 6, at 3769. 

30Id. at § 15, reprinted in Kintner, supra note 6, at 3773.
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follow the progress of the trade commission bill, as well as its companion bill designed to 

define more clearly what conduct would violate the antitrust laws.31 The chairman of the 

House Committee on the Judiciary, Representative Henry Clayton, introduced this 

companion bill on the floor of the House on the same day as the trade commission bill. By 

April, Rublee had become disenchanted with the idea of trying to define more precisely 

through legislation the conduct that would violate the antitrust laws. Rublee explained in a 

memorandum he prepared for President Wilson in June that he had become convinced it 

would be “impossible to frame a set of definitions which embrace all unfair practices” and 

would “fit business of every sort in every part of this country.”32 He concluded that the 

better approach would be to give the new trade commission broad authority “to prevent 

corporations from using unfair methods of competition in commerce,” leaving it to the 

commission to determine what conduct met that test.33

 

31 See William Kolasky, George Rublee and the Origins of the Federal Trade Commission, ANTITRUST 106, 

Fall 2011, at 107; Thomas K. McCraw, PROPHETS OF REGULATION 122-23 (1984). Rublee’s central rule in 

formulating Section 5 and in persuading President Wilson to propose it was acknowledged by Senator 

Newlands, the chairman of the Senate Committee on Commerce who introduced the Federal Trade 

Commission bill on the floor, during the debate on the bill. See 51 CONG. REC. 11,537 (1914) (Remarks of Sen. 

Francis Newlands) (“It is true . . . that a suggestion was made with reference to including unfair competition by 

Mr. Stevens of the House, Mr. Rublee, and Mr. Brandeis. That matter was presented to me, as it was to other 

members of the committee of both parties. . . . It was presented to the President, and that was his view, and 

the matter was presented to the committee later on and was accepted.”), reprinted in Kintner, supra note 6, at 

4077.

32Rublee, supra note 6, at 7.

33President Wilson was also advised by Joseph Davies, who was then the Commissioner of 

Corporations and later became the first chair of the FTC. Davies shared Rublee’s and Brandeis’s view that the 

new commission should regulate competition, not monopoly. Elizabeth Kimball MacLean, Joseph E. Davies: The 

Wisconsin Idea and the Origins of the Federal Trade Commission, 6 THE JOURNAL OF THE GILDED AGE AND PROGRESSIVE 

ERA 248, 270 (2007) (“‘The whole purpose of [the FTC] legislation,’ Davies reminded Newlands and other 

colleagues, was to ‘destroy monopoly and to regulate competition.’”). Davies agreed with Rublee, but not 

Brandeis, that the commission should use its authority to protect consumers, not smaller competitors. Id. at 

272 (“Davies favored the consumer—thus his opposition to price fixing, which suppressed competition that 

lowered prices for the consumer. Brandeis favored the small entrepreneur, whether he provided lower prices 

or not.”). Like Rublee, Davies also “was convinced that the effort to define unfair practices through legislation 

was impractical. Given their ‘infinite variety,’ he knew it was ‘impossible to specify all that [might] be regarded 

as ‘unfair.’” Id. at 262.
Copyright © 2014 Washington Legal Foundation 11

Rublee took his idea to Congressman Raymond Stevens, a freshman Democrat he 

knew from New Hampshire and who sat on the House Commerce Committee. Stevens 

agreed to introduce a bill embodying Rublee’s new conception of the commission and to 

seek to have it substituted in committee for the Covington bill. Stevens’ bill renamed the 

proposed agency the “Federal Trade Commission,” and added a new Section 5 to prohibit 

“unfair and oppressive competition” and give the commission power to issue orders 

restraining “unfair methods of competition.”34 The committee quickly rejected Stevens’ 

substitute bill and reported out its original bill. Stevens then attempted to have his version 

substituted for the committee bill on the House floor, again without success.35 

Having failed in the House, Rublee and Stevens decided to approach President Wilson 

personally, with the help of a mutual friend, Norman Hapgood, who was the editor of 

Harper’s Weekly and a close friend of the President. With opposition to the Clayton bill 

growing, Wilson agreed in late May to meet with Rublee. Knowing that Wilson would likely 

not act without consulting Brandeis, Rublee asked Brandeis to join him for the meeting, 

along with Stevens and Senator Henry Hollis of New Hampshire. 

After Rublee outlined his proposal to Wilson, Brandeis surprised Rublee by 

supporting his proposal, even though he had earlier opposed giving the commission any 

enforcement authority. Despite Brandeis’ support, Wilson decided it was too late to so 

radically change the trade commission bill before it was voted on in the House. The 

president instead waited until the bill had passed the House on June 5 before calling Rublee 

and the others back to the White House to tell them that he intended to have Rublee’s 

 

34H.R. 15660, 63d Cong. (1914).

3551 CONG. REC. 9,059 (1914), reprinted in Kintner, supra note 6, at 3878-79.
Copyright © 2014 Washington Legal Foundation 12

provisions incorporated into a new bill in the Senate that would be introduced as a 

substitute for the House bill. At Wilson’s direction, the chairman of the Senate Interstate 

Commerce Committee, Senator Francis Newlands, introduced this substitute bill on June 

13.36 The new bill was modeled closely after the bill Representative Stevens had introduced 

in the House. Like that bill, it changed the name of the new commission to the Federal Trade 

Commission, increased its membership from three to five, and added a new Section 5 to give 

it broad enforcement powers. Adopting Stevens’ language, this new Section 5 provided that 

“unfair competition in commerce is hereby declared unlawful,” and empowered the 

Commission “to prevent corporations from using unfair methods of competition in 

commerce.” 

Debate on the new bill began on the Senate floor on June 25 and continued for 

nearly six weeks until the bill passed by a vote of 53 to 16, with 27 senators abstaining, on 

August 5. Over this period, the bill was debated on the floor for 26 full days, with the vast 

majority of this time being spent on Section 5’s grant of authority to the Commission to 

prohibit “unfair methods of competition.” Senator Charles Thomas, a Democrat from 

Colorado, set the tone for this debate on the opening day by attacking the “indefiniteness” 

of the term “unfair competition,” and declaring that Section 5 would give the FTC “the 

absolute power . . . of arbitrarily determining whether any act submitted to it is or is not 

unfair competition.”37 Senator James Reed, a Democrat from Missouri and perhaps the 

most persistent critic of Section 5, added that the bill would leave the FTC “without any 

guide of law . . . to determine what is fair and what is unfair,” thereby unconstitutionally 

 

36S. 4160, 63d Cong. (1914), reprinted in Kintner, supra note 6, at 3924.

3751 CONG. REC. 11,103 (1914), reprinted in Kintner, supra note 6, at 3947. 
Copyright © 2014 Washington Legal Foundation 13

delegating to the Commission the powers of Congress to legislate.38

After the first two weeks of this debate, George Rublee prepared a memorandum for 

President Wilson with “answer[s] to most, if not all, of the objections that have been raised 

to” Section 5.39 This memorandum, which remains unpublished, provides valuable insight 

into the intentions of the original authors of Section 5. Stating that “[t]he object of Section 5 

is to prevent the creation or continuance of monopoly through unfair methods,” the 

memorandum goes on to explain what Rublee understood the term “unfair methods of 

competition” to mean: “Fair competition is competition which is successful through superior 

efficiency. Competition is unfair when it resorts to methods which shut out competitors 

who, by reason of their efficiency, might otherwise be able to continue in business and 

prosper.”40 

Rublee’s statement of the purposes and meaning of Section 5 was later embraced by 

the proponents of the bill on the floor of both the Senate and House, who used his 

arguments—often verbatim—to rebut the concerns of Senator Reed and others that Section 

5 was too vague to be enforceable.41 As they expanded on these views over the course of 

 

38Id. at 11,114, reprinted in Kintner, supra note 6, at 3972.

39Letter from Franklin K. Lane, U.S. Sec’y of the Interior, to Woodrow Wilson, President of the United 

States, providing an introduction to and attaching George Rublee’s Memorandum Concerning Section 5 of the 

Bill to Create a Federal Trade Commission (July 10, 1914) (unpublished memorandum) (on file in the 

Washington, D.C. office of Hughes Hubbard & Reed LLP). For a more detailed account of Rublee’s role in 

guiding administration senators in their defense of Section 5, see Kolasky, The Election of 1912, supra note 19.

40Rublee, supra note 6, at 3. See also 51 CONG. REC. 12,146 (1914) (Remarks of Sen. Henry Hollis), 

reprinted in Kintner, supra note 6, at 1982 (repeating Rublee’s formulation of the distinction between fair and 

unfair competition nearly verbatim).

41In a series of interviews conducted from December 1950 to February 1951, Rublee explained that he 

“was very busy during all this time furnishing ammunition by explaining to the Administration Senators what 

this meant, why it was a good thing, why it was constitutional, and all that. [He] actually wrote speeches that 

were delivered by senators.” Reminiscences of George Rublee (series of interviews conducted from December 

1950 to February 1951), at 116 (available at Columbia University’s Rare Book & Manuscript Library in the 

Columbia Oral History Archives). Rublee sat in the visitors’ gallery during the debates, distributing his notes 

and speeches to the senators, and slipping them arguments to rebut the other senators’ views. Id. at 117 
Copyright © 2014 Washington Legal Foundation 14

that debate, the proponents were able to overcome the initial skepticism, if not outright 

opposition, that greeted the bill when it was first introduced, resulting in the bill’s ultimate 

passage in early September. Their arguments in support of the bill, therefore, provide the 

best evidence of the legislative intent behind Section 5.

II. THE PRINCIPLES CONGRESS INTENDED TO GOVERN THE COMMISSION’S 

ENFORCEMENT OF SECTION 5’s PROHIBITION OF UNFAIR METHODS OF 

COMPETITION

The debates on the floor of both the Senate and House reveal three main principles 

that Congress intended would govern the FTC’s exercise of its authority under Section 5 to 

prohibit unfair methods of competition. The first principle was that Section 5 would give the 

Commission authority only to regulate exclusionary practices that might lead to monopoly, 

not to regulate a firm’s efforts to exploit its monopoly power once acquired. The second 

principle was that Section 5 would give the FTC authority only to prohibit those unfair 

methods of competition that threaten to harm competition itself and thereby expose 

consumers to the evils of monopoly, and the agency’s authority could not be used to protect 

smaller, less efficient rivals. The third, which was a corollary of this second principle, was 

that the Commission could find that a business practice violated Section 5 only when it 

employed unfair “methods which shut out competitors who, by reason of their efficiency, 

might otherwise be able to continue in business and prosper,” and that it could not be used 

 

(“One speech I wrote, I had fifteen or twenty copies typewritten and distributed and I could see the distinctive 

covers which I had placed them in laying around on the tables.”). Rublee was so visible during the debates that 

Senator Reed questioned his role: “I asked [the senator] if he did not know a man named Rublee, who has been 

weeks here in Washington and has haunted the galleries and antechambers of the senate. He has been very 

active in the advocacy of this bill, and I wanted to learn what the Senator knows about the activities of Mr. 

Rublee . . . and who, if anybody, is paying Mr. Rublee.” 51 CONG. REC. 14,786-87 (1914), reprinted in Kintner, 

supra note 6, at 4702.
Copyright © 2014 Washington Legal Foundation 15

to attack “a corporation which maintains its position solely through superior efficiency.”42 

Each of these three controlling principles will now be examined in turn.

A. Section 5 Gives the Commission Authority to Only Regulate 

Competition, Not Monopoly

The first major theme that emerges from the legislative history is that Section 5 was 

designed to put into law President Wilson’s 1912 campaign pledge to regulate competition, 

not monopoly. Congress did not give the FTC the power to regulate a firm’s use of 

monopoly power to extract monopoly rents from its customers, however unfair or 

oppressive a firm’s conduct might be, but gave it the power to prevent firms from acquiring 

or maintaining monopoly power through exclusionary practices. 

This limitation was a natural result of the debate during the election of 1912 as to 

how business should be regulated.43 The Progressive Party, led by Theodore Roosevelt, saw 

some measure of monopoly power as inevitable in a modern industrial economy. The

Progressives sought, therefore, to give the government the power to regulate the exercise of 

that monopoly power which, in their view, could not be prevented. The Democratic Party, 

led by Woodrow Wilson and Louis Brandeis, argued to the contrary that large firms were not 

necessarily more efficient than small ones and that most monopolies were likely the result of 

exclusionary conduct. The Democrats urged, therefore, that the government should strive

to prevent monopolies from forming by seeking to regulate competition, rather than try to 

regulate monopolies once they had formed, as Roosevelt urged.

The reports of the House and Senate Committees on Interstate Commerce that 

 

42Rublee, supra note 6, at 4-5. See also 51 CONG. REC. 12,146 (1914) (Remarks of Sen. Henry Hollis), 

reprinted in Kintner, supra note 6, at 1982.

43See generally Kolasky, The Election of 1912, supra note 19.
Copyright © 2014 Washington Legal Foundation 16

accompanied the bills to create a new trade commission took great pains to make clear that 

these bills embodied the Democratic Party’s view and not that of the Progressive Party. 

Thus, the House report begins by stating that the purpose of its bill was “the preservation of 

proper competitive conditions in our great interstate commerce,” and that there was “no 

place in the bill” for “the establishment of a commission having powers of regulation or 

control of prices.”44 The Senate report was even more explicit: 

Some would found such a commission upon the theory that monopolistic 

industry is the ultimate result of economic evolution and that it should be so 

recognized and declared to be vested with a public interest and as such regulated 

by a commission. This contemplates even the regulation of prices. Others hold 

that private monopoly is intolerable . . . , but recognize that a commission is a 

necessary adjunct to the preservation of competition. . . . The commission which 

is proposed by your committee in the bill is founded upon the latter purpose and 

idea.45

Notwithstanding these clear statements of legislative purpose by both committees, 

several senators and representatives sought further assurances during the floor debates that 

the new commission would not have the power to regulate the conduct of firms with 

monopoly power, expressing a fear that such authority could dull efforts to prevent 

monopolies from forming in the first place. The first senator to raise the issue was Senator 

William Borah, an outspoken populist from Idaho who had spent much of his political career 

crusading for stronger antitrust enforcement.46 As soon as Senator Newlands introduced the 

Senate substitute with its new Section 5, Senator Borah rose to state: 

What I fear is that this bill can serve no other purpose than to dull the edge of our 

activities and our desire to destroy monopoly. We know that within the last few 

years there has been a distinct and aggressive movement in this country to legalize 

monopoly . . . . The people are told that they will be made safe and even happy . . . 

 

44H.R. REP. NO. 63-533, pt. 1, at 2 (1914), reprinted in Kintner, supra note 6, at 3757. 

45S. REP. NO. 63-597, at 10 (1914), reprinted in Kintner, supra note 6, at 3907.

46See Thurman Arnold, THE FOLKLORE OF CAPITALISM 217 (1937) (“Men like Senator Borah founded 

political careers on the continuance of such crusades, which were entirely futile but enormously picturesque.”).
Copyright © 2014 Washington Legal Foundation 17

by means of a commission or bureau appointed and sitting at Washington, whose 

functions it shall be to regulate these monopolies. It is argued that combinations 

with monopolistic powers . . . are inevitable, necessary, and that all they need is a 

little regulation.47

Two of the bill’s principal proponents, Senator Newlands, the Chairman of the 

Commerce Committee who introduced the bill in the Senate, and Senator Hollis, who had 

helped persuade President Wilson to add Section 5, responded that Senator Borah’s 

concerns were unwarranted. They assured the Senate that the commission would have no 

power to regulate a firm’s exercise of its monopoly power. 

Senator Hollis, responding to Senator Borah’s concerns, referred back to the fact that 

“[o]ne of the great issues in the last presidential campaign was whether the solution of the 

trust problem was to be found in the regulation of monopoly or in the regulation of 

competition.”48 He reminded Borah that the Democratic Party in that election had “declared 

itself for the abolition of monopoly and the regulation of competition,” rather than 

accepting monopolies as inevitable and attempting to regulate them as the Progressive Party 

had urged. At a later point in the debate when Senator Borah, still not persuaded, raised 

this point again, Senator Hollis suggested he read all three of the pending antitrust bills the 

Administration was proposing, saying that if he did so, he would “find that there is not one 

line or syllable in any one of them that countenances monopoly in any way” and that they 

were all “intended not to regulate monopoly, but to . . . prohibit those practices which will 

lead to and encourage it.”49

 

4751 CONG. REC. 11,233 (1914), reprinted in Kintner, supra note 6, at 4009–10. See also id. (Remarks of 

Sen. Borah) (“While I know it is not the purpose of the authors of the bill—I know the very opposite to be the 

object and purpose of the authors of the bill—a time is coming when this will be used as a buffer against 

prosecutions under the Sherman Act.”), reprinted in Kintner, supra note 6, at 4009.

48Id. at 12,146, reprinted in Kintner, supra note 6, at 4142.

49Id. at 12,732, reprinted in Kintner, supra note 6, at 4236.
Copyright © 2014 Washington Legal Foundation 18

Senator Newlands, both at the time and again later in the debate, likewise drew a 

sharp distinction between the type of commission the Progressive Party had proposed and 

that which his bill would create:

The commission which they [the Progressive Party] wanted was a commission 

which would recognize consolidation, which would recognize monopoly, but would 

regulate it even to the extent of regulating its prices.

. . . . 

Now, this kind of a commission is an entirely different commission. This 

commission is not to recognize consolidation, but to destroy it. It is not to 

recognize monopoly, but to destroy it. . . . Instead of regulating monopoly we are 

regulating unfair competition. . . . [This commission] is so organized as . . . [to] 

impair and destroy monopoly in the future in the embryo . . . .50

Senator Albert Cummins, a Republican from Iowa and the ranking minority member 

of the Commerce Committee, endorsed these descriptions of the limitations on the FTC’s 

authority under Section 5. Saying that he “was astonished to hear it said that this bill was 

intended or would have the effect of regulating monopoly instead of maintaining and 

preserving competition,”51 Cummins told the Senate:

I do not believe there is a single provision in any of the bills intended to encourage 

or protect monopoly, or that can by any possibility encourage or protect monopoly. 

The bill that we have before us is not a regulation of monopoly in any of its parts. It 

is not intended to permit monopoly to exist and then prescribe the terms or 

conditions upon which it may operate or do business. It is intended to destroy the 

monopolies that are now with us and to prevent the establishment of other 

monopolies.52 

Again referring back to the 1912 election, Senator Cummins assured the Senate that, while 

the Progressive Party “did propose to regulate monopoly,” he, as a member of the 

committee reporting out the bill, was “unalterably opposed to any such proposition,” and 

did not “want a commission imposed upon the industry of this country which recognizes a 

 

50Id. at 12,867, reprinted in Kintner, supra note 6, at 4342–43.

51Id. at 12,919, reprinted in Kintner, supra note 6, at 4373.

52Id. at 12,733, reprinted in Kintner, supra note 6, at 4237-38.
Copyright © 2014 Washington Legal Foundation 19

monopoly and attempts to check its ravages in that way.”53 

When the Senate’s substitute bill returned to the floor of the House after passing the 

Senate, Representative James Covington, who had introduced the original House bill, 

likewise assured his colleagues that the addition of Section 5 would not give the commission 

the power to regulate the pricing or output decisions of large firms:

The acceptance of section 5 of the present bill, conferring upon the Federal trade 

commission the power to deal with unfair methods of competition, in no wise 

[sic] interferes with the declaration made by me respecting the way in which the 

powers of the commission ought to be circumscribed. There is not now found 

within the extent of the well-defined doctrine of the substantive law recognized 

by the courts as “unfair methods of competition” any attempt to make terms 

with monopoly or . . . to regulate production or enforce by orders the 

maintenance of fixed prices.54

These excerpts from the Act’s legislative history illustrate how far from the legislative 

purpose of Section 5 the FTC strayed when, in 2008, it authorized a complaint against 

Negotiated Data Solutions LLC (“N-Data”) for allegedly violating Section 5 by engaging in 

unfair methods of competition in its enforcement of its patents against makers of equipment 

employing Ethernet, a widely used computer networking standard.55 In its complaint, the 

Commission alleged that N-Data had violated Section 5 by reneging on a commitment its 

predecessor company had made to an Ethernet standing-setting organization by demanding 

higher royalties for its patents than it had committed to charge at the time they were 

incorporated into the industry standard. Two commissioners dissented from the 

Commission’s action, with one of them writing that “[t]his case departs materially from the 

prior line [of FTC standard-setting ‘hold-up’ challenges], in that there is no allegation that [N-

 

53Id. at 4238.

54Id. at 14,927, reprinted in Kintner, supra note 6, at 4721.

55See Negotiated Data Solutions LLC, FTC Docket C-4234, 2008 FTC Lexis 119 (Complaint) (Sept. 22, 

2008), available at http://www.ftc.gov/sites/default/files/documents/cases/2008/01/080122complaint.pdf.
Copyright © 2014 Washington Legal Foundation 20

Data] engaged in improper or exclusionary conduct to induce” the Ethernet standard-setting 

organization to include its technology, which would have required proof that its predecessor 

intended to renege on its commitment at the time it made it.56

The three commissioners voting to authorize the complaint did not disagree. 

Instead, they argued that a complaint was justified because N-Data, by reneging on its 

predecessor’s commitment, had “engaged in conduct that was both oppressive and coercive 

when it engaged in efforts to exploit licensees that were locked into a technology by the 

adoption of a standard,”57 and that “consumers would be forced to pay higher prices” 

because of its conduct.58 This rationale for the Commission’s action shows that however 

“contrary to good morals” N-Data’s conduct may have been, it was not conduct designed to 

exclude any rival from the market—because there were none—but was simply an effort to 

more fully exploit a monopoly its predecessor had acquired lawfully. Just as Theodore 

Roosevelt might have wished, the Commission was therefore seeking to regulate the pricing 

behavior of a lawful monopolist, not to protect competition. But that was a power the

proponents of Section 5 had repeatedly assured their Senate and House colleagues the 

Federal Trade Commission would not have.

B. Section 5 Protects Competition, Not Competitors

The second governing principle that emerges from the legislative history is that by 

giving the FTC authority in Section 5 to prohibit unfair methods of competition, Congress 

 

56See id. (Dissenting Statement of Chairman Majoras), available at

http://www.ftc.gov/sites/default/files/documents/cases/2008/01/080122majoras.pdf.

57See id. (Statement of the Commission), available at 

http://www.ftc.gov/sites/default/files/documents/cases/2008/01/080122statement.pdf.

58See Press Release, Fed. Trade Comm’n, FTC Challenges Patent Holder’s Refusal to Meet Commitment 

to License Patents Covering ‘Ethernet’ Standard Used in Virtually All Personal Computers in U.S. (Jan. 23, 2008) 

(transcript available at http://www.ftc.gov/news-events/press-releases/2008/01/ftc-challenges-patentholders-refusal-meet-commitment-license).
Copyright © 2014 Washington Legal Foundation 21

sought to protect the public interest in competition, not to protect weaker competitors for 

their own sake. Section 5, therefore, like the Sherman Act, can be fairly described as a 

“consumer welfare prescription.”59 

When Senator Newlands introduced the Senate substitute for the House bill on the 

floor, some senators raised serious concerns as to its new Section 5 declaring “unfair 

competition” unlawful and giving the new commission authority to prohibit “unfair methods 

of competition.” Led again by Senator Borah, a number of senators objected that the bill 

would leave the FTC free “to determine whether or not that competition was fair or unfair,” 

without any legal standard to guide judicial review of whether it had acted beyond its 

authority.60 The new section would, Senator Reed declared, “confer upon five men a power 

more arbitrary than that possessed by any king or potentate on earth.”61

Senator Borah and others also saw a potential conflict between the policy of the 

Sherman Act and that of the new bill. As Borah explained, 

The Sherman law bids the business of the country to compete. It was built upon 

the theory that competition is the life of trade. It punishes those who 

unnecessarily restrain trade or destroy competition. . . . We have given business 

to understand that we were not concerned with the severity of competition, but 

only with its preservation, however strong.62

He then contrasted this policy in favor of free and open competition with that of a 

law that would regulate that competition: 

 

59Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979).

6051 CONG. REC. 11,232 (1914) (Remarks of Sen. Borah), reprinted in Kintner, supra note 6, at 4007.

61Id. at 11,113, reprinted in Kintner, supra note 6, at 3969.

62Id. at 11,186, reprinted in Kintner, supra note 6, at 3989. See also id. at 12,208 (Remarks of Sen. 

McCumber) (“There are two vices in section 5, vices that must not only seriously affect the producer and seller 

of commodities but more disastrously affect the consumer. First, this section destroys the main purpose of the 

antitrust law. Second, it destroys the incentive for any new and untried project by surrounding the individual 

and hemming him in between two conflicting laws—one law that enforces full competition and another that ...

punishes him if his competition is too ardent or too strong.”), reprinted in Kintner, supra note 6, at 4151.
Copyright © 2014 Washington Legal Foundation 22

[W]hile the Sherman antitrust law bids the business world to compete 

. . . we announce another rule here in another law, saying that while we 

recognize competition as necessary we insist that it shall not be unfair 

competition. We propose to have competition, but to regulate 

competition which means to oversee the whole business world and 

ultimately and logically to tolerate monopoly.63

To illustrate his point, Senator Borah cited the then-recent International 

Harvester case,64 where defendants had argued that the alleged restraints of trade 

had been “made for the purpose of getting rid of ruthless, unfair, overreaching 

competition.”65 He maintained that, while the defendants may have viewed the 

competition as unfair, it had proven to be “of unquestionable benefit” to the farmers 

who paid the lower price, and who suffered “when the severe competition ended 

[and] the price was ultimately raised.”66 

Several days later, to further illustrate his concern, Senator Borah cited a 

letter he had received “from a gentleman who is in favor of a trade commission 

which should have power to fix prices.”67 Using the letter as a foil, he continued:

That undoubtedly would be a satisfactory proposition to the small 

competitor if his business was in a failing condition; but how about the 

consumers throughout the country? Would the commission say that 

that was unfair competition—that because a large business could afford 

. . . to sell at the lower price it was unfair for them . . . simply because 

smaller concerns could not afford to sell for that price?68

A number of other senators expressed similar concerns over the course of the ensuing 

 

63Id. at 11,186, reprinted in Kintner, supra note 6, at 3989.

64See State ex rel. Major v. International Harvester Co. of America, 237 Mo. 369, 141 S.W. 672 (1911), 

aff’d, 234 U.S. 199 (1914).

6551 CONG. REC. 11,187 (1914), reprinted in Kintner, supra note 6, at 3992.

66Id. at 11,232, reprinted in Kintner, supra note 6, at 4007.

67Id. at 11,601, reprinted in Kintner, supra note 6, at 4100.

68Id.
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debate.69

In response to these concerns, the proponents of Section 5 emphasized throughout 

the debate that it would give the new commission power to prohibit a practice as an “unfair 

method of competition” only if it was likely to cause harm to the public at large, not just to a 

competitor. Thus, Senator Cummins, who was the first to address Senator Borah’s concerns, 

assured the Senate that Section 5 was concerned “not merely with unfairness to the rival or 

competitor,” but instead that “the unfairness must be tinctured with unfairness to the 

public.”

70

 Expanding on this point, he explained:

We are not simply trying to protect one man against another; we are trying to 

protect the people of the United States, and, of course there must be in the 

imposture or in the vicious practice or method something that has a tendency to 

affect the people of the country or be injurious to their welfare.71

Senator Cummins assured Senator Borah that Section 5 would not condemn aggressive price 

competition just because it discomfited a rival. “No sane, sensible man,” he argued, “ever 

suggested that mere underselling constitutes unfair competition.”72 Instead, Section 5 

 

69See, e.g., id. at 12,218 (Remarks of Sen. McCumber) (“He may take means that I consider unfair . . . , 

and he may drive down the price of the commodity that we are both selling, . . . and suppose he has not 

destroyed me entirely but has merely injured me[,] . . . but [that] I am still continuing in business. Can he be 

indicted for unfair practices so long as I am keeping alive and keeping up a competition, when the result of that 

competition is for the benefit of the purchasing public which buys our commodities? . . . If that is the case, then 

I think we are stifling competition, and in the end are doing a great injury to the country.”), reprinted in Kintner, 

supra note 6, at 4172; id. at 12,221 (Remarks of Sen. Frank Brandegee) (“[R]epresentatives of both the large 

and small coal operators . . . were complaining of [ ] cutthroat competition. . . . They said that . . . if they were 

allowed to have a trade commission which would have authority to set the seal of approval of this government 

upon an agreement that those otherwise competing coal miners and coal companies might make with each 

other to stop this wasteful competition, to fix the price of coal higher, it would result in a great economic 

operation of their coal properties.”), reprinted in Kintner, supra note 6, at 4178. 

70Id. at 11,105, reprinted in Kintner, supra note 6, at 3952. See also id. at 13,304 (Remarks of Sen. 

McCumber) (“[T]here are a great many practices which might be declared to be unfair as between two 

competitors, the result of which is beneficial to the public, and it only ceases to be beneficial to the public 

when the effect of the competition is such that it destroys one of the competitors and thereby creates a 

monopoly.”), reprinted in Kintner, supra note 6, at 4655. 

71Id. at 11,105, reprinted in Kintner, supra note 6, at 3952

72Id. at 12,815, reprinted in Kintner, supra note 6, at 4315.
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would reach only those “practices indulged in for the purpose of driving anybody out of 

business or destroying his trade,”73 and that were “inconsistent with or repugnant to the 

continuance of competition as a force in the business life of the country.”74 

Senator Hollis, another proponent of the bill who had helped persuade President 

Wilson to add Section 5, agreed. In successfully resisting an amendment designed to define 

what constituted an unfair method of competition, he argued that the amendment would 

have meant that, “[i]f you undertook to undersell him honestly or to give better service, you 

would come under the prohibition of the amendment.”75

Other supporters of the bill likewise assured the Senate that Section 5 would not 

interfere with price competition that resulted in lower prices to consumers, but only those 

unfair methods of competition that were likely to lead ultimately to consumers paying 

higher prices. Senator Newlands, for example, said that he assumed that the commission 

would act only when it felt that “the matter is of sufficient importance, both between the 

parties and with reference to the public interest, to call the parties before them and hav[e] a 

hearing.”76 Senator Henry Lippitt of Rhode Island likewise emphasized that, “when you 

come to the question of what is ‘unfair competition,’ such unfair competition must involve 

an element of unfairness to the public.”77 For competition to be unfair, he continued, it 

must be “because in some way it will ultimately result in higher prices to [the public], but if 

 

73Id. at 13,046, reprinted in Kintner, supra note 6, at 4464.

74Id. at 13,051, reprinted in Kintner, supra note 6, at 4475.

75Id. at 13,313, reprinted in Kintner, supra note 6, at 4669. Several other senators echoed these views. 

See, e.g., id. at 13,101 (Remarks of Sen. Porter McCumber) (“I further agree that the definition ought to be such 

as will exclude all the ordinary efforts of competition except those which are directed to the destruction of 

competition in some way and at some particular point.”), reprinted in Kintner, supra note 6, at 4510. 

76Id. at 11,109, reprinted in Kintner, supra note 6, at 3960.

77Id. at 11,081, reprinted in Kintner, supra note 6, at 3952.
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the competition results in lower prices to the public, it is fair to them.”78

Other senators continued to be concerned, however, that this public interest 

requirement did not appear in the language of the statute itself. Senator George Sutherland, 

a Republican from Utah and later Supreme Court Justice, said that while he found comfort in 

Senator Cummins’ remarks, he still would not be able to support the bill when it came to a 

vote in the Senate because he did not read its language as imposing such a requirement:

The Senator from Iowa [Cummins] who, I may say, of those who have stood 

sponsors for this legislation is, in my judgment, the only one who has measurably 

put coherence into what I regard as a hopelessly incoherent proposition, says [that 

unfair competition] “is that competition which is resorted to for the purpose of 

destroying competition, of eliminating a competitor, and of introducing 

monopoly. . . . The unfairness must be tinctured with unfairness to the public, not 

merely with unfairness to the rival or competitor. . . .” That is a coherent statement, 

although I do not believe it to be a precise limitation of what unfair competition will 

include.79

To satisfy those who shared Senator Sutherland’s concerns, when the Senate bill 

reached conference, the committee added an express public interest requirement to Section 

5. Their amendment read as follows:

Whenever the commission shall have reason to believe that any such person, 

partnership, or corporation has been or is using any unfair method of 

competition in commerce, and it shall appear to the commission that a 

proceeding by it in respect thereof would be to the interest of the public, it shall 

issue . . . a complaint stating its charges in that respect . . . .80

Representative Covington, who had chaired the conference committee, explained 

when he introduced the conference substitute in the House that the purpose of this 

amendment was to ensure that Section 5 would give the FTC authority to prohibit only those 

 

78Id. at 11,106, reprinted in Kintner, supra note 6, at 3953.

79Id. at 12,981, reprinted in Kintner, supra note 6, at 4415. See also id. at 11,081 (Remarks of Sen. 

McCumber) (“I confess I cannot agree with the Senator from Iowa [Mr. Cummins] that the term here used 

would be applicable only to those cases in which the public itself might be interested.”), reprinted in Kintner, 

supra note 6, at 3959.

80H.R. REP. NO. 63-1142, at 3 (1914), reprinted in Kintner, supra note 6, at 4682 (emphasis added). 

Senator Cummins, it should be noted, was a member of the conference committee.
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unfair methods of competition that were “detrimental to the public” and had the “potential 

for restraint of trade or monopoly.”81 He continued:

As the bill passed the Senate there was not, however, any limitation in section 5, 

relating to unfair competition, directing the trade commission to deal with cases only 

where a public interest is involved, so the conferees agreed to insert a provision that 

the commission shall act—“if it shall appear to the commission that a proceeding by 

it in respect thereof would be to the interest of the public.” That prevents the 

commission from becoming a clearing house to settle the everyday quarrels of 

competitors, free from detriment to the public, which should be adjusted through 

the ordinary processes of the courts.82 

Another member of the conference committee, Representative Frederick Stevens of 

Minnesota, offered further insight into the committee’s reasoning. It was, he said, “a 

recognized fact that there may be many controversies between competitors over the 

unfairness or fairness of methods of competition with which the public can have no 

concerns.” 83 “In such cases,” Representative Stevens argued, “competitors properly ought 

to be left to their ordinary legal remedies through the courts.” If, on the other hand, “the 

general purpose and the result of it will be to the detriment of the public by eliminating 

competition which in the public interest ought to exist . . . , then it is fraud against the public 

and ought to be repressed.”84

Several of the senators who had expressed concerns about the vagueness of the 

term “unfair methods of competition” had insisted for this reason that its enforcement by 

the new commission should be subject to strict judicial review.85 In order to secure its 

 

8151 CONG. REC. 14,931 (1914), reprinted in Kintner, supra note 6, at 4732

82Id. at 14,930, reprinted in Kintner, supra note 6, at 4729.

83Id.

84Id. at 14,937, reprinted in Kintner, supra note 6, at 4744.

85See, e.g., id. at 12,874 (Remarks of Sen. Atlee Pomerene) (“If we cannot define [unfair competition], I 

want the courts to define it. I do not want it to be left to the single judgment of the commission itself.”),

reprinted in Kintner, supra note 6, at 4355; id. at 14,793 (Remarks of Sen. Reed) (“In closing, I may say that the 
Copyright © 2014 Washington Legal Foundation 27

passage, the conference committee therefore also amended Section 5 to give any party 

against whom the Commission issued a cease-and-desist order a right to seek judicial review 

of that order by one of the circuit courts of appeal.86 This amendment enabled the Supreme 

Court, in the first FTC case to come before it, FTC v. Gratz, to hold that, “[i]t is for the courts, 

not the commission, ultimately to determine as a matter of law what [the words ‘unfair 

method of competition’] include.”87

With these changes to its language, the Federal Trade Commission Act passed both 

the House and Senate by overwhelming margins.88 As its legislative history shows, 

clarification that Section 5’s purpose was to protect competition, not competitors—and 

thereby promote consumer welfare—was critical to the Act’s passage. Like the Sherman 

Act, Section 5 is, therefore, “a consumer welfare prescription.”89

C. The Enforcement of Section 5 Requires a Rule-of-Reason Analysis in

which the Ultimate Question Is Whether a Practice May Exclude 

Equally Efficient Competitors

A requirement that the public interest in competition must be harmed still left open 

the question of how the new commission was to determine whether an allegedly unfair 

method of competition met that test. Congress devoted much of the remainder of the 

debate to this issue. Three main points emerged from this discussion. The first was that 

whether a method of competition was fair or unfair should depend on whether it was likely 

 

conference report improves the Senate bill. The court review is more carefully safeguarded.”), reprinted in 

Kintner, supra note 6, at 4715.

86See H.R. REP. NO. 63-1142, at 4 (1914), reprinted in Kintner, supra note 6, at 4683.

87253 U.S. 421, 427 (1920).

88The Act passed the Senate by a vote of 43 to 5. 51 CONG. REC. 14,802 (1914), reprinted in Kintner, 

supra note 6, at 4716. The Act passed the House by voice vote without the yeas and nays being taken. Id. at 

14,943, reprinted in Kintner, supra note 6, at 4756.

89Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979).
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to exclude equally efficient competitors. The second point was that the new commission 

and the courts would need to rely on a rule of reason similar to that which the courts used to 

enforce the Sherman Act in determining whether a method of competition was fair or unfair 

in the circumstances of each particular case. The third point was that Section 5 would allow 

the FTC to prohibit incipient practices that might ultimately lead to a loss of competition 

before they had matured into a full-blown Sherman Act violation, but not to prohibit 

practices that did not have that potential. These three points will now be examined in detail. 

1. The ultimate test of whether a practice is a fair or unfair method of 

competition is whether it is likely to exclude equally efficient 

competitors from the market

Many of those who have examined the legislative history of Section 5 have come 

away with the impression that it provides little guidance as to how the Federal Trade 

Commission should apply its authority to prohibit unfair methods of competition.90 It may 

be true that the debate on the floor of the Senate was often confused, with different 

senators at different points in the debate offering what seemed to be conflicting 

understandings of what the term meant. A close reading of the legislative history reveals, 

however, that by the end of the debate there was general agreement that the new 

commission was not intended to be a general arbiter of business morals, but that its focus 

should instead be on whether a practice was likely to harm competition by excluding equally 

efficient competitors, thereby allowing the respondent to then raise prices to the detriment 

of consumers. 

A major source of the confusion over the scope of the FTC’s authority stems from the 

comments of the bill’s chief sponsor in the Senate, Senator Francis Newlands. When he first 

 

90See supra p. 1 and note 3. 
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introduced the Senate substitute for the House bill, Senator Newlands—who had played no 

role in its drafting—described Section 5 in a way that made it sound as if the new 

commission’s job would be to police business morals. “[I]t would be utterly impossible,” he 

announced, “for Congress to define the numerous practices which constitute unfair 

competition and which are against good morals in trade and that tend to give competitors 

unfair advantage and dishonest advantage.”91 Newlands continued to make similar 

statements throughout much of the ensuing debate.92 

Senator Newlands’ suggestion that Section 5 would outlaw business practices that 

were “against good morals” triggered a wave of protests from others in the Senate, 

sometimes bordering on ridicule. Senator Porter McCumber of North Dakota, for example, 

asked Newlands “whether [he] contemplate[d] that the Government of the United States is 

to go into the business of controlling the commercial morals of every individual in the 

country . . . .”93

The other proponents of Section 5 quickly distanced themselves from Senator 

Newlands’ remarks. On the floor of the Senate, they sought to assure their fellow senators 

that policing business morals was not the purpose of Section 5 through statements like this 

one from Senator Cummins: 

One Senator has gone so far as to say that the words “unfair competition” would 

leave a court at liberty to denounce any conduct which, in the opinion of the court, 

 

9151 CONG. REC. 11,084 (1914), reprinted in Kintner, supra note 6, at 3936.

92See, e.g., id. at 11,112 (Remarks of Sen. Newlands) (“[T]he question is what unfair competition 

covers. It covers every practice and method between competitors upon the part of one against the other that 

is against public morals . . . or is an offense for which a remedy lies either at law or in equity.”), reprinted in 

Kintner, supra note 6, at 3968; id. at 12,980 (Remarks of Sen. Newlands) (“The Senator objects to the term 

‘public morals’ or ‘good morals’ as a test. I think it is a very good test. I think there are certain practices that 

shock the universal conscience of mankind, and the general judgment upon the facts themselves would be that 

such practices are unfair.”), reprinted in Kintner, supra note 6, at 4414.

93Id. at 11,108, reprinted in Kintner, supra note 6, at 3959. 
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was unethical or un-Christian or unneighbor like. I feel sure that a review of the 

matters I have already brought to the attention of the Senate will disabuse the mind 

of any candid person of that view.94 

In private they were even more derogatory. Louis Brandeis, for one, described Newlands as 

“the despair of mankind,” attributing “his shortcomings to senility.”95 The other proponents 

argued that the fairness of a business practice should be understood instead in economic 

terms and that determining whether it was fair or unfair would require an examination of 

both its purposes and its likely effects on competition. Thus, Senator Hollis explained that, 

“[t]he regulation of competition means the prevention of competition that destroys 

competition for the purpose of creating a monopoly, and so is harmful to the public—the 

prevention, in short, of unfair competition.”96 Senator Cummins agreed, arguing that the 

term referred to “those methods which have not for their object the profit of the person 

who practices them so much as the destruction of the competitor against whom the 

methods are used.”97 

In order to counter concerns stimulated by Senator Newlands’ opening remarks that 

the language of Section 5 was too vague and would give the new commission virtually 

unbridled authority over business conduct, the bill’s other proponents also argued that the 

 

94Id. at 12,913, reprinted in Kintner, supra note 6, at 4360.

95Winerman, The Origins of the FTC, supra note 3, at 78 n.473 (internal quotation marks and citation 

omitted).

9651 CONG. REC. 12,146 (1914) (Remarks of Sen. Hollis), reprinted in Kintner, supra note 6, at 4142. 

Several other proponents of Section 5 echoed Senator Hollis’ view that to be viewed as unfair a practice must 

have as its objective the destruction of competition. See, e.g., id. at. 11,104 (Remarks of Sen. Cummins)

(“Unfair competition is the pursuit of that practice which destroys competition and establishes monopoly.”), 

reprinted in Kintner, supra note 6, at 3950; id. at 12,150 (Remarks of Sen. McCumber) (“No competition should 

be covered by this bill except that competition which is intended in the end to create a monopoly and destroy 

competition.”), reprinted in Kintner, supra note 6, at 4152; id. at 12,213 (Remarks of Sen. Newlands) (“I will ask 

the Senator, if one of these corporations was cutting the price with a view to destroying its competitor, and 

with a view to afterwards raising the price to a high monopolistic price, whether he would not regard that a 

method that should be condemned by law?”), reprinted in Kintner, supra note 6, at 4161. 

97Id. at 11,389, reprinted in Kintner, supra note 6, at 4041.
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term “unfair methods of competition” had a well-understood meaning in the business 

community.98 To support this argument, they pointed to cases in both the federal and state 

courts in which the term had been used to describe conduct that violated the federal or 

state antitrust laws, often quoting at length from those decisions.99 Several also pointed to 

an article by Professor William S. Stevens of Columbia University, in which he had identified 

eleven types of business practices that the courts had characterized as unfair methods of 

competition.100 The practices he listed included various forms of predatory pricing, such as 

local price cutting, “fighting ships,” and “fighting brands.” They also included various forms 

of exclusionary conduct, such as tying, exclusive dealing, boycotts, rebates, and preferential 

contracts. 

From these eleven practices, Professor Stevens had distilled a definition of fair 

competition, which several proponents quoted approvingly during the debates: 

Fair competition in an economic sense signifies a competition of economic or 

productive efficiency. On economic grounds an organization is entitled to remain 

in business so long and only so long as its production and selling costs enable it to 

hold its own in a free and open market. As the production and selling efficiency 

of competitors increase, marginal concerns which are unable to keep pace will 

gradually lose their market and ultimately discontinue business. But in such an 

 

98See, e.g., id. at 11,189 (Remarks of Sen. Lewis) (“[T]he expression ‘unfair competition,’ as now 

incorporated in the bill, is not a new phrase. It is not untried, and in the processes of business is not an 

experimental phraseology, but is a mere adaptation of expressions from the decisions of the courts which have 

come down to us as expressive of certain conduct.”), reprinted in Kintner, supra note 6, at 3996; id. at 11,228 

(Remarks of Sen. Robinson) (“Not only has the term ‘unfair competition’ a meaning fairly well-fixed in law and 

in economics, but it is also easily understood by the average business man.”), reprinted in Kintner, supra note 6,

at 4003. 

99See, e.g., id. at 11,107 (Remarks of Sen. Robinson) (“The words ‘unfair competition’ have received 

definition by the courts in quite a number of cases.”), reprinted in Kintner, supra note 6, at 3956; id. at 11,107 

(Sen. Robinson quoting T.B. Dunn Co. v. Trix Manufacturing) (“The term ‘unfair competition in trade’ includes 

the simulation by defendant of the packages of plaintiff, ... The court will only interfere to protect the plaintiff 

and the public, and for the suppression of unfair and dishonest competition, when ‘the resemblance is such 

that it is calculated to deceive, and does in fact deceive, the ordinary buyer...”), reprinted in Kintner, supra note 

6, at 3957. 

100See, e.g., id. at 11,230 (Remarks of Sen. Joe T. Robinson), reprinted in Kintner, supra note 6, at 4003 

(quoting William S. Stevens, UNFAIR COMPETITION–A STUDY OF CERTAIN PRACTICES (1914).
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elimination there is nothing not economically fair to all concerned. If all have an 

equal chance to survive, it is economically proper that those failing through lack 

of efficiency should be destroyed. The community is entitled to the most 

efficient service that can be given. Inefficient organizations constitute a burden 

to the community and no justification can be found for their continued 

existence.101

Based on Professor Stevens’ article, these proponents of Section 5 argued that 

efficiency should be the touchstone of fair versus unfair competition. Senator Hollis, for 

example, argued that efficiency should be the principal criterion for distinguishing fair from 

unfair competition:

Fair competition is competition which is successful through superior efficiency. 

Competition is unfair when it resorts to methods which shut out competitors 

who, by reason of their efficiency, might otherwise be able to continue in 

business and prosper. Without the use of unfair methods no corporation can 

grow beyond the limits imposed upon it by the necessity of being as efficient as 

any competitor. The mere size of a corporation which maintains its position 

through superior efficiency is ordinarily no menace to the public interest. The 

object of Section 5 is to prevent the creation or continuance of monopoly 

through unfair methods.102

Senator John Sharp Williams, a Democrat from Mississippi who also supported the 

bill, agreed:

[I]f any monopoly could grow up without a legal privilege merely by fair 

competition and by producing as good an article as someone else, or a cheaper 

article and a better one, it would have a God-given right to a monopoly. If I could 

go out to-morrow and raise cotton cheaper than any man in the South . . . I 

would have conferred a benefit upon mankind; in other words, it is not the size 

of the business that hurts; it is the nature of the business that hurts. . . . If I can 

exceed you in cheapness and quality of production or you can exceed me, that is 

 

101See, e.g., id. at 11,300 (Remarks of Sen. Borah), reprinted in Kintner, supra note 6, at 4021 (quoting

STEVENS,supra note 100).

102Id. at 12,146, reprinted in Kintner, supra note 6, at 4141. The chair of the House Commerce 

Committee, James Covington, who had been the sponsor of the commission bill in the House and was later 

chair of the conference committee that reported it out, cited Senator Hollis’ speech with approval when he 

introduced the conference substitute of the floor of the House. See id. at 14,929 (Remarks of Rep. Covington) 

(“Upon this subject, I want to call the attention of the House to the statement of Senator Hollis, of New 

Hampshire, in his very able speech elucidating the subject of unfair competition, in the Senate on July 15 last”), 

reprinted in Kintner, supra note 6, at 4726.
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your right, and no man has any right to do away with it . . . .

103

Even Senator Newlands ultimately agreed that an efficiency-based test would 

provide an effective criterion for separating fair from unfair competition. Speaking shortly

after Senator Williams delivered his remarks, Senator Newlands agreed that the purpose of 

Section 5 was “to prevent the stifling of competition by unfair methods” and that the new 

commission should look to “authorities, both in economics and in the decisions of courts and 

the decrees of courts,” in determining what constitutes an unfair method of competition.104

He then pointed to Senator Hollis’ earlier remarks, which had emphasized the central role of 

efficiencies in distinguishing between fair and unfair competition, as providing a sound 

framework for doing so:

I will not weary the Senate by reading these decisions or decrees. They will be 

found in the remarks I made in presenting this bill [and] in the very able address 

of the Senator from New Hampshire [Senator Hollis] yesterday, in which he met 

fully and completely every criticism that has been made upon this phrase, and I 

beg Senators who did not have the pleasure of hearing that speech to read it, for 

it is a strong, close, legal argument upon this single proposition.105

Many of the senators who initially had been most skeptical of Section 5 also 

came ultimately to accept the notion of using efficiency as a measuring rod for unfair 

competition. Even Senator Borah, who had been concerned that the bill would be 

used to protect small, inefficient competitors for their own sake, seemed to endorse 

this standard when he stated: “Mr. President, the Senator says that if a combination 

 

103Id. at 12,211, reprinted in Kintner, supra note 6, at 4156. See also id. at 11,231 (Remarks of Sen. Joe 

T. Robinson) (“Not only has the term ‘unfair competition’ a meaning fairly well fixed in law and in economics, 

but it is also easily understood by the average business man. Nearly all normal business men can distinguish 

between ‘fair competition’ and ‘unfair competition.’ Efficiency is generally regarded as the fundamental 

principle of the former—efficiency in producing and in selling, while oppression or advantage obtained by 

deception or some questionable means is the distinguishing characteristic of ‘unfair competition.’”), reprinted 

in Kintner, supra note 6, at 4003.

104Id. at 12,211, reprinted in Kintner, supra note 6, at 4157.

105Id. at 12,212, reprinted in Kintner, supra note 6, at 4157–58.
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or an individual can produce an article cheaper than anybody else and thereby get 

control of a market and in a sense create a monopoly, that would be a blessing to 

mankind. I agree with that proposition . . . .”106 Senator Reed, another of the bill’s 

most persistent skeptics, agreed: “What are we trying to do?” he asked. “We are 

not trying to write a code of business morals. . . . We are trying to keep the doors of 

competition open in this land. . . .”107 Citing the Standard Oil case, Senator Reed 

drew a distinction between conduct designed only to destroy a rival and conduct that

benefitted the purchaser of the larger firm’s products:

Another practice calculated not to benefit the purchaser, but to destroy 

competition, is well illustrated in certain practices attributed to the Standard 

Oil Co. . . . It was merely a method used to destroy competition; not an 

attempt to sell goods, but to destroy a rival. That would be within the terms 

of my amendment, because it is an act done for the purpose of restraining 

trade. It is not the lessening of the trade of one man which results from

simple competition. The object and purpose is to destroy the trade rival. 

That can be reached under this definition.108

As this examination of the debates on the Senate floor shows, despite initial 

confusion over the purposes of Section 5, there ultimately emerged a consensus 

among its supporters, and even among those who in the end reluctantly voted in 

favor of it, that the ultimate test of whether a practice was an unfair method of 

competition was whether it might exclude equally efficient competitors from the 

market.109 Again, this is plainly a consumer welfare prescription, similar to the 

 

106Id. at 12,211, reprinted in Kintner, supra note 6, at 4157.

107Id. at 13,231, reprinted in Kintner, supra note 6, at 4635.

108Id. at 4635–36.

109The emphasis on efficiency as the determinant of fair versus unfair competition on the floor of the 

Senate was consistent with the views Representative Ray Stevens of New Hampshire had expressed in his 

minority views to the House report in which he had urged the addition of Section 5 to the House bill. See H.R. 

REP. NO. 63-533, pt. 2, at 2 (1914) (“[T]he chief means these combinations have used to acquire a monopoly or 

partial control of the business field has been by unfair methods of competition. They have been able to drive 
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standard Robert Bork argued a half century later should be used in enforcing Section 

2 of the Sherman Act.110

2. Congress intended the Commission to apply a rule of reason in enforcing 

Section 5

Having argued that the main criterion of whether a practice should be prohibited 

should depend on whether it was likely to exclude equally efficient competitors if allowed to 

continue, the proponents of Section 5 were next asked how the new commission would be 

expected to apply this test in practice.111 Their response, delivered first by Senator 

Cummins, was that the new commission should do so “[b]y applying the rule of reason.”112 

Referring back to the Supreme Court’s decision in the Standard Oil case,113 Senator Cummins 

argued, “If the rule of reason—and I am not quarreling with the rule of reason, because it 

must prevail everywhere—if the rule of reason is used to interpret the phrase ‘restraint of 

trade,’ likewise will the rule of reason be used to interpret the phrase ‘unfair 

competition.’"114 

Other supporters of Section 5 agreed. Senator Hollis was perhaps the most explicit, 

agreeing that the commission should “apply the rule of reason, which every judge has in his 

 

their competitors out of business not by superior efficiency in the manufacturing of their product but by 

securing special advantages and contracts in the buying of their raw materials and in the distribution and 

selling of their products. Any advantage large corporations have over small corporations or individuals through 

lower costs or production they are entitled to, but they should be prevented from an unfair use of the power 

that comes from their size alone.”), reprinted in Kintner, supra note 6, at 3763-64.

110Bork, supra note 4, at 7 (“Congress intended the courts to implement . . . only that value we would 

today call consumer welfare. To put it another way, the policy the courts were intended to apply is the 

maximization of wealth or consumer want satisfaction.”).

111See, e.g., 51 CONG. REC. 12,917 (1914) (Remarks of Sen. LeBaron B. Colt) (“I should like to ask the 

Senator how the court would determine what was fair and what was unfair in trade practices?”), reprinted in 

Kintner, supra note 6, at 4369-70.

112Id. (Remarks of Sen. Cummins), reprinted in Kintner, supra note 6, at 4370.

113Standard Oil Co. v. United States, 221 U.S. 1 (1911).

11451 CONG. REC. 12,910 (1914), reprinted in Kintner, supra note 6, at 4366.
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head, . . . precisely as our courts have under the Sherman antitrust act.”115 Another 

supporter, Senator James Hamilton Lewis of Illinois, added that “if ‘unfair competition’ shall 

be so construed and applied by those to whom its construction is committed within the light 

of the reason of business affairs, then such does no wrong.”116

By suggesting that the new commission should apply a rule of reason in enforcing 

Section 5, these senators were endorsing a test that the Supreme Court had held requires an 

examination of both the purposes and likely effects of an alleged restraint or other 

anticompetitive conduct. In its opinion in Standard Oil, the Court instructed the lower 

courts, in applying the rule of reason, to examine whether the alleged restraint had “been 

entered into or performed with the legitimate purpose of reasonably forwarding personal 

interest and developing trade,” or had, instead, “been entered into or done with the intent 

to do wrong to the general public” and thereby “bring about the evils, such as enhancement 

of prices, which were considered to be against public policy.”117 This is the same test the 

courts apply today in evaluating allegedly anticompetitive conduct under both Sections 1 

and 2 of the Sherman Act.118 

 

115Id. at 13,000, reprinted in Kintner, supra note 6, at 4447.

116Id. at 12,931, reprinted in Kintner, supra note 6, at 4392-93.

117Standard Oil Co., 221 U.S. at 58.

118See, e.g., Broadcast Music, Inc. v. CBS, 441 U.S. 1, 19-20 (“[O]ur inquiry must focus on whether the 

effect and, here because it tends to show effect, the purpose of the practice are to threaten the proper 

operation of our predominantly free-market economy—that is, whether the practice facially appears to be one 

that would always or almost always tend to restrict competition and decrease output . . . , or instead one 

designed to ‘increase economic efficiency and render markets more, rather than less, competitive.’”) (citations 

omitted); United States v. Microsoft Corp., 253 F.3d 34, 45-48 (D.C. Cir. 2001) (holding that under Section 2, a 

court must first examine whether the plaintiff can show that alleged exclusionary conduct had the “requisite 

anticompetitive effect” and, if it did, whether the defendant can show “a procompetitive justification” for its 

conduct—that is, “that its conduct is indeed a form of competition on the merits because it involves, for 

example, greater efficiency or enhanced consumer appeal,” in which case the burden then “shifts back to the 

plaintiff to rebut that claim”).
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While not mentioning the rule of reason expressly, several others, some of whom 

had initially questioned Section 5 but ultimately voted in favor of it, suggested essentially the 

same test. Thus, Representative Frederick Stevens of Minnesota told the House that if an 

act or practice was “merely for an ordinary business purpose, it is as innocent as any other 

act.”119 By contrast, as Senator Reed of Missouri noted, if it “was merely a method used to 

destroy a competitor, not an attempt to sell goods,” then it should be unlawful.120 Another 

Senator, John Sharp Williams of Mississippi, described an unfair method of competition as a 

“profitless stifling of competition,” rather than an honest effort to sell one’s goods by 

undercutting the price of a rival.121 Another, Senator Porter McCumber, provided an 

example of how he thought the rule of reason should be applied in practice:

The mere fact that a manufacturer or merchant may sell his product at a 

particular point at a loss would not constitute an offense against the term ‘unfair 

competition’ as defined by the amendment which I propose. For the purpose of 

disposing of a surplus or getting rid of an accumulation at the end of a season, 

the sale of such product at a loss is not only proper and just but often necessary 

but if that sale is made not for these purposes, but from all of the evidence it 

should appear that it is persisted in for the main purpose of getting rid of a 

competitor, it ought to be stopped, and it ought to be stopped not because it is 

competition, but because in the end it is destructive of competition.122

Senator McCumber’s example illustrates a key point made throughout the debates in 

both the House and Senate. The proponents of Section 5 did not intend for it to be used to 

interfere with competition on the merits, but only to reach what the Supreme Court has 

 

11951 CONG. REC. 12,910 (1914), reprinted in Kintner, supra note 6, at 4743.

120Id. at 13,231, reprinted in Kintner, supra note 6, at 4636.

121Id. at 12,210, reprinted in Kintner, supra note 6, at 4154 (Senator Williams offered two examples of 

what he viewed as a “profitless stifling of competition. The first was “selling goods within a restricted area or 

for a restricted time at less than the cost of production, in order to drive out of trade a restricted competitor;” 

the second, “buying the raw material at a price so high that the restricted competitor cannot afford to pay for 

it, and thus drive him out.”).

122Id. at 12,208, reprinted in Kintner, supra note 6, at 4152.
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called “unnecessarily restrictive” conduct.123 By this, both the proponents of Section 5 and 

the Supreme Court meant an act or practice that could potentially exclude a rival from the 

market that served no other legitimate business purpose in terms of promoting the sale of 

the firm’s own goods or services. The senators who in the end supported Section 5 believed 

that “competition, however severe or unfair, would finally work out for the public good,” 

even if it was painful for smaller, less efficient competitors.124 They, therefore, did not 

intend Section 5 to be used to condemn bigness itself, so long as it “resulted from normal 

and regular growth, from giving increased quality of goods,” or from other forms of 

competition on the merits.125 Instead, they expected it to be used only to condemn those 

practices designed to “place[] the individual at such a disadvantage that he cannot obtain . . . 

equal opportunities for trade and sale . . . .”126 

3. Section 5 gives the Commission power to prohibit unfair methods of 

competition in their incipiency before they mature into full-blown 

Sherman Act violations

While Congress intended the FTC to apply a rule of reason in enforcing Section 5, this 

does not mean that it viewed that section as outlawing only those practices that would 

violate the Sherman Act. The legislative history makes it clear that in order to protect 

competition, Congress intended that Section 5 would give the new commission authority to 

prohibit unfair methods of competition in their incipiency before they matured into full-

 

123See Aspen Highlands Skiing Corp. v. Aspen Skiing Co., 472 U.S. 585, 604 (1985) (“If a firm has been 

‘attempting to exclude rivals on some basis other than efficiency,’ it is fair to characterize its behavior as 

predatory.”).

124See 51 CONG. REC. 11,187 (1914) (Remarks of Sen. Borah), reprinted in Kintner, supra note 6, at 3991. 

See also id. at 12,212 (Remarks of Sen. Thomas Sterling) (noting that “[in] the intensity of competition . . . , 

perfectly independent concerns will . . . be induced to cut prices to the general public,” and that this may cause 

smaller “competitors with fewer facilities or . . . a higher wage . . . [to] be forced out of business,” but should 

not, for that reason alone, “come under the ban of the law”), reprinted in Kintner, supra note 6, at 4160.

125Id. at 11,187 (Remarks of Sen. Borah), reprinted in Kintner, supra note 6, at 3990-91.

126Id. at 12,933 (Remarks of Sen. Lewis), reprinted in Kintner, supra note 6, at 4396-97.
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blown Sherman Act violations—as one senator put it, to “nip those practices in the bud.”127 

The debates on the floor of both the House and Senate made it equally clear, however, that 

Congress did not intend to give the Commission free rein to go after practices that did not 

have that potential. 

Thus, when Representative Covington, the original sponsor of the legislation and the 

chair of the conference committee, brought the bill to the floor of the House for a final vote, 

he received applause when he stated that the purpose of Section 5 was to prohibit only 

those anticompetitive practices that might otherwise culminate in a restraint of trade or 

monopoly that would violate the Sherman Act: 

We are seeking here not to enter into any unknown or speculative realm of the 

law but to deal, as we ought to deal, with those practices of unfair trade in their 

incipient stages which if left untrammeled and uncontrolled become the acts 

which constitute in their culmination restraint of trade and monopoly and the 

groundwork of the trusts which have menaced us industrially. [Applause.]128 

On the floor of the Senate, the bill’s proponents likewise emphasized that the 

purpose of Section 5 was to give the commission authority to prohibit unfair methods of 

competition that threatened the same type of harm to the public interest in competition as 

 

127Id. at 12,146 (Remarks of Sen. Hollis), reprinted in Kintner, supra note 6, at 4142. See also, e.g., id. 

at 11,529 (Remarks of Sen. Cummins) (“We propose to make it unlawful for any corporation, or any person, 

indeed, to practice unfair competition, and wherever the practice of unfair competition has not reached a point 

that constitutes a violation of the antitrust law . . . .”), reprinted in Kintner, supra note 6, at 4066; id. at 12,146 

(Remarks of Sen. Hollis) (“The Sherman Act does not become effective until a monopoly is fully grown . . . ; but 

if the proposed trade commission has its attention called to some unfair method of competition, it can 

immediately investigate, and if it decided that it is unfair competition and may lead to monopoly or restraint of 

trade, it may prohibit it.”), reprinted in Kintner, supra note 6, at 4141.

128Id. at 14,929, reprinted in Kintner, supra note 6, at 4725. See also id. at 13,156 (Remarks of Sen. 

Kenyon) (“That, it seems to me, is the difference between the Sherman Act and the present act. This can take 

hold of matters that are not in themselves sufficient to amount to a monopoly or to amount to restraint of 

trade.”), reprinted in Kintner, supra note 6, at 4576; id. at 12,217 (Remarks of Sen. Newlands) (“I should say, 

with reference to stifling competition, that all you would have to prove would be an unfair method whose 

tendency was to stifle competition. I do not think you would have to wait until the destruction was complete in 

order to entitle you to make the complaint.”), reprinted in Kintner, supra note 6, at 4170; id. at 13,160 

(Remarks of Sen. Kenyon) (“If this act shall do even a little to help in stopping monopoly in this country by 

getting at unfair practices before they have fully ripened and blossomed, then it will do good and it will justify 

the long time that has been taken in its discussion.”), reprinted in Kintner, supra note 6, at 4582.
Copyright © 2014 Washington Legal Foundation 40

did violations of the Sherman Act, but to do so before that harm had “fully ripened and 

blossomed.”129 As Senator Cummins explained, 

Unfair competition must usually proceed to great lengths and be destructive of 

competition before it can be seized and denounced by the antitrust law. . . . The 

purpose of this bill in this section . . . is to seize the offender before his ravages have 

gone to the length necessary in order to bring him within the law that we already 

have.130 

The bill’s proponents envisioned that, by stepping in to prohibit conduct before it 

violated the Sherman Act, the FTC would play an important role in supplementing the 

Department of Justice’s enforcement of antitrust laws. Congress intended for the 

Commission to conduct quick investigations of potentially anticompetitive practices that the 

Department of Justice had neither the authority nor the resources to challenge. During the 

debates, Senator Hollis explained:

[T]he Department of Justice with its manifold other activities, has not in the past 

brought suit under the Sherman Act, and probably will not do so, except in cases of 

great magnitude involving what appear to be very clear violations of the act. 

. . . . 

The commission, by reason of its knowledge of business affairs and . . . its 

facilities for investigation, its rapid, summary procedure, will be able to protect 

business against unfair competition in [a] much more effective and timely 

fashion than the Department of Justice can do.131 

The quoted portion also appears verbatim in the memorandum Rublee prepared for 

President Wilson, which suggests that Rublee prepared this speech for Senator Hollis.

132

 

129Id. at 13,160, reprinted in Kintner, supra note 6, at 4584.

130Id. at 11,455, reprinted in Kintner, supra note 6, at 4060.

131Id. at 12,146, reprinted in Kintner, supra note 6, at 4141-42. See also id. at 11,236 (Remarks of Sen. 

Borah) (“[T]he execution of the Sherman law has not thus far aided the man in the street; but that is because 

we stopped short of our duty; it was not the court’s fault. I agree the way we have been proceeding the 

burden has been too great for the court; but we can relieve the situation by appropriate administrative 

measures.), reprinted in Kintner, supra note 6, at 4015; id. (Remarks of Sen. Cummins) (“The Attorney General 

of the United States. . . is a man who must take into account tens of thousands of other things than the 

enforcement of the antitrust law. It is utterly impossible, as I look at it, to expect that the Attorney General will 

follow these decrees into their full and complete execution.”), reprinted in Kintner, supra note 6, at 4016.

132Rublee, supra note 6, at 4-5.
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These excerpts from the legislative history show that Congress did not intend, as 

some have seemed to suggest,133 to wholly untether Section 5 from the principles governing 

the application of the other antitrust laws. Like Section 5, the Clayton Act was designed to 

make unlawful the practices at which it was aimed—tying, exclusive dealing, price 

discrimination, and mergers—in their incipiency when they were likely “substantially to 

lessen competition,” even if they would not yet have violated the Sherman Act as then 

interpreted.134 As the next section discusses, it is a mistake, therefore, to suggest, as the 

Supreme Court did in FTC v. Brown Shoe,

135 that Section 5 could be used to prohibit a 

practice that is expressly addressed in the Clayton Act, but that would not violate that Act 

under its own incipiency standard.

* * * * *

This review of its legislative history shows that its sponsors drafted Section 5 with a 

clear purpose—to protect competition in order to promote consumer welfare. It also shows 

that the section’s proponents articulated a viable set of governing principles to guide the 

FTC’s exercise of its enforcement power. First, Section 5 can only be used to prohibit 

exclusionary, not exploitative, practices. Second, Section 5 can only be used to protect 

competition, not weaker competitors. Third, Section 5 can be used to prohibit only those 

 

133See, e.g., Rosch, supra note 1, at 1 (Stating that the first “unassailable proposition[] about Section 5 

. . . is that its reach is not confined to conduct reached by the Sherman and Clayton Acts. Otherwise, Congress 

would just have provided that the Commission could enforce these statutes. It did not do so. Instead it 

provided that the Commission could challenge, inter alia, any ‘unfair method of competition.’ That is why the 

Supreme Court held in the Sperry & Hutchinson case that Section 5 was not simply coextensive with these 

other antitrust statutes.”).

134See, e.g., S. REP. NO. 63-698, at 1 (1914) (“The purpose is only to supplement [the Sherman Antitrust 

Act] and the other antitrust acts . . . and make unlawful certain trade practices . . . in their incipiency and before 

consummation.”); S. REP. NO. 81-1775, at 6 (1950) (Referring to the Clayton Act as a “statute which seeks to 

arrest restraints of trade in their incipiency and before they develop into full-fledged restraints violative of the 

Sherman Act.”).

135384 U.S. 316 (1966).
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unfair methods of competition that threaten to “shut out competitors who, by reason of 

their efficiency, might otherwise be able to continue in business and prosper.”136 All three 

governing principles require the Commission to apply a rule of reason in order to determine 

whether a particular act or practice represents fair competition designed to promote the 

sale of the firm’s own goods or services or unfair competition designed to stifle competition 

by denying rivals an equal opportunity to compete.

III. THE COURTS’ CHANGING INTERPRETATIONS OF SECTION 5

In its early cases interpreting Section 5, the Supreme Court interpreted the provision 

in a manner consistent with its legislative purpose as outlined in this WORKING PAPER, using 

what was essentially a rule-of-reason analysis to determine whether allegedly 

anticompetitive practices violated Section 5. Several of the justices who decided these early 

cases had been involved in the formulation of Section 5, so they understood its legislative 

purpose and the limits imposed on the FTC’s authority. In the 1960s and early 1970s, 

however, when the Warren Court was generally interpreting the antitrust laws very 

expansively, it deviated from these earlier decisions, appearing to read Section 5 broadly to 

condemn practices that violated “the spirit of the antitrust laws” even if they could not be 

found to have harmed competition.137 In the early 1980s, both the Commission and the 

lower courts appear to have returned to a narrower construction of Section 5 that is more 

consistent both with the section’s legislative history and with the Supreme Court’s earlier 

decisions. The Supreme Court has not had occasion to discuss the scope of Section 5 in any 

detail since these more recent lower court decisions, but when it finally has an opportunity 

 

136Rublee, supra note 6, at 3.

137FTC v. Sperry and Hutchinson Co., 405 U.S. 233, 244 (1972).
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to do so, it will hopefully follow the lead of the lower courts in applying Section 5 in a 

manner more consistent with its original purpose.

A. Early Supreme Court Cases Adhered to the Governing Principles 

Outlined in Section 5’s Legislative History

In Gratz138—the first Section 5 case to reach it—the Court affirmed a decision by the 

U.S. Court of Appeals for the Second Circuit overturning an FTC order condemning an alleged 

tying arrangement. In analyzing the alleged tie, the Court interpreted Section 5 in a manner 

consistent with the governing principles outlined in the above review of its legislative 

history. The Court held that the words

unfair methods of competition . . . are clearly inapplicable to practices never 

heretofore regarded as opposed to good morals because characterized by 

deception, bad faith, fraud, or oppression, or as against public policy because 

of their dangerous tendency to unduly hinder competition or create monopoly. 

The act was certainly not intended to fetter free and fair competition as 

commonly understood and practiced by honorable opponents in trade.139

The Court emphasized the importance of analyzing an allegedly unfair method of 

competition thoroughly in order not to inhibit healthy competition. Applying what was 

essentially a rule-of-reason test, the Court held that the allegations in the FTC complaint 

were “wholly insufficient” to charge the respondent with practicing an unfair method of 

competition because it did not allege any “deception, misrepresentation, or oppression,” did 

not allege what share of the market was affected by respondent’s behavior, and did not 

allege that respondent “held a monopoly of either [the tying or tied products] or had ability, 

purpose, or intent to acquire one.”140 The Court also pointed to the absence of any 

allegation that respondent had sold to customers at unfair prices or injured the public in any 

 

138FTC v. Gratz, 253 U.S. 421 (1920).

139Id. at 427-28 (emphasis added). 

140Id. at 428. 
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other way.141

Throughout the opinion, the Court reiterated the importance of not interfering with 

free competition. After detailing the inadequacy of the FTC’s findings and emphasizing the 

absence of consumer harm, the Court concluded, 

[a]ll question of monopoly or combination being out of the way, a private 

merchant, acting with entire good faith, may properly refuse to sell, except in 

conjunction, such closely associated articles as ties and bagging. If real 

competition is to continue, the right of the individual to exercise reasonable 

discretion in respect of his own business methods must be preserved.142

Gratz made it clear that the FTC has no authority to condemn a tie in the absence of 

persuasive evidence that competition would be unduly hindered.

Justice Brandeis dissented in Gratz, arguing in favor of a broader interpretation of the 

FTC’s authority under Section 5, but one that was still consistent with the governing 

principles outlined above. Brandeis agreed with the majority that the FTC must engage in a 

rule-of-reason analysis in order to distinguish between “honorable rivalry” and conduct that 

“may result in grave injustice and public injury, if done by a great corporation in a particular 

field of business which it is able to dominate.”143 Brandeis disagreed with the majority as to

the outcome of the case only because he saw the facts of the case differently. He saw the 

respondent as dominating the market for the tying product with a 45 percent share, as a 

result of which he believed consumers would often be unable to purchase that product from 

anyone other than respondent, thereby forcing them to buy the tied product from it as well. 

 

141Id.

142Id. at 428-29. 

143Id. at 438 (Brandeis J., dissenting).
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FTC v. Sinclair Refining Co.,

144 decided three years later in 1923, was similarly 

consistent with the governing principles outlined above. The FTC alleged that refiners and 

wholesalers of gasoline “leas[ed] underground tanks with pumps to retail dealers at nominal 

prices and upon condition that the equipment should be used only with gasoline supplied by 

the lessor.”145 The Supreme Court affirmed the Third Circuit’s decision to set aside the FTC’s 

order requiring the refiners and wholesalers to cease this conduct. In concluding that the 

FTC had not met its burden of proving that this practice was an unfair method of 

competition, the Court emphasized the procompetitive benefits of the practice. It found 

that many refiners and wholesalers had adopted this practice because they “regard[ed] it as 

the best practical method of preserving the integrity of their brands,” and as “promot[ing] 

the public convenience by inducing many small dealers to enter the business and put 

gasoline on sale at the crossroads.”146 The Court also found that the practice did not 

foreclose the market to competitors, because retailers could purchase competing pumps 

inexpensively and then use any distributor’s gasoline in those pumps. After thoroughly 

analyzing the restraint’s impact on the retail market for gasoline, the Court described the 

agency’s limited authority under Section 5:

The powers of the commission are limited by the statutes. It has no general 

authority to compel competitors to a common level, to interfere with ordinary 

business methods or to prescribe arbitrary standards for those engaged in the 

conflict for advantage called competition. . . . And to this end it is essential that 

those who adventure their time, skill, and capital should have large freedom of 

action in the conduct of their own affairs.147

 

144261 U.S. 463 (1923).

145Id. at 464-65.

146Id. at 475.

147Id. at 475-76.
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Sinclair, like Gratz and the other early Supreme Court cases interpreting Section 5, therefore 

adhered to the original legislative purpose behind Section 5 and to the governing principles 

outlined in its legislative history.

B. Supreme Court Cases in the 1960s and 1970s Departed from the 

Limiting Principles Outlined in the Legislative History

In the 1960s, during a period in which the Supreme Court has been criticized by one 

current justice for adopting “antitrust theories so abbreviated as to prevent proper analysis” 

under which the “Government always wins,”

148 the Court appeared to take that same 

approach with respect to Section 5 in three cases, Atlantic Refining Co. v. FTC,

149 FTC v. 

Brown Shoe Co.,

150 and FTC v. Sperry & Hutchinson Co..151

 These three decisions marked a 

substantial departure both from the Court’s earlier decisions and from the limits Congress 

intended would govern the FTC’s exercise of its authority under Section 5.

In Atlantic Refining, the Court upheld an FTC order finding that Atlantic had violated 

Section 5 by using a sales commission plan to induce its dealers to sell Goodyear tires, 

batteries, and accessories. Conceding that this arrangement could not be found to be an 

illegal tying arrangement under either the Sherman or Clayton Acts, the Court nevertheless 

upheld the FTC order, holding that “all that is necessary in § 5 proceedings to find a violation 

is to discover conduct that ‘runs counter to the public policy declared in the’ Act.”152 In so 

holding, the Court blessed the FTC’s “refus[al] to consider evidence of economic justification 

 

148California Dental Ass’n v. FTC, 526 U.S. 656, 794 (1999) (Breyer, J., dissenting).

149381 U.S. 357 (1965).

150384 U.S. 316 (1966).

151405 U.S. 233 (1972).

152381 U.S. at 369.
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for the program.”153 It was enough, the Court held, that the case involved “‘a classic 

example of the use of economic power in one market . . . to destroy competition in another 

market.’”154 The Court failed to explain how Atlantic’s actions could have destroyed 

competition in the market for automotive tires, batteries, and accessories when Atlantic’s 

share of the national market for gasoline was only 2.5 percent.155 In both respects, the 

Court’s opinion failed to recognize that the legislative purpose of Section 5 was to prohibit 

only those unfair methods of competition that threatened harm to the public at large, not 

just competing manufacturers.156

Similarly, in Brown Shoe, the Court upheld an FTC order finding that Brown Shoe had 

violated Section 5 by structuring its franchise program to give special benefits to retailers 

that sold Brown Shoes exclusively. The Court accepted the FTC’s finding that “the franchise 

program effectively foreclosed Brown’s competitors from selling to a substantial number of 

retail shoe dealers”157 without analyzing what share of the market was foreclosed, without 

finding any consumer harm, and without considering procompetitive justifications. At the 

time, Brown Shoe had a share of less than ten percent of the total U.S. market for shoes and 

its program included fewer than 700 retail stores—only about one percent of the country’s 

70,000 retail shoe outlets.158 The Court neither considered the procompetitive justifications 

 

153Id. at 371.

154Id. at 361.

155Id. at 364.

156As Justice Goldberg pointed out in dissent, many small dealers liked Atlantic’s sales commission 

plan, arguing in an amicus brief that they needed sales commission plans to compete effectively with larger 

dealers. See id. at 385 (Goldberg, J., dissenting).

157FTC v. Brown Shoe Co., 384 U.S. 316 (1966).

158See Brown Shoe Co. v. FTC, 339 F.2d 45, 47-48 (8th Cir. 1964) (program affected 682 stores; Brown 

Shoes had shoe sales of $111 million of the $1.8 billion in sales by the top 70 shoe manufacturers); Brown Shoe 

Co. v. United States, 370 U.S. at 300 (finding 70,000 retail shoe outlets in U.S.).
Copyright © 2014 Washington Legal Foundation 48

for the practice, which the lower court had found was designed to provide stores 

participating in the program services to make them more competitive with other retailers, 

nor the fact that several of Brown Shoe’s competitors had similar programs. Again, the 

Court deviated from the legislative purpose of Section 5, which was not to interfere with 

practices a firm adopted in order to compete more effectively, but only to prohibit practices 

that were likely to destroy competition through methods that served no legitimate purposes 

but threatened to exclude competitors from the market.159

In support of its decision, the Supreme Court criticized the Eighth Circuit’s reliance on 

Gratz in overturning the FTC order. Writing for the Court, Justice Black declared that “[l]ater 

cases of this court . . . have rejected the Gratz view and it is now recognized in line with the 

dissent of Justice Brandeis in Gratz that the Commission has broad powers to declare trade 

practices unfair.”160 This characterization of Justice Brandeis’ dissent overlooks how 

Brandeis himself analyzed the alleged restraint in that case. It also mischaracterizes the two 

cases Justice Black cited as having overruled Gratz—FTC v. R. F. Keppel161 and FTC v. Cement 

Inst.162 

Keppel condemned the Respondent’s sale of candy packages known as “break and 

take.” There were three variations of the candy packages and consumers did not know

which variation they would receive upon purchase. The packages had differing values, so 

there was an element of gambling involved in the purchase of the candy. The FTC 

considered this practice “dishonest” because “break and take” packages were enticing to 

 

159 The only plausible theory of anticompetitive harm in Atlantic Refining and Brown Shoe would have 

been an exclusionary theory, but the facts of neither case supported such a theory.

160FTC v. Brown Shoe, 384 U.S. at 320-21.

161291 U.S. 304 (1934). 

162333 U.S. 683 (1948).
Copyright © 2014 Washington Legal Foundation 49

children and might induce them to buy Keppel’s candy, even if it was inferior to other 

candies.163 The Court concluded that “[a] method of competition which casts upon one’s 

competitors the burden of the loss of business unless they will descend to a practice which 

they are under a powerful moral compulsion” not to engage in was an unfair method of 

competition.164 There is nothing about this ruling that can be read to overrule Gratz either 

explicitly or implicitly. In it, the Court merely held that a practice that gave one competitor 

an unfair competitive advantage over its rivals based not on the merits of its product, but 

through a dishonest practice could be found to violate Section 5. That is entirely consistent 

with the legislative history, which made it clear that other dishonest practices, such as 

passing off one’s goods as those of a competitor, could be found to be an unfair method of 

competition if they harmed the public at large, not just another competitor.165 

In Cement Institute, the Court upheld an FTC order finding that an agreement among 

cement producers to employ a multiple basing point pricing system violated Section 5 

because it facilitated more uniform pricing. Again, there is nothing in that ruling that could 

be read to overrule Gratz. The portion of the Court’s opinion Justice Black cites as overruling 

Gratz actually cuts the other way; in it, the Court rejects the argument of the Respondents 

that “the term ‘unfair methods of competition’ should not be construed as embracing any 

conduct within the ambit of the Sherman Act.”166 The Court’s holding in Cement Institute—

 

163Keppel, 291 U.S. at 313.

164Id. 

165See, e.g., 51 CONG. REC. at 11,107 (1914) (Sen. Robinson quoting T.B. Dunn Co. v. Trix Manufacturing) 

(“The term ‘unfair competition in trade’ includes the simulation by defendant of the packages of plaintiff, ... 

The court will only interfere to protect the plaintiff and the public, and for the suppression of unfair and 

dishonest competition, when ‘the resemblance is such that it is calculated to deceive, and does in fact deceive, 

the ordinary buyer . . . .”), reprinted in Kintner, supra note 6, at 3957

166Cement Inst., 333 U.S. at 692.
Copyright © 2014 Washington Legal Foundation 50

that Section 5 prohibits anticompetitive practices that would also violate the Sherman Act—

does not support Justice Black’s claim that the Court’s decision in that case somehow 

overruled Gratz. 

In Sperry & Hutchinson, the Court affirmed a Fifth Circuit decision overturning an FTC 

order. The order required the country’s largest trading stamp company to cease and desist 

from attempting to suppress the operation of trading stamp exchanges. The FTC had failed 

to challenge the lower court’s holding that Sperry & Hutchinson’s conduct violated neither 

the letter nor the spirit of the antitrust laws. In his opinion for the Court, Justice White 

nevertheless cited Justice Black’s opinion in Brown Shoe as having held that “unfair 

competitive practices were not limited to those likely to have anticompetitive consequences 

after the manner of the antitrust laws; nor were unfair practices in commerce confined to 

purely competitive behavior.”167 

Justice White’s dictum offers a more expansive reading of the scope of the FTC’s 

Section 5 authority than that of any other justice in any Supreme Court opinion, “appear[ing] 

to contemplate almost no principled limitations on the Commission’s power.”

168

 It is also 

the most at odds with the section’s legislative history and purpose. As we have seen, while 

Congress intended Section 5’s prohibition of unfair methods of competition to reach conduct 

that would not necessarily be unlawful under the antitrust laws, it did so only to the extent 

necessary to “nip those practices in the bud” before they matured into full-blown Sherman 

Act violations.169 The legislative history reflects nothing, other than Senator Newlands’ 

 

167 FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 (1972).

168Karin A. DeMasi and Jonathan J. Clarke, Section 5 of the FTC Act and the End of Antitrust Modesty, 

BLOOMBERG LAW REPORTS, at 3 (June 25, 2010), 

http://www.cravath.com/files/Uploads/Documents/Publications/3233999_1.pdf.

169See discussion supra pp. 38-41, part II.C.3.
Copyright © 2014 Washington Legal Foundation 51

vague references to morality, to suggest that Congress intended Section 5 to reach anything 

other than “competitive behavior.” Nor is there anything in the legislative history to suggest 

that Section 5 was intended to empower the FTC to prohibit “competitive behavior” that 

was not likely, if continued, to cause substantial harm to competition and thereby deprive 

consumers of the benefits of that competition. 

In support of his broad reading of Section 5, Justice White claims that Congress’ 

passage of the Wheeler-Lea Act of 1938 reflects that the legislature intended “unfair 

methods of competition” would reach beyond practices that harm competition. But, if 

anything, the passage of that Act reflects just the opposite. Congress passed the WheelerLea Act in large part because the Supreme Court had earlier held, in FTC v. Raladam Co.,

170

that the Commission had no power under Section 5 to condemn misleading advertising as an 

unfair method of competition unless it “substantially injured, or tended thus to injure, the 

business of any competitor or competitors generally.”171 Congress responded in the 

Wheeler-Lea Act by amending Section 5 to broaden the FTC’s authority beyond unfair 

methods of competition to “unfair or deceptive acts or practices in or affecting commerce,” 

thereby giving the Commission an express consumer protection mission in addition to its 

mission to protect competition.172 The passage of those amendments cannot be read to 

have somehow broadened the FTC’s existing authority over unfair methods of competition 

to reach conduct that does not injure competition.

 

170283 U.S. 643 (1931).

171Id. at 652-53.

172See H.R. REP. NO. 75-1613, at 1 (1937) (stating that the Wheeler Lea Act’s purpose was “ to broaden 

the powers of the Federal Trade Commission over unfair methods of competition by extending its jurisdiction 

to cover unfair or deceptive acts or practices in commerce.”).
Copyright © 2014 Washington Legal Foundation 52

C. The FTC and Lower Courts Have Returned to a Narrower 

Interpretation of Section 5 More Consistent with Its Legislative 

Purpose, but the Supreme Court Has Not Yet Spoken

As the Supreme Court began in the mid-1970s to acknowledge that many formerly 

suspect restraints may have procompetitive benefits,173 the FTC and lower courts returned 

to an interpretation of Section 5 more consistent with its legislative history. In 1982, in 

Beltone Electronics Corp.,

174 the Commission analyzed the state of the law on exclusive 

dealing arrangements. The FTC reviewed Supreme Court cases dealing with exclusive 

dealing arrangements under Section 5, including Brown Shoe, and concluded that, although 

market foreclosure had frequently been the determinative factor in courts’ analyses, 

today it would remain only one of several variables to be weighed in the rule-ofreason analysis now applied to all nonprice vertical restraints, under both Section 3 

of the Clayton Act and Section 5 of the FTC Act. More specifically, a proper analysis 

of exclusive dealing arrangements should take into account market definition, the 

amount of foreclosure in the relevant markets, the duration of the contracts, the 

extent to which entry is deterred, and the reasonable justifications, if any, for the 

exclusivity.175

Beltone can be fairly read as repudiating Brown Shoe, because the Court’s brief opinion in 

Brown Shoe concluded that market foreclosure occurred without defining the relevant 

market, analyzing the degree of foreclosure, or examining the legitimate business reasons 

for exclusive dealing arrangements, all of which would be required under the rule-of-reason 

test adopted by the Commission in Beltone.

 

173See, e.g., Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977) (Overruling United States v. 

Arnold, Schwinn & Co., 388 U.S. 365 (1967), and holding that non-price vertical restraints could serve 

procompetitive purposes and therefore must be evaluated using the rule of reason.) 

174 100 F.T.C. 68, 92 (1982).

175Id. at 92 (emphasis added). 
Copyright © 2014 Washington Legal Foundation 53

Subsequent lower court cases echoed Beltone’s rule-of-reason approach to Section 5. 

For example, in Boise Cascade Co. v. FTC,

176 a case involving a basing-point pricing system in 

the freight industry similar to the system at issue in Cement Institute, the Ninth Circuit 

stated, “[W]e decline to follow the Commission’s suggestion that industry-wide adoption of 

an artificial method of price-quoting should be deemed a per se violation of section 5.”177 To 

do so, the court wrote, 

would be to assume what must be proven, namely, that the use of West Coast 

freight by southern plywood producers is not a natural competitive response to 

buyer preference for traditional forms of price quotation, but rather is a deliberate 

restraint on competition. . . . [T]he weight of the case law, as well as the practices 

and statements of the Commission, establish the rule that the Commission must find 

either collusion or actual effect on competition to make out a section 5 violation for 

use of delivered pricing.178

The court noted that consumers prefer this type of pricing scheme and that consumers and

an industry expert believed that the scheme had no impact on prices. Boise Cascade and 

Beltone both reaffirmed the need for a rule-of-reason approach to Section 5. The authors of 

the leading treatise on antitrust law, Areeda and Hovenkamp, endorse the approach taken 

to applying Section 5 in these cases and agree that it requires a rule-of-reason analysis of the 

allegedly anticompetitive practices: 

Federal Trade Commission Act § 5 does not simply speak of that which may be 

“unfair” in any vagrant sense. It concerns “unfair methods of competition.” This 

would seem to require the Commission—at least when operating within the 

antitrust laws as distinct from, say, prohibiting practices that deceive consumers—to 

confront the same issues of competitive policy that must be analyzed in applying the 

Sherman Act and the Clayton Act.179

 

176637 F.2d 573 (9th Cir. 1980).

177Id. at 581.

178Id. at 581-82.

179Phillip E. Areeda & Herbert Hovenkamp, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR 

APPLICATION 230 (3d ed. 2009).
Copyright © 2014 Washington Legal Foundation 54

The Second Circuit likewise articulated what is fundamentally a rule-of-reason test 

for applying Section 5 in E.I. Du Pont De Nemours & Co. v. FTC.

180

 In that case, all four 

leading manufacturers of a compound added to gasoline to prevent “knocking” had 

“independently and unilaterally” adopted certain business practices that allegedly facilitated 

coordinated pricing.181 The court held,

In our view, before business conduct in an oligopolistic industry may be labeled 

“unfair” within the meaning of § 5 a minimum standard demands that, absent tacit 

agreement, at least some indicia of oppressiveness must exist such as (1) evidence 

of anticompetitive intent or purpose on the part of the producer charged, or (2) the 

absence of an independent legitimate business reason for its conduct.182 

 

The court emphasized the limits of the FTC’s authority under Section 5, stating that 

“Congress did not . . . authorize[] the Commission under § 5 to bar any business practice 

found to have an adverse effect on competition. Instead, the Commission could proscribe 

only ‘unfair’ practices or methods of competition.”183

Whether the Supreme Court will follow these decisions remains unclear. None of its 

decisions in Section 5 cases decided since Du Pont turned on whether the scope of Section 5 

was broader than that of the Sherman Act.184 Nevertheless, in one case, FTC v. Indiana 

Federation of Dentists,

185 the Court cited its earlier decision in Sperry & Hutchinson for the 

proposition that “[t]he standard of ‘unfairness’ under the FTC Act is, by necessity, an elusive 

one, encompassing not only practices that violate the Sherman Act and the other antitrust 

 

180729 F.2d 128 (2d Cir. 1984).

181Id. at 130.

182Id. at 139.

183Id. at 136.

184See California Dental Ass’n v. FTC, 526 U.S. 756 (1999); FTC v. Actavis, Inc., 133 S. Ct. 2223 (2014); 

FTC v. Phoebe Putney Health Sys, Inc., 133 S. Ct. 1003 (2013); FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992); FTC 

v. Indiana Fed’n of Dentists, 476 U.S. 447, 454 (1986).

185476 U.S. at 454.
Copyright © 2014 Washington Legal Foundation 55

laws, . . . but also practices that the Commission determines are against public policy for 

other reasons.”186 This statement has led one law professor, Robert Lande, to argue:

There is no doubt that when Congress enacted Section 5 of the FTC Act, it intended 

the law to be more aggressive than the Sherman and Clayton Acts. The legislative 

history and Supreme Court decisions demonstrate that Section 5 was intended to 

cover incipient violations of the other antitrust laws, conduct violating the spirit of 

the other antitrust laws, conduct violating recognized standards of business 

behavior, and conduct violating competition policy as framed by the Commission. 

Even though reasonable people may differ as to whether the FTC Act should be 

more expansive than the other antitrust laws, congressional intent concerning this 

point is clear.

187

As we have seen, Professor Lande is only half right. The legislative history does show 

that Congress intended Section 5 to reach anticompetitive practices that might otherwise 

not violate either the Sherman or Clayton Acts, in order to “nip those practices in the 

bud.”188 But in this regard, Section 5 is no different from the Clayton Act, which Congress 

also intended to prohibit practices whose effect “may be substantially to lessen 

competition” in their incipiency before maturing into full-blown Sherman Act violations.189 

The only difference between the Clayton Act and Section 5, in that sense, is that the Clayton 

Act was limited to a handful of defined anticompetitive practices, whereas Section 5 was 

aimed at anticompetitive practices outside those defined areas that could likewise 

“substantially lessen competition.” 

 

186Id.

187Robert H. Lande, Statement at the Federal Trade Commission’s Workshop on Section 5 of the FTC 

Act as a Competition Statute, at 1 (Oct. 17, 2008) (cited in its revised and expanded written version, available at 

www.antitrustsource.com).

188See discussion supra pp. 38-41, part II.C.3.

189See, e.g., United States v. Von’s Grocery Co., 384 U.S. 270, 284 (1966) (citing S. REP. NO. 63-698, at 1 

(1914) (“Broadly stated, the bill, in its treatment of unlawful restraints and monopolies seeks to prohibit and 

make unlawful certain trade practices which, as a rule, singly and in themselves, are not covered by the act of 

July 2, 1890 (the Sherman Act), or other existing antitrust acts, and thus, by making these practices illegal, to 

arrest the creation of trusts, conspiracies, and monopolies in their incipiency and before consummation.”); S.

REP. NO. 81-1775, at 4-5 (1950) (“The intent here, as in other parts of the Clayton Act, is to cope with 

monopolistic tendencies in their incipiency and well before they have attained such effects as would justify a 

Sherman Act proceeding.”)).
Copyright © 2014 Washington Legal Foundation 56

What Professor Lande overlooks is that the legislative history makes it equally clear 

that Congress did not intend Section 5 to prohibit methods of competition that were what 

we would today call competition on the merits—competition based on a firm’s greater 

efficiency or on its ability to offer new and better products or services than its competitors. 

Congress intended, instead, only to give the FTC authority under Section 5 to prohibit unfair 

methods of competition, by which it meant exclusionary practices that had the potential to 

exclude equally efficient competitors from the market and that did not serve any legitimate 

business purpose. 

D. Efforts by the FTC to Extend Section 5 beyond Exclusionary Conduct to 

Police Tacit Collusion

Another area in which the FTC has arguably applied Section 5 in a manner that goes 

beyond what its proponents viewed as its original purpose relates to the Commission’s use 

of the provision to prohibit practices that it views as facilitating tacit coordination among a 

group of competitors or as invitations to collude. As our discussion of its legislative history 

shows, both the committee reports and the floor debates on Section 5 focused almost 

exclusively on the FTC’s ability to prohibit exclusionary conduct that otherwise could not be 

reached under the Sherman Act before it had matured into a full-blown Sherman Act 

violation. To the extent there was any discussion of collusion, it was directed to the concern 

of Senator Borah and others that the commission might misuse Section 5’s prohibition of 

unfair methods of competition as a vehicle for sanctioning price-fixing and other collusive 

conduct among smaller producers who viewed the prices charged by larger, more efficient 

producers as unfair.190 As we have seen, the proponents argued strenuously that Section 5 

 

190See supra pp. 21-26.
Copyright © 2014 Washington Legal Foundation 57

would give the Commission no such power and the conference committee ultimately added 

an express public interest requirement designed to assure it was not misused in that 

manner.

Despite those assurances and the addition of an express public interest requirement, 

Senator Borah’s concerns were borne out in the 1920s when the FTC began to approve 

industry codes developed through so-called “Trade Conferences” that included provisions 

designed to limit price competition and restrict output, and that would otherwise have been 

per se unlawful under Section 1 of the Sherman Act. 191 These industry codes grew out of the 

associationist movement that began just a few years before the FTC was created and then 

flowered during World War I, when Woodrow Wilson created a War Industries Board, 

headed by New York financier Bernard Baruch. This board required every major industry to 

cooperate with it to develop policies to redirect their production to needed war material 

while imposing price controls to protect the public from price gouging. 

Having grown accustomed to working together in this manner, many industries 

formed trade associations after the war to develop codes of conduct and to exchange pricing 

and other information.192 While the Justice Department brought several actions challenging 

these trade association practices under the Sherman Act,193 the FTC actively promoted them, 

sponsoring Trade Practice Conferences to assist industries in developing these industry 

codes and then approving the rules that emerged.194 As one commentator has observed, 

 

191See generally Robert T. Joseph, John Lord O’Brian, Hoover’s Antitrust Chief, Gives the FTC an 

Antitrust Lesson, ANTITRUST 88, Fall 2010.

192Id. at 89.

193See, e.g., Maple Flooring Mfrs. Ass’n v. United States, 268 U.S. 563 (1925); American Column & 

Lumber Co. v. United States, 257 U.S. 377 (1921).

194Joseph, supra note 191, at 89-90.
Copyright © 2014 Washington Legal Foundation 58

some of the rules approved by the FTC between 1927 and 1930 were 

startling—even shocking—when read today from the perspective of current 

antitrust doctrine. . . . [M]any of the provisions treated as “unfair methods of 

competition” pricing or marketing activity that we would view today as competition 

on the merits. These included secret discounts, selling surplus stock at reduced 

prices, failing to adhere to fixed bids, competition on elements other than price, and 

other competitive tactics that aggressive competitors could use to win business, but 

that would be disruptive of “stable” market conditions.195

By condoning these practices under Section 5, the FTC was plainly operating in a 

manner inconsistent with the section’s legislative purpose. In 1929, the then-head of the 

Antitrust Division, John Lord O’Brian, began to urge the FTC to re-examine the industry codes 

it had approved and to excise from them any anticompetitive provisions. In response, the 

Commission ultimately revised its rules in at least fifty industries, deleting some of their 

most objectionable features and rephrasing others.196

After World War II, beginning with its action against the Cement Institute,197 the FTC 

changed course and began using Section 5 to attack trade association practices that it found 

were likely to facilitate coordinated pricing. As discussed above, in Cement Institute, the 

Supreme Court affirmed a Commission order finding that an agreement among cement 

producers to employ a multiple basing point price system that the Commission found was 

calculated to produce more uniform pricing was an unfair method of competition that 

violated Section 5. Thirty-five years later, in the DuPont case, the Commission sought to 

extend this precedent to the parallel adoption by competitors in a highly concentrated 

industry of several allegedly facilitating practices, including a multiple basing point price 

 

195Id. at 90.

196Id. at 92.

197FTC v. Cement Inst., 333 U.S. 683 (1948).
Copyright © 2014 Washington Legal Foundation 59

system similar to the one in Cement Institute.198 As discussed earlier, the Second Circuit in 

this case agreed with the Commission that practices that facilitated coordinated pricing 

could violate Section 5, without the need to find an agreement, but only if it could be shown 

that they harmed consumers by raising prices and that there was no legitimate 

procompetitive explanation for the industry’s parallel adoption of those practices. 

Relying on this authority, the Commission has since used Section 5 to prohibit 

collusive practices, such as facilitating practices and invitations to collude, that it believes 

were likely to limit competition and thereby harm consumers even if they did not violate the 

Sherman or Clayton Acts. Some of these actions have involved “exchanges of competitively 

sensitive information” that the Commission alleged would “increase the likelihood of tacit 

collusion.”199 Others have involved what the Commission alleged were private, “naked 

solicitation[s] regarding price,” 200 that did not result in an agreement. All of these cases 

were resolved through consent orders so they did not produce a reasoned Commission 

decision, much less any judicial review of the FTC’s use of Section 5 to attack these allegedly

anticompetitive practices. As a result, there is only a limited public record on which to 

evaluate whether the Commission’s actions in these cases—in some of which the 

Commission itself conceded no actual agreement was reached—were warranted.201 

 

198Id. at 696-700.

199Susan D. DeSanti & Ernest A. Nagata, Competitor Communications: Facilitating Practices or 

Invitations to Collude? An Application of Theories to Proposed Horizontal Agreements Submitted for Antitrust 

Review, 63 ANTITRUST L.J. 93, 94 (1994-95). The authors state that “courts have found a variety of facilitating 

practices to be unlawful under particular circumstances.” Id. at 95-96 (citing, as examples, FTC v. Cement Inst., 

333 U.S. 683 (1948); Nat’l Macaroni Mfrs. Ass’n v. FTC, 345 F.2d 421 (7th Cir. 1965)).

200DeSanti, supra note 199, at 109 (citing Quality Trailer Prods. Corp., 115 F.T.C. 944 (1992); A.E. Clevite 

Inc., 116 F.T.C. 389 (1993); YKK (U.S.A.), 116 F.T.C. 628 (1993)). See also Valassis Commc’ns Inc., 141 F.T.C. 247 

(2006); U-Haul Int’l, Inc. 150 F.T.C. 1 (2010).

201DeSanti, supra note 199, at 107.
Copyright © 2014 Washington Legal Foundation 60

Despite the lack of a full public record in these cases, even those who have objected 

to the Commission’s other efforts to apply Section 5 to conduct that would not violate the 

Sherman Act seem to agree that the FTC’s application of Section 5 to prohibit invitations to 

collude, information exchanges that could facilitate coordinated pricing, and other 

facilitating practices is, in theory at least, a proper use of its authority under that section.202 

When these practices are, in fact, likely to result in higher prices and thereby harm 

consumers, and fail to serve any legitimate pro-competitive business purpose, the legislative 

history would appear to support the Commission’s use of its authority to prohibit them. 

Even though the section’s proponents focused principally on exclusion, rather than collusion, 

there is nothing in the legislative history to suggest that the FTC could not use its authority 

under Section 5 to attack practices that facilitate collusion in a way that would be likely to 

harm consumers.

CONCLUSION

When it enacted Section 5, Congress expected that the meaning of its prohibition on 

“unfair methods of competition” would be developed through a common law process as the 

Commission and courts enforced that prohibition over time, just as the meaning of “restraint 

of trade” and “monopolization” had been developed over time by the courts in deciding 

cases brought under the Sherman Act.203 The proponents of Section 5 would almost 

 

202See, e.g., A. Douglas Melamed, The Wisdom of Using the “Unfair Method of Competition” Prong of 

Section 5, supra n. 1, at 3; Statement of Comm’r Joshua D. Wright, Comm’r, Fed. Trade Comm’n, Proposed 

Policy Statement Regarding Unfair Methods of Competition Under Section 5 of the Federal Trade Commission 

Act (June 19, 2013) (available at www.ftc.gov) (“An invitation to collude satisfies the harm to competition 

element of an unfair method of competition—whether or not it ultimately results in increased prices, reduced 

output, or other harm to competition—because it creates a substantial risk of competitive harm.”).

203See, e.g., 51 CONG. REC. 13,234 (1914) (Remarks of Sen. James Clarke) (“Those of us who think the 

phrase ‘unfair competition’ is adequate understand that it will be for the commission, subject to review by the 

courts, to fill in, under the rule of reason, such things as they may find to be unfair competition.”), reprinted in 

Kintner, supra note 6, at 4642; id. at 11,179 (Remarks of Sen. Hollis) (“The very first case that went from this 
Copyright © 2014 Washington Legal Foundation 61

certainly be disappointed that the meaning of Section 5 has not been developed nearly as 

fully through Commission and court decisions as they expected.

Having the Commission issue a policy statement explaining what it thinks the term 

“unfair methods of competition” means might be helpful, but would not be sufficient, by 

itself, to fill this gap. While such a policy statement might clarify how the FTC intends to use 

its authority under Section 5, it would suffer from the problem the framers of Section 5 saw 

in any effort to define more clearly in the statute itself what constitutes unfair competition. 

Instead, the best means to give content to the words “unfair methods of competition” would 

be to follow the common law approach that Congress intended. This path would require the 

FTC to explain more fully the reasoning behind each of its enforcement decisions and would 

require it to spend less time investigating and more time litigating, as Congress expected,

204

so that a fuller body of well-reasoned precedents could be developed as to what this 

otherwise inherently vague term means.205

 

commission to the court would give a precedent; and there would probably be in a few years a body of 

advancing, progressing decisions on this question that would be a continually growing and improving guide of 

conduct, just like the decisions of every court in the county on the question of negligence in tort cases.”), 

reprinted in Kintner, supra note 6, at 3980.

204Id. at 12,146 (Remarks of Sen. Hollis) (referring to the Commission’s expected “facilities for 

investigation” and “rapid, summary procedure”), reprinted in Kintner, supra note 6, at 4141-42.

205For a contrary view on the efficacy of the case method, see Jan M. Rybnicek & Joshua D. Wright, 

Defining Section 5 of the FTC Act: The Failure of the Common Law Method and the Case for Formal Agency 

Guidelines, 21 GEO MASON L. REV. 1287 (2014). The authors argue that the common law approach has failed to 

define the contours of the FTC’s “unfair methods of competition” authority, and that the Commission should 

instead issue a formal policy statement explaining the purpose and limits of its authority. Id. at 1292 (“[T]he 

Commission’s case-by-case approach to Section 5 enforcement has little to do with the common law process 

and cannot be expected to result in the same development of substantive competition doctrine or possess any 

of its other virtues.”).
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1. Time.

Mywifedevotesherselftothe“businessopportunity”andpaidtojoineverytrainingheruplinerecommends,mostofthetrainingsareinweekendorinweekdayevenings,

thetrainingtimeisfrom6hoursto8hours.Inaddition,mywifehastospendtimetalkingtohercustomers,trainingherdownlines,creatingblogsmarketingtheproductsand

deliveringproductsforhercustomerlivinginChina.Consideringthatmywifehasafulltimejob,thereislittletimeleftforourfamily.UsuallywhenIwanttochatwithmywife,

herroom’sdoorisoftenclosed,IcanhearhersoundofdoingherMAbusiness,Isimplycan’ttalktoher,intheweekendsoreveningswhensheworksherMAbusiness.

2. Money.

Asmywifeworksveryhard,youmightthinkshecouldmakeagoodamountofmoney.Therealityisthecontrary.From2020Q3Iinsistedthatshemustcountthemoneyand

timespentinher“MarketAmericabusiness”andI’mgladthatshedidit.Fromhernotes,in2020Q3,shespent$3449forselfandfamilyuse,andhersalescommissionwas

$213.In2020Q4,shespent

$3380forfamilyuse,andsalescommissionwas$286.In2021Q1,spendingwas$2084,salescommissionwas$61.Intotal,duringthepast3quartersherexpenseis$8913,

herrevenueis$566,hernetlossis$8347.Allherself-expenseisusedontrainingsanddietarysupplementsfromMarketAmericaincludingvitamins,minerals,fishoil,protein

powder,coffee,tea,collagen.Whilemywifelosesmoney,heruplinetakesacommissionfromherexpense.Nowmywifestartstohaveherownrecruits,andisdreamingof

makingmoneyfromherteam.

3. Losttrustinmedicalprofessionalandmedicine.

Mywifeishealthy,herannualhealthexamdoesn’tshowanyissuesexceptonlyonceshewasfounddeficientiniron.Itwasduringthattimeshewasapproachedbysomeone

sellingMarketAmericasupplementandbecamea“MarketAmerica”UFO(theMarketAmericanameforrepsthatrecruitothers).

Nowshedoesn’tgotothedoctorwhenshehassomehealthissues,instead,shebecomesaddictedtothesupplements,believesthatdoctorsarenottrainedinnutritionand

doctorshavenoideaaboutpreventivemedicine.Nowshethinksthatsupplementsarenecessaryinherlife:everymorningandnight,shedrinksonebigcup(12oz.)of

“Isotonix”supplements.Everyday,shetakesMarketAmerica’sproteinpowder,collagen,vitamingums.

Whenshefeelstiredorsleepy,shedrinksMAproductslikeTurnup,MochaTonixcoffee,etc.Whenshecooks,sheputsthefishoilsfromMAinoursalad.Alloftheseproducts

havenoevidenceotherthansomeanecdotestoshowthattheyareeffectiveinimprovinghealth,thereisnoevidencetoshowthatMAproductsarebetterthanthosedietary

supplementsfromCostco,TraderJoe’soranysupermarket,butthepriceissignificantlyhigherthanmostnon-MLMproducts.

Mywifeistheonlyoneinourextendedfamilywhodoesn’twanttotakecovidvaccinebecauseshethinksthatshehas“strengthened”herimmunityviatheMarketAmerica

solution!

Notonlyshebecomesthedoctorforherself,shealsobecomesthedoctorforourfamily.EverytimeIhavesomeailments,ornotfeelingwell,sheproposessomecombination

ofMAdietarysupplements.Theyarenoteffectiveformeatall,andIjusthavetostopsharinganyofmypainwithmywifeandcheckwithmydoctorssecretlytosavesome

expenseforourhousehold.
2

Conclusion

WhenmywifejoinedMAin2016,shewasattractedbythepotentialoffinancialfreedom.Shedidn'trealizeherfinancialsituationuntilIinsistedthatsherecordhergainsand

losses.Evenaftersheseesthenumber,heruplinecanstillholdherinthenetworkmarketingbusiness,shebelievesthatwithmoreinvestment,she’llonedaymakeaprofit

fromMA.

Asherhusband,Iseehowshegetsmoreandmoreisolatedbyfamily,howhertimeinourfamilybecomesless,howshewasspendingtensofthousandsofdollarsthat

probablywon’tcomeback.Howshelosthertrustinmedicineanddoctors.NowsheevenwantstoquitherjobandbecomeafulltimeMAUFO.

FromMA’searnerdisclosurehttps://market-america.info/mais,Idon’tunderstandhowmywifecouldeverthinkabusinesswhereonlythetop1%makeanincomemore

than$46730couldgiveherfinancialfreedom.Ifeelsadforherandourfamilyeveryday.

Iwantthatthetragedyofmywifeandfamilytobeavoidedinthefuture.IhopethattheFTCcouldreformthebusinessopportunityrule.Belowaremytwocents:

Anybusinessopportunityshouldadvertisethetypicalearningpotentialhonestly(average,90percentiles,99percentiles),andgiverecruitstimetothinkaboutit.

Uplineshouldn’tmakeanyprofitfromtheirteammember’ssales.Theyareallindependentcontractors,theyareequaltoeachother,whyuplinecanprofitfromdownline’s

work?Isn’taone-timereferralbonusenough?

TheMLMcompanyshouldberesponsibleofwhattheirrepsaresaying.EventhoughMA’sofficialwebsitedoesn’tmentiontheirsupplementscouldcureanydisease,my

wife’suplineandtheirnetworktalksaboutitandtheyarenotrecordingitandreportittotheFTC.

Thanks

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/174
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Monday, June 28, 2021 3:48 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonMonday,June28,2021-15:47Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Conor

LastName:Healy

Affiliation:IPVM

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:

Asawatchdogandconsumerpublicationforthesurveillanceindustry,wearepleasedtoseetheFTCconsiderastrongerstanceonfalseMadeintheUSAclaims.IPVM

regularlyseessellersprofitfromliesaboutthetrueoriginsoftheirproducts,andbelievesourindustryservesasademonstrativeexampleforhowsuchbehaviorcausesreal

harmtohonestAmericanbusinesses.

Inthesurveillancespace,thisevencomesatacosttoUSnationalsecurity,andresultsinFederalagenciesunwittinglypurchasinghardwarethatoriginatesfromsanctioned

companiescomplicitingenocide.

Althoughdisagreementremainsastotheimportanceoforiginforconsumerpreferencesat-large,governmentpurchasingregulationscreateaclearpreferenceproductsthat

areMadeintheUSA.SinceFederal,State,andLocalagenciesmakeupalargeproportionofdemandforsurveillanceproducts,theimpactoftheserulesisthatbusinessesinour

industrysellingAmericangearhaveaprofitableadvantage.Thosewhoarewillingtolie,maskingcheaperforeign-madeproductsasMadeintheUSA,standtomakeeven

moreprofit.AndthiscreatesaneconomicdisadvantageforthousandsofhonestAmericansmallbusinessesthatwouldotherwisereceivethesegovernmentcontracts.

Thisisfarfrombeingahypothetical.AninvestigationbyIPVMthatwillbepublishednextweekshowsthatcertainsellersinourindustryaresobrazenintheirfraudastolist

secretly-relabelledproductsforsaleontheFederalprocurementmarketplace,GSAAdvantage.Togivejustoneexample,14listingsofproductsbyLorexwerefoundonthe

site,andpublicrecordsshowtheywentontobesoldtoFederalagenciesliketheUSAirForce.AlltheseproductsarefalselydescribedasbeingMadeintheUSA.Thosefamiliar

withsurveillancebusinesseswillknowthatLorexisawholly-ownedsubsidiaryofDahua;theirproductsarecosmeticallyalteredversionsofDahuamodels,whicharemadein

China.FederalpurchasingofDahuaproductswasbannedfornationalsecurityreasonsunderthe2019NDAAbecausetheyposewell-evidencedcybersecurityrisks.Dahuais

alsosanctionedforitscomplicityingenocide,asakeysupplieranddesignerofpolicesurveillancesystemsusedtotrackUyghursinXinjiang.

FraudslikethesedonotoccurbecausesellersdesiretoundermineUSnationalsecurity.Rather,theimpetusforthesefraudsistoprofitfromfalseclaimsregardingproduct

origin.Theyoccurbecauseunscrupulousgovernmentcontractorsseektoprofitfromtheadvantageofsellingproductsthatare“MadeintheUSA”,attheexpenseofothers

andwithuntoldside-effects.Inotherwords,theriskstoAmericannetworksaretheside-effectratherthedisease.

Inthatsense,theresponsibilityfallssquarelyontheFTC’sshoulderstotakeaction.WesupporttheproposaltodayasanecessaryexpansionofFTC’sabilitytoimpose

consequencesonviolatingbehavior.Rightnow,badactorshavelittleincentivetocareaboutthedubiousoriginsoftheirproducts.WebelieveclearrisksofrealFTC

enforcementcanchangethat.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/50
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 11:18 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-11:17Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Aaron

LastName:Greenspan

Affiliation:PlainSite

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

TheFTCisinauniquepositiontoenforcelawsthathaveadirectimpactonincomeinequalitybyreiningintheflagrantlyunlawfulpracticesofbillionaires.

Specifically,ElonMusk,whowasrecentlytherichestmanintheworld,hasbeenviolatingtheFTCActforyearsthroughhiscompany,Tesla,Inc.TheFTCiswellawareofmany

oftheseviolations,havingbeenreferredaconsumerprotectionmatterbyNHTSAasearlyasOctober17,2018.YetwhileGermanyandevenChinahavetakenactionto

protecttheirconsumersfromTesla'sfalseclaims(regardingAutopilotandvehiclesafety,specifically),theFTChasdonepreciselynothing.Meanwhile,thelistoffalseclaimsby

ElonMuskissoextensivethatthereisanentirewebsitededicatedtohislies,presentlyon-lineathttps://elonmusk.today.

Similarly,theFTCshouldbetakingactionwithregardtofakeaccountsonFacebook(referredtointernallyas"SUMA"forSingleUserMultipleAccounts)—amatterofwhich

MarkZuckerberghaspersonalknowledge.Hislieutenant,AmiVora,isonrecordinalready-disclosedOctober26,2017e-mailtotopexecutivesopenlyworryingthat"Ithink

thereisarealchancethisisaverybadmomentforus—'Facebookliesaboutitsuser#stogetrecordprofits.'Thecombooflong-termerodedtrust+congressionaltestimony+

suma+earningsmeansthetargetonourbackjustgetsbigger."

That'sbecauseFacebookactuallydoeslieaboutitsusernumberstoachieverecordprofits,hasliedforyears,andsinceWallStreetanalystsarepaidtolooktheotherway,itfalls

toregulatorybodiessuchastheFTCandSECtotakeaction.Thathasnothappenedandtheresultshavebeencatastrophicfordemocracy.

IbelieveFacebookandTeslarepresentthetwolargestcorporatefraudsinhistory,withtheircombinedmarketcapitalizationatvariouspointsapproachingtwotrilliondollars.I

havewrittendetailedreportsonbothcompanies,accessibleathttps://www.plainsite.orgfromthehomepage.IalsotestifiedbeforetheUKParliament'sDCMSsubcommitteeregardingtheFacebookfakeaccountissue.Seehttps://www.parliamentlive.tv/Event/Index/d434d37f-c020-44b4-bda8-11bbad29ac58.

IsincerelyhopetheFTCre-examinesitsenforcementapproachtothesecompanies(andothers,suchasAirbnb,HerbalifeandCreditAcceptance

Corporation)anddeposeseverycurrentandformertopexecutive,mostespeciallyincludingMarkZuckerbergandElonMusk.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/130
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 4:07 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-16:06Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Alden

LastName:Abbott

Affiliation:MercatusCenteratGeorgeMasonUniversityFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:VA

Submitwrittencomment:

TheFTC’sannouncementthatitmayconsiderrescindingits2015“unfairmethodsofcompetition”policystatement(“Statement”)ismostconcerning.TheStatement

elegantlyenunciatedCommissionpolicyinchallenging“unfairmethodsofcompetition”whicharebarredbySection5oftheFTCAct.

AlongwithRepublicanCommissionerJoshWright,threeDemocrats–ChairwomanRamirezandCommissionersBrillandMcSweeny–backedtheStatement.

TheStatementhastwoimportantlimitingprinciples.

FIRST,thisbipartisanStatementalignsFTCcompetitionenforcementwiththeoverarchinggoalofU.S.antitrustenforcement,whichisthepromotionofconsumerwelfare–a

goalexplicitlyendorsedbytheUSSupremeCourt.InReiterv.Sonotone(1979),theCourtstatedplainlythat“CongressdesignedtheShermanActasa‘consumerwelfare

prescription.’”

SECOND,alongwithconsumerwelfare,theStatementalsostressesthattheFTCwillevaluateapracticeunderaframeworksimilartotheantitrustruleofreason,thatis,anact

orpracticechallengedbytheCommissionmustcause,orbelikelytocause,harmtocompetitionorthecompetitiveprocess,takingintoaccountanyassociatedcognizable

efficienciesandbusinessjustifications.

TheseprinciplesmeanthatFTCcompetitionenforcementwillfocusonpracticesthatundermineconsumerwelfarebyharmingcompetition.Byconsideringefficienciesand

businessjustifications,theFTCwilltakecaretoavoidtheerrorofmistakenlychallengingefficientbusinesspracticesthatwouldactuallybenefitconsumers.

Regrettably,abandonmentoftheStatementwouldcreategreatconfusionanduncertaintyfortheprivatesectorastotheFTC’senforcementintentions.

Itwouldmeanthatevenifbusinessescompeteonthemeritsandadvanceconsumerwelfare–thatis,benefitthegeneralpublic–theymaybesubjecttoFTCinvestigations

andlawsuits.

Thisuncertaintywilldeteraggressivecompetitiononthemeritsthatspursinnovationsandbringsforthnewandbetterproductsandprocessesthatbenefitconsumers,and

theeconomyasawhole.(Thinkofallthebenefitscreatedbytheinterneteconomythatarethefruitofinnovativebusiness

actions.)Itwillalsoimposeunwarrantedinvestigationandlitigation-resultedcostsonbusinesses,hamperingtheirabilitytoservetheircustomerseffectively.

Finally,sinceexistingU.S.caselawrecognizestheconsumerwelfarestandard,newFTCsuitsthatignoreconsumerwelfareandcompetitiononthemeritswouldlikelyfail,

leadingtoawasteofpublicandprivateresources.

Inshort,abandonmentofthesection5statementcouldspurFTCactionsthatwouldbebadforconsumers,badforinnovation,andbadfortheAmericaneconomy.Before

acting,,theFTCshouldthinkagainandonceagainendorse,notrescind,thebipartisanStatement.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/158
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Monday, June 28, 2021 7:45 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonMonday,June28,2021-19:45Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Robert

LastName:Fischer

Affiliation:Consumer

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

TheTelecommunicationsActof1996requiredLocalExchangeCarriers(LECs)tooffernumberportability.Solet'sthinkexaminethat:theideawasthatifaconsumerchanged

serviceproviders,herexistingcontactswouldbeabletoreachherusingthesamenumber.

ContrastthatwithApple'siMessageandFaceTime.Whenaconsumersignsup,herphonenumberisused(IwouldpositstolenbyApple)suchthatallotheriOSmemberscan

initiateFaceTimecallsandiMessageactionstotheconsumer.

WhatisaFaceTimevideocallbutanenhancedphonecallfromyesteryear?

WhatisaniMessagebutanenhancedtextmessagefromyesteryear?

ButiftheconsumerbuysanAndroidphone...thereisnoportability.Existingcontacts'FaceTimecallsring,unanswered.iMessagesmaybesenttoherMacbookbutnever

appearonherphone.TorememberthisrequiresPROACTIVEactionsbytheconsumerto"reclaim"herphonenumberfromApple'secosystem.

ApplemakesamockeryofexistinglawsandregulationsbyduplicatingtheservicesprovidedbyLECs-atgreaterscale-andrefusingtoprovideconsumerprotectionsthe

incumbentsmustprovide.

Itisanunfairsystem,andonethattakesawayconsumerbenefitspreviouslywon. We*solved*theproblemofnumberportability...in1996. Applehasrecreateditforprofit,

forlock-in,andtosupportsupracompetitivepricing.

ThankstoDisney'sMoviesAnywhere.com,anymovieIbuyhasitsrightsinstantlysyncedbetweentheTechGiants'ecosystems.Thatdoesnotexistformusic,books,

newspapers,orvideogames,despiteIPholder'senjoyingalegalmonopoly.Thatalsodemonstrateshowpowerfultheseecosystemsare-onlyDisneycouldstanduptothem.

Theanswerissimple:marketcapitalizationtestsforcebreakups.Companiesthatachieve$1trillioninmarketcaphavefiguredouthowtoavoidcompetition.Breakthemup.

Thankyou.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/58
1

Smith, Michelle

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 7:31 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-19:31Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:JohnW

LastName:BudgickII

Affiliation:DisenfranchisedbyAmazon

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:

Amazondestroyedmylife.

Hadexcellentcreditscore,decadesofnotasinglemissedpaymentonmyreport,andhavespentthepast15years(well,alluptoJuly12th,2020)beingobsessivelyprivate.Asa

result,Iwasofferedonthespotfinancing...Significantonthespotfinancing.CitiFlexPay.OnAmazon.Cuewhatcanonlybedescribedasresolutionhell.Attorneystryingto

frameme,manufacturednarrativesandcounternarrativesaimedatdiscreditingme,insolvency,bilkingof3rdpartysellers,gagorders,promises&lies&misdirectionanda

concertedattempttousetheatypicalchainofmisdoingsontheirpartasaberrationsonmine.

Thankyouforthisopportunisticpulpitandapologiesforanybreachindecorum.Havingsaidthat-here'sashortintro.

IsitnotweirdforAmazontocontractoutDavisWrightTremaineattorneystotrytointimidatemewhentheyhavetheirowncounsel?AndweirderstillthatnoAmazonianwill

evenadmitsaidfirmwascontractedbyAmazon?LookbeyondthesuperficialshellofthenarrativefurnishedbyAmazon.Examinethedataholistically.Everythingauth'd.

Multipleguaranteesofshipment&processfulfillmentfromnumerousAmazoniansarepublishedrighthereonmyprofile.

Timestamped.

Sowhathappened?WasitsomekindoflicensedalgorithmbyAmazontoCitiforuseintheamazonmarketplace?Isthatwhathappened?Wasthesoftware/codemakingup

thatalgorithmkeptsoundercoverof"proprietaryinformationandprocesses"thattheguaranteeAmazonattachedtoitwhilelicensingittoCitihadtobetakenonblindfaith

byCiti?HasthisallbeenAmazontryingtodigitselfoutofagraveofitsownmakingsinceJuly12th-hopingtohavemetakeitsplace?

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/170
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 3:11 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-15:10Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Jon

LastName:Morgan

Affiliation:Democrat

FullEmailAddress

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

OnorjustpriortoJune1,myaccountonFacebookwasintrudeduponbyanindividualwhothenalteredtheimagesfortheheaderofabusinesspagethatImaintain.This

resultedintheimmediatedisablingofmyFBaccount,andissuethatI'vebeentryingtoreversesincethen.AssoonasIrealizedthatthepagehadbeenalteredwithoutmy

permission,Iattemptedtologintomyaccount,andthatiswhenIdiscoveredthatmyaccounthadbeendisabled.

FacebookpromptedmetoverifymyID,butwhenIdidIwastakentoapagewhichstatedthatmyaccounthadbeendisabledforviolatingtheircommunitystandards,and

thatmyaccountwouldnotbereviewed.Additionalattemptstoappealhavebeenmetwiththesamemessage.IhavealsotriedtoreachFacebookviaanumberofsupport

emailaddressesIfound,andfiledacomplaintwiththeBBB.Mostly,IwouldliketospeakwithsomeoneatFacebookandtrytogetthisstraightenedout.Otherthanthe

incidentwiththeintrusion,Ihavealmostalwaysfollowedtheircommunitystandards.ThereareanumberofgroupsandpagesthatIwasadministeringthatIneedtohave

accessto.Furthermore,thereareanumberofphotosonFacebookofmysonwhopassedawayinAprilfrombraincancer,andIreallywouldliketobeabletohaveaccessto

themagain.

AsI'veresearchedpossiblesolutionstomyissue,IhavediscoveredthatthisisevenmorewidespreadthanIcouldhaveimagined.Everyday,therearenewreportsfrom

peoplewhoseaccountswererestrictedordisabledwithbarelyanexplanationfromFacebook.And,itisnearlyimpossibletoreachFacebook'ssupportteam.Themost

successfulstoriesarefromthosewhoreachedouttosupportforFacebook'shardware,suchastheirOculusproduct,withthehopethatthesupporttherewouldassistthem

withre-activatingtheiraccount.

Asidefromwantingmyaccounttobere-enabled,Ijustthinkthatsomethingmoreneedstobedone.Facebookneedstoimprovethewaysthatitcommunicateswithitsusers

aswellasitssystemformoderation.

Moreofmystorycanbefoundhere:http://www.gazerbeam.com.

Thankyou,

JonMorgan

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/22
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Sunday, June 27, 2021 2:30 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSunday,June27,2021-14:30Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Matthew

LastName:Krupczak

Affiliation:KrupczakOrg

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:https://www.youtube.com/watch?v=AlpIrdaQmHU

Submitwrittencomment:

Hello,

IamayoungprofessionalandstudentofcomputersciencecurrentlybuildingacareerinTechnology.

IfearIhavebeendirectlyharmedinmyprospectsforemploymentandinterstatecommercebywell-doccumentedanti-competitiveemployeenon-poachingagreements,

predatorypricingagainstandacquisitionoftechnologystartups,andprohibitivedigitalappmarketplacepoliciesbyseverallargetechnologyfirms.

MyquestionfortheFTCis:whatstandardofproofmustthecommissionmeetfordeterminingifthisactivityviolatessection1,andsection2,oftheShermananti-trustact?

Thankyou.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/6
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 9:16 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-09:16Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Lillian

LastName:Salerno

Affiliation:Entrepreneur/formerpublicservantFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:Iamafounderof RTIasyringeinnovatorandmanufactureroftheworldsfirstretractablelowdeadspacesyringe.RTIhasstruggledtogainUS

marketsharebecauseofthemonopolisticpracticesofthedominantmanufacturer. Theresultsofthemonopolisticpracticeswashighlightedduringthepandemicwherein

theDominantsupplierwasunabletomeetthesyringedemandneededrequiredfortheCOViD-19 vaccinationcampaign.FortunatelyRTIwaspresentandsteppedupto

meetthechallenge.

Themonopolisticpracticesofdominantsuppliers inthehealthcaresupplynotonlycoststheUSGbillionsofdollarsin inflatedhealthcarecosts butalsocostsAmericanlives.

Thepandemicshowedhowfew essentialhealthcaresuppliers/manufacturers havesurvived. TheFTChasanopportunitytohelpnavigateapathforward.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/74
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 2:29 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-14:29Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Zahida

LastName:Ullah

Affiliation:CitizenwithdualnationalityFullEmailAddress: ConfirmEmailAddress:Z

Telephone:

FTC-RelatedTopic:

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:TX

Submitwrittencomment:

HowdoestheFTCmonitorprivacypolicysetupinbycountriesand/orinstitutionsoutsideoftheUS? DoexpatriatesespeciallyBritishhaveanestablishedsystem,withconsent,

whentheymove? WhataboutthepeoplethatmovefromStatetostate,howaretheymonitoredunderthedifferentjurisdictionforeachState?

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/14
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 9:30 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-09:29Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Deborah

LastName:Bowers

Affiliation:YorkvillePharmacy

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:CVSCAREMARKverticalintegrationtakesawaycompetitionwhichinturnmakesamonopolyanddrivesupprices.Youdon’thavetotakemyword

foritgoogleandyouwillfindmultiplearticlesthatprovetheyareoverchargingandscammingthesystem.Theytakeawaypatientchoicewhichinturnmakesforworsepatient

experiences.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/82
From: Federal Trade Commission via Federal Trade Commission > 

Sent: Saturday, June 26, 2021 1:57 PM 

To: JulyPublicComments 

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for 

July 1, 2021 Open Commission Meeting 

Submitted on Saturday,1 une 26, 2021-13:56 Submittal byanonymous user: Submitted values are: 

First Name: Linda 

Last Name: Knauss 

Affiliation: N/A 

Full Email Address Confirm Email Addres 

Telephone: 

FTC-Related Topic Competition 

Registerto speakduring meeting No 

Lin kto web video statement 

Submit written comment Please take a good hard bokat what mail order pharmades r doing. They rfordng usto um them because ofthe prim. 

Smaller pharmades r beingforcal to dosed down. Then there's a major issue abouttemperature control &timelydelivery. 

The results ofthis submissbn maybeviewecl at 

https://wwwftcgov/node/1591350/submission/10 

1 1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 1:57 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-13:56Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Linda

LastName:Knauss

Affiliation:N/A

FullEmailAddress: ConfirmEmailAddress

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:Pleasetakeagoodhardlookatwhatmailorderpharmaciesrdoing.Theyrforcingustousethembecauseoftheprice.

Smallerpharmaciesrbeingforcedtocloseddown.Thenthere’samajorissueabouttemperaturecontrol&timelydelivery.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/10
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 6:21 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-18:20Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Kenneth

LastName:Evans

Affiliation:Consumer

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:MA

Submitwrittencomment:Safety,onesmallwordwithabigmeaning.Iamadiabetic,type1.WhenIfirstneededtoacquiresyringes,frommyinsurancecoveredprogram,for

myinsulinittookthreetriesforExpressScriptstogetitright.IfIhadnotstartedwellinadvancethiscouldhavebeenaseriousproblem.Beingabletogotoalocalpharmacy

makesitsomucheasier,quickerandsafer.Ineverhadaproblemgettingthecorrectsyringesorotherproductsfrommylocalpharmacy.Iunderstandthecostbenefitanalysis

logicfortheinsurancecompanybut,safety.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/30
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 10:36 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-10:36Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Hemant“Henry”

LastName:Patel

Affiliation:AAHOA

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:Iwastheboardmemberand.Chairmanoflargesthotelownersassociation.Majorityofourhotelsarefranchisedpropertiesandtherearelotsof

challengestotheFranchiseesduetounfairbusinesspractices.ThiswaythefranchisorshaveliterallytakenlotsofprofitawayfromFranchiseesandalsolotsoftradingcouldbe

lookedasunethicalorillegalaslotsofthis Franchisorownedbrandsarepubliclytradedcompanies.CongressinpasthavetriedtobringfairnessbyintroducingFairFranchise

bipartisanbills.FTCcanbegamechanger..

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/106
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 9:08 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-21:08Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Nada

LastName:Terstenyak

Affiliation:Consumer

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

Please,please,pleaserememberuspatients,Ifeelsecure,confidentandtrustingindealingwithmypharmacistfacetofaceaboutanythingandeverythingrelatedtomy

medications.Thisisvery,veryimportanttousknowingthatIcandependonmylocalpharmacyandhavePERSONALtrustworthyrelationship.Thankyouforreadingmy

comments,takingitintoconsiderationthemostimportant therelationshipofTRUSTrLOCAL pharmacy!

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/34
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 9:06 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-09:05Submittedbyanonymoususer: Submittedvaluesare:

FirstName:RICH

LastName:GANDHI

Affiliation:ReformLodging

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:NJ

Submitwrittencomment:Wouldliketodiscussunfairanddeceptivebusinesspracticesinregardstofranchisorandfranchisees.Franchisorsareopenlystealingfrom

franchiseeswithoutanyregardfortheirwellbeing.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/58
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 8:56 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-08:56Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Todd

LastName:Achilles

Affiliation:CEO,EvocaTV

FullEmailAddress:t

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:

Dualcontentsuppliers–horizontallyintegratedmedianetworksthatsupplybothbroadcastchannelsandnon-broadcastcontent–areengagedintyingandrefusalstodeal.

Bothoftheseanticompetitiveactivitiesharmconsumers.Thedualcontentsuppliersarepursuingtheseanticompetitiveactionstoprotectarevenuestreamtowhichthey

haverecentlybecomeaccustomed.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/26
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 8:43 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-08:42Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Matthew

LastName:Lower

Affiliation:Employeeboundbynon-competeFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

Thankyouforreviewingthistopic.

Non-competeagreementsarefundamentallyatoddswithat-willemployment.

Theyintroduceanobviouspowerimbalancebetweenemployerandemployees.

Theyarenotenforcedconsistently,andstateslikeCaliforniahaveseenincrediblesuccessinignoringthem.Pleasestrikedownnoncompeteclausesandletthehighest-bidding

employersemploywhotheywant,whentheywant.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/2
1

Smith, Michelle

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 10:23 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-10:22Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Donna

LastName:Schexnaydre

Affiliation:Independent

FullEmailAddress:

ConfirmEmailAddress: m

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:IsupportbreakingupCVS.Consumersarelosingoutonlife-savingmedicationsthathavetobepurchasedatCVSduetothe

monopolywhichhasbeencreated.DoyourjobfortheAmericanpeople. We

deservetruthandhonesty.Wedon’twantbigpharmacontrollingourlives.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/98
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 8:59 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-08:59Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Jeff

LastName:Chester

Affiliation:CenterforDigitalDemocracyFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:Yes

Linktowebvideostatement:www.democraicmedia.orgSubmitwrittencomment:Iwillprepareacommentthatdiscussespastproblemsatcommissionandchallenges

ahead,aswellasmakespecificrecommendations.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/34
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Monday, June 28, 2021 3:07 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonMonday,June28,2021-15:06Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Peter

LastName:Tregillus

Affiliation:None,retiredcitizen

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:CO

Submitwrittencomment:BreakuptheeyeglassandframecompaniesorworkwiththeEUtogetitdone. EyeglassesareheavilybrandedandmadeinChina.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/42
1

From: Federal Trade Commission via Federal Trade Commission <

Sent: Tuesday, June 29, 2021 9:52 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonTuesday,June29,2021-09:51Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Linda

LastName:Holliday

Affiliation:None

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

RegardingFacebook,don'toverlook--ThepayingcustomersofFacebookareadvertisers.

AndtheywouldbeclosetounanimousinsayingthattheyhavenochoicebuttouseFacebook.Askthem.Thiswasnevertrueofanyadvertisingvehicle.

OnecouldargueTVwasmandatoryforcertainproducts,butnosinglenetwork.

Thatshouldbetheprimarybasisfordefiningmonopoly.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/10
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 9:15 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-09:15Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Patricio

LastName:Silva

Affiliation:Independent

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:IwouldliketoaddressthenationwideissuebehindtheLiveEventTickingIndustry.TheUSCommitteeonEnergyandCommercehasalready

discussedthatissueontheHousefloorbutnosolutionshavebeenputinplaceyet.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/70
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 10:03 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-22:02Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Loretta

LastName:Boesing

Affiliation:UniteForSafeMedications

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:https://youtu.be/Ad2sjuayfj0Submitwrittencomment:

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/178
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Saturday, June 26, 2021 5:28 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonSaturday,June26,2021-17:28Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Emily

LastName:Hellmann

Affiliation:None

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:Non-competesfurtherthepowerimbalancebetweenemployeesandemployers,andmakeitharderforemployeestonegotiatebetterpayand

benefits.Peopleshouldhavethefreedomtochangewheretheyworkandcontinueworkinginanindustrythatfitstheirskillset-non-competesinhibitthisfreedom.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/26
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Monday, June 28, 2021 1:23 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonMonday,June28,2021-13:22Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Austin

LastName:Phillips

Affiliation:NA

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Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:IamrequestinganindependentauditofthefinancialinformationandincomesourcesofLinaKhandatingthelast15years.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/34
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Friday, June 25, 2021 9:42 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonFriday,June25,2021-09:41Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Elijah

LastName:Turner

Affiliation:Lawstudent

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:TuningintoseemyprofessorinhernewroleasChairoftheFTC

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/86
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:49 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:48Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Carl

LastName:Szabo

Affiliation:NetChoice

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:https://youtu.be/GE7WExzfMeQSubmitwrittencomment:

WeworrythatseveralofthechangesbeingconsideredwouldunderminetrustandcredibilityintheCommission,exposeittopoliticallymotivatedactions,andmovetheFTC

awayfromfocusingonprotectingconsumersandatthesametimeremoveconsumerinput.

WeasktheCommissionersto:

1.VoteAGAINST“streamlining”Section18rulemakingproceduresastheproposalunderminestheMagnuson-MossActandCongress’sintentinpassingit,anditgreatly

curtailspublicinputinFTCrulemaking;

2.VoteAGAINSTrescindingoramendingtheadoptedprinciplesregarding“unfairmethodsofcompetition”underSection5oftheFTCActasthe

2015PolicyStatementprovidesaffectedpartiesandthepublicwithnoticeofwhatconductispermissible,supportstheruleoflaw,andappropriatelyconfinestheFTC’s

discretion;and

3.VoteAGAINSTchangestoenforcementinvestigationsasCongressintentionallystructuredtheFTCtobeamulti-member,consensus-drivenorganization,andtheproposed

“streamlined”subpoenaprocesswouldviolatethatstructure.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/46
1

From: Crenshaw, Jordan < >

Sent: Tuesday, June 29, 2021 2:16 PM

To: JulyPublicComments

Cc: Heather, Sean; Quaadman, Tom

Subject: U.S. Chamber Comments for July 1 Open Meeting

Attachments: US Chamber_Comments_Open Meeting_FTC (final).pdf

To Whom It May Concern:

Please find attached comments from the U.S. Chamber of Commerce regarding the July 1 Open Meeting.

Thank you!

Best,

Jordan Crenshaw

Vice President

Chamber Technology Engagement Center

U.S. Chamber of Commerce

www.americaninnovators.com
June 29, 2021

The Honorable Lina Khan

Chair

Federal Trade Commission

Washington, DC 20580

Re: July 1, 2021 FTC Open Commission Meeting

Dear Chair Khan:

The U.S. Chamber of Commerce writes to express our concerns with the Open Meeting 

scheduled for July 1, 2021 that was noticed on June 24, 2021.1 Although the Federal Trade 

Commission (“FTC” or “Commission”) has expressed its intention to “open the work of the 

Commission” to the public, the FTC has failed to provide meaningful notice or adequate 

opportunity to comment on the pending items to be voted upon on July 1. 

In the Notice, the Commission provides vague and brief summaries of significant FTC 

rulemakings, process, and policy changes that fail to provide the public with adequate notice of 

the proposals. For example, regarding Section 18 rulemaking procedures, the Notice merely

states “The Commission will vote on whether to streamline the procedures for section 18 rules 

prohibiting unfair or deceptive trade practices. Section 18 rules allow the Commission to seek 

redress for defrauded consumers and penalties against firms that cheat.”2

The descriptions of the proposal fail to describe the scope or subject matter of potential 

rules as well as the proposed streamlined Section 18 rules themselves. A Section 18 streamlining 

could impact a wide range of conduct. In light of the recent 9 to 0 decision by the Supreme 

Court that held the Commission has already exceeded its statutory authority in consumer redress 

cases3, it would benefit the Commission to seek meaningful public input and establish a robust 

record that achieves the best and legally durable public policy result.

1 Federal Trade Commission Announces Agenda for July 1 Open Commission Meeting (June 24, 2021) available at

https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-open-commission-meeting. 

(“Notice”) 

2

Id. 

3 AMG Capital Management, LLC v. Fed. Trade Comm’n, No. 19-508 (Apr. 22, 2021). 
The Chamber recommends that if the Commission seeks to conduct open meetings to 

vote upon policy or significant process changes, it should follow the bipartisan example of the 

Federal Communications Commission (“FCC”) which notices meetings months in advance.4

The FCC, beginning with former Chair Ajit Pai in 2017 and continued by Acting Chair Jessica 

Rosenworcel, publishes the full proposed text of orders and proposed rules to be voted upon 

three weeks in advance of open meetings. This approach follows the spirit of the Administrative 

Procedure Act and adequately notifies the public about what the agency intends to consider,

therefore enabling meaningful public comment. 

We urge the Commission to show good faith and transparency by providing the public 

with the text of its proposals. The Commission should give the public at least three weeks, as

opposed to the one week provided by the FTC for the current meeting, before its Open Meeting 

to comment. 

Based upon the limited notice provided by the Commission, the Chamber offers the 

following substantive concerns about the proposed topics at the Open Meeting:

Section 18 Rulemaking Procedures:

The Supreme Court made it clear that the Commission had been misusing its 13b 

authority for years whenever it attempted to seek monetary relief under 13b. Congress has 

already outlined a path for the FTC to seek monetary relief for cases that arise from fraudulent 

and dishonest conduct in Section 19. Section 18 should not be used to circumvent the Supreme 

Court ruling, nor should the Commission get out ahead of the pending Congressional debate over 

when such remedies would be appropriate.

While it is unclear from the posted agenda for the open meeting what is envisioned by the 

use of the word “streamlining,” it is clear is that the FTC should, for now, use Section 19 to 

prosecute such cases and not consider writing rules that do an end-run around the Congressional 

process. 

“Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under 

Section 5 of the FTC Act” (2015):

The statement of principles was developed on a bipartisan basis that served as a path 

forward for the agency to bring viable Section 5 Unfair Methods of Competition cases that may 

not be entirely consistent with the antitrust laws. The statement remains sound because it tethers

enforcement both to harm to the consumer and to the rule of reason standard.

The Notice for the open meeting fails to put forward any objective rational for removing 

the guidance. Nor does the Notice suggest that the Commission plans to replace such guidance 

4 See Open Commission Meetings, Federal Trade Commission available at https://www.fcc.gov/newsevents/events/open-commission-meetings.
with updated guidance. It seems premature to make any decision around the guidance without a 

more fulsome debate, including FTC workshops with stakeholders. In the end, any removal of 

existing guidance should only be done when updated guidance is ready for 

consideration. Finally, without bipartisan support, guidance will fail to stand the test of time and 

lead to lengthy court challenges brought on by partisan impulses. 

Enforcement Investigations:

The Federal Trade Commission’s notification of its plans to consider “a series of 

resolutions” is vague and does not provide any specificity as to what is truly under 

consideration. Such an approach is counter to the goal of transparency and the purpose of open

meetings. As a result, it is difficult for the Chamber to comment. 

However, the Notice signals the intent to use omnibus resolutions to empower the staff to 

launch investigations without seeking a vote from commissioners. The Chamber strongly 

opposes any such attempt to delegate Commission votes to initiate competition investigations to

a staff level decision. Omnibus resolutions lead to “fishing expedition” that circumvents 

the oversight that comes from the Commission having to approve staff proposed investigations. 

Further, the notion that a single commissioner can turn a staff-initiated investigation into 

a compulsory exercise holds the potential for a gross abuse of power. Yet, this is exactly what 

the agenda for the open meeting suggests is planned. Strong enforcement does not need to be 

done in an abusive manner, but these efforts to “streamline” investigations are highly 

questionable and undermine the confidence and legitimacy of the Commission. 

The Chamber stands ready to work with you to address these issues. 

Sincerely,

 

Jordan Crenshaw Sean Heather

Vice President, Senior Vice President,

Chamber Technology Engagement Center U.S. Chamber International Division 
1

From: Josh Withrow < >

Sent: Wednesday, June 30, 2021 10:02 AM

To: JulyPublicComments

Subject: Comment on FTC July 1 Open Meeting from National Taxpayers Union Foundation

Attachments: NTUF FTC 7-1-2021 Open Meeting Comment.pdf; NTU 2021 Economist Antitrust

Letter.pdf

Hi,

On behalf of the National Taxpayers Union Foundation, I would like to submit the attached written comment on the

process and items on the agenda for the upcoming July 1 open meeting. A supporting document referenced in the

comment has been attached as well.

Thank you,

JOSH WITHROW | DIRECTOR OF TECHNOLOGY POLICY

National Taxpayers Union Foundation

www.ntu.org | |
June 30, 2021

Federal Trade Commission

Comment regarding items on the agenda of the July 1, 2021 open meeting of the

Federal Trade Commission

National Taxpayers Union Foundation (NTUF) appreciates the opportunity to comment on the

agenda for the July 1st open meeting and applauds newly appointed FTC Chair Lina Khan’s

commitment to holding such open meetings regularly in order to bring more transparency to the

work of the Commission. At the same time, echoing the words of current FTC Commissioner

Noah Phillips, “a mere week’s notice on matters requiring serious deliberation, and a number of

the policies themselves, undermine that very goal.”

1

In particular, we find the sudden move to revoke the 2015 “Statement of Enforcement Principles

Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act” to be alarming.

This Section 5 guideline was the product of a bi-partisan process under a Democratic-appointed

majority FTC under the Obama Administration, and expresses as one of its principles the

continuation of a decades-long bi-partisan consensus that the welfare of consumers should be

paramount while considering antitrust enforcement. The point of creating this concise set of

guidelines was to provide increased clarity with respect to how the FTC would define these

unfair methods of competition (UMCs).

The National Taxpayers Union recently released an open letter to policymakers signed by over

70 economists and antitrust scholars highlighting the long-standing, non-partisan ideological

consensus that has existed behind the consumer welfare standard for antitrust enforcement.

The letter also warns against the sort of radical expansion of antitrust that this modest change in

guidelines, given the expressed views FTC Chair Lina Khan,

2 seems to foreshadow. We’ve

attached this letter along with our comment and hope that the Commission will take it into

consideration.

As our letter argues, “...the harm and uncertainty posed to businesses from expanded or

excessively broad interpretations of antitrust laws are significant. These destructive and ill-fated

actions imperil the economy at a pivotal point in its progress toward full recovery from the effects

of the pandemic.”

2 See: Lina M. Khan, “Book Review: The End of Antitrust History Revisited,” Harvard Law Review, Mar.

10, 2020. https://harvardlawreview.org/wp-content/uploads/2020/03/1655-1682_Online.pdf

1 Commissioner Noah J. Phillips, @FTC Phillips, Twitter, June 25, 2021.

https://twitter.com/FTCPhillips/status/1408459407134973955
In addition, we are concerned that the rushed process under which these changes are being

considered indicates a shift towards partisan decision-making with respect to how the FTC will

enforce competition policy. This meeting was announced fewer than ten days after

Commissioner Lina Khan was sworn in as the new Chair of the FTC, allowing less than a week

for public comment, and little to no time for real debate or consideration by the whole of the

Commission.

3 With Commissioner Chopra potentially leaving the FTC if confirmed in his

nomination to head the Consumer Financial Protection Bureau, this sudden rush to a vote

seems designed to quickly steamroll any potential opposition while the current ideological

majority has this window in which to operate.

Similarly, we urge that the “streamlining” of Section 18 rulemaking procedures and of

enforcement investigations (both of which are not defined in detail in the meeting agenda)

should not curtail the ability of the public to provide input into these important activities of the

commission. Certainly, any substantial changes in the FTC’s rulemaking procedures ought to be

subject to the same standard minimum of 30 days’ advance notice to the public as any other

federal regulatory proceeding.

If the true interest of the Chair is to promote more transparency regarding the FTC’s approach to

enforcing antitrust laws, we encourage a process that fosters more deliberation and consensus

than this rushed proceeding suggests.

Respectfully,

Josh Withrow

Director of Technology Policy

National Taxpayers Union Foundation

3

“FTC Announces Agenda for July 1 Open Commission Meeting,” FTC.gov, June 24, 2021

https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-open-commissionmeeting
June 23, 2021

An Open Letter to Public Officials: Consumer Welfare Standard 

Should Guide Antitrust Policy

We, the undersigned economists and legal experts, write to express concern regarding the government’s 

approach toward antitrust and competition policy, embodied recently in federal and state litigation 

against tech firms, as well as legislative proposals to ban mergers or radically restructure industries. 

We urge public officials to be wary of antitrust activities that distort existing antitrust standards and 

do not focus on real harm to consumers. Such caution is especially critical now, as consumers here 

and around the world have benefited from the existing robust, adaptable business structures that have 

efficiently responded to the pandemic. 

History shows that these antitrust actions and proposals have major potential to: deprive consumers of 

choices, limit the ability of entrepreneurs to innovate, deny workers and shareholders opportunities 

to build wealth, confer artificial benefits on competitors, drain “defendant” companies of capital due 

to legal expenses, and thwart potential growth in the economy as companies are forced to divert 

resources and attention to legal battles instead of innovation. 

Ultimately taxpayers suffer from this heavy-handed approach as well -- a less vibrant economy not only 

means rising deficits from shrinking government revenues, but also less technological advancement 

that can make those governments operate more efficiently. 

Perhaps most alarming are the notions that governments can engineer a superior “remedy” to the 

equilibrium markets will find, and that the consumer welfare standard should no longer guide 

policymakers. Proposed alternatives to this standard, such as forced break-ups, restructuring, or 

restrictions on business models do not serve the interests of the consumers whom public officials seek 

to protect. 

Regardless of the particular firm under government scrutiny, the harm and uncertainty posed to 

businesses from expanded or excessively broad interpretations of antitrust laws are significant. These 

destructive and ill-fated actions imperil the economy at a pivotal point in its progress toward full 

recovery from the effects of the pandemic. 

• Charles W. Baird, 

 California State University, 

East Bay

• Don Bellante, 

 University of South Florida 

(emeritus)

• James T. Bennett, 

George Mason University

• Bruce L. Benson, 

Florida State University

• Geoffrey A. Black, 

 Boise State University

• Michael Bond, 

 University of Arizona

• Samuel L. Bostaph, 

University of Dallas

• Donald J. Boudreaux, 

George Mason University

• Scott Bradford, 

 Brigham Young University

• Jason Brennan, 

 Georgetown University

• Wayne T. Brough, 

 R Street Institute

• Peter T. Calcagno, 

 College of Charleston

• James H. Cardon, 

Brigham Young University

• Joe Cobb, 

Concordia University Irvine

Long-form signatories (for identification purposes only): 
• Joab N. Corey, 

 University of California, 

Riverside

• Joseph S. DeSalvo, 

University of South Florida 

(emeritus)

• Gerald P. Dwyer, 

 Clemson University

• Kenneth J. Elzinga, 

University of Virginia

• Richard A. Epstein,

 NYU Law School, 

University of Chicago

• Fred Esposto, 

 Kutztown University

• John A. Flanders, 

 Central Methodist 

University

• Judge Ferdinand, 

 Glock Cicero Institute

• Robert James Gmeiner, 

Kennesaw State University

• Stephan F. Gohmann, 

University of Louisville

• Kenneth Greene, 

Binghamton University 

(emeritus)

• Stephen K. Happel, 

Arizona State University

• Dermot James Hayes, 

Iowa State University

• Jeff Haymond, 

Cedarville University

• David R. Henderson, 

Hoover Institute, Stanford 

University

• John P. Hoehn, 

Michigan State University

• Douglas Holtz-Eakin, 

American Action Forum

 

• Jeffrey Rogers Hummel, 

San Jose State University

• David Kalist, 

Shippensburg University

• Raymond J. Keating, 

Small Business and 

Entrepreneurship Council

• Daniel Klein, 

George Mason University

• Kishore G. Kulkarni, 

Metropolitan State 

University of Denver

• Richard N. Langlois, 

University of Connecticut

• Thomas E. Lehman, 

Indiana Wesleyan 

University

• Stan Liebowitz, 

University of Texas - Dallas

• Tony Lima, 

California State University, 

East Bay

• Christopher Lingle, 

Universidad Francisco 

Marroquin

• Abir Mandal, 

University of Mt. Olive

• Michael L. Marlow, 

California Polytechnic State 

University

• Scott E. Masten, 

University of Michigan 

• John R. McArthur, 

Wofford College

• W. Douglas McMillin, 

Louisiana State University 

(emeritus)

• James C. Miller III, 

Former Chairman, FTC 

• Michael C. Munger, 

Duke University

• Sam Peltzman, 

University of Chicago 

(emeritus)

• Arturo C. Porzecanski, 

American University

• Barry W. Poulson, 

University of Colorado

• Farhad Rassekh, 

University of Hartford

• Nancy Roberts, 

Arizona State University 

(emeritus)

• Paul H. Rubin, 

Emory University 

(emeritus)

• John G. Ruggiero, 

University of Dayton

• Joseph T. Salerno, 

Pace University

• Raymond D. Sauer, 

Clemson University

• Nilopa N.S. Shah, 

University of California, 

Irvine

• William F. Shughart II, 

Utah State University

• Daniel J. Smith, 

Middle Tennessee State 

University

• Vernon L. Smith, Chapman 

University

• Charles N. Starnes, 

Wayland Baptist University
• Daniel Sutter, 

Troy University

• Edward J. Timmons, 

St. Francis University

• Edward Tower, 

Duke University

• Michael Welker, 

Franciscan University of 

Steubenville

• Christopher Westley, 

Florida Gulf Coast 

University

• Bill Yang, 

Georgia Southern 

University

• Benjamin Zycher, 

American Enterprise 

Institute
1

From: Chris Marchese < >

Sent: Wednesday, June 30, 2021 10:28 AM

To: JulyPublicComments

Cc: Trace Mitchell; Carl M. Szabo

Subject: NetChoice Comment for Open Meeting on July 1, 2021

Attachments: NetChoice Comment to FTC for Open Mtg on July 1, 2021.pdf

Hi,

PleasefindattachedourcommentfortherecordfortheFTC’sopenmeetingonJuly1,2021.Pleaseletusknowifpdfsareunacceptableandwe’llremedytheproblem.

Thankyou,

NetChoice
NetChoice Comment for the Record:

FTC Open Meeting, July 1, 2021

NetChoice

1

is a trade association of leading internet businesses that promotes the

value, convenience, and choice internet business models provide American

consumers. Our mission is to make the internet safe for free enterprise and for free

expression. We also work to promote the integrity and availability of the internet on a

global stage, and are engaged on issues in the states, in Washington, D.C., and in

international internet governance organizations.

Introduction

We welcome the opportunity to provide the Federal Trade Commission with

feedback about the many significant issues it will discuss at its open meeting on Ju

1st, 2021. As discussed below, we ask that the FTC:

1. Vote against “streamlining” Section 18 rulemaking procedures.

● The proposal undermines the Magnuson-Moss Act and Congress’s

intent in passing it, and it greatly curtails public input in FTC

rulemaking

2. Vote against rescinding or amending the adopted principles regarding “unfair

methods of competition” under Section 5 of the FTC Act.

● The 2015 Policy Statement provides affected parties and the public with

notice of what conduct is permissible, supports the rule of law, and

appropriately confines the FTC’s discretion; a

3. Vote against changes to enforcement investigations.

● Congress intentionally structured the FTC to be a multi-member,

consensus-driven organization, and the proposed “streamlined”

subpoena process would violate that structure

We appreciate the Commission’s consideration of our views, and welcome the

opportunity to provide any additional information or answer any questions.

1 NetChoice is a trade association of e-Commerce and online businesses, at www.netchoice.org. The views

expressed here do not necessarily represent the views of every NetChoice member.

| Page 1
Part 1. “Mag-Moss” Rulemaking

Section 18 of the FTC Act provides the Federal Trade Commission with the authority

to prescribe “rules which define with specificity acts or practices which are unfai

deceptive acts or practices in or affecting commerce” within the meaning of Section

5(a)(1) of the Act.

Unlike traditional agency rulemaking under the Administrative Procedures Act

(APA), rulemaking under Section 18, often referred to as “Magnuson-Moss”

rulemaking after the Magnuson-Moss Warranty Act, comes with additional statutory

requirements meant to curb the FTC’s discretion. Those include requirements to

provide interested parties with limited cross-examination rights during informal

hearings and show that the practices the proposed rule seeks to regulate are

“prevalent” before the rulemaking occurs.

2

These procedural safeguards are a benefit, not

drawback. The FTC should continue to adhere to them.

History Shows that Magnuson-Moss Rulemaking Authority is not

Supposed to be “Streamlined.”

To begin, the FTC likely does not have the authority to “streamline” Section 18

rulemaking procedures. Congress imposed these rulemaking requirements through

explicit statutory text and intentionally curbed the FTC’s discretion. While some may

oppose the additional procedures, only Congress can substantively “streamline” or

change them.

During the 1960s and 70s, the FTC’s rulemaking activity became the subject of

considerable controversy and debate. Many felt the Commission had become

overzealous in its promulgation of rules. Consider the (in)famous example of the “Kid

Vid” rule that would have basically prohibited any television advertising aimed at

children.

3 This decision and the circumstances surrounding it resulted in the

Washington Post dubbing the FTC the United States’ “National Nanny.”

4 As

subsequent commentators have explained, “the FTC adopted the reformers’ cause

uncritically, seeing itself self-appointed champion of American children” such that

“even its supporters acknowledge that the FTC made a serious political

miscalculation.”

5

5 Robert H. Mnookin & Susan Bartlett Foote, The “kid vid” Crusade, 61 The Public Interest 90, 91-105 (1980).

4 The FTC as National Nanny, Wash. Post (Mar. 1, 1978),

https://www.washingtonpost.com/archive/politics/1978/03/01/the-ftc-as-national-nanny/69f778f5-8407-4df

0-b0e9-7f1f8e826b3b/.

3 Robert H. Mnookin & Susan Bartlett Foote, The “kid vid” Crusade, 61 The Public Interest 90 (1980).

2

15 U.S.C. § 57a(b)(3).

| Page 2
Congress passed the Magnuson-Moss Warranty of 1975 and the FTC Improvements

Act of 1980 to curb the FTC’s excessive rulemaking activity. Congress did not hide its

justification for limiting the Commission’s powers. In a series of hearings held in t

late 1970s, “Congress publicly lambasted the Commission for its activist programs

branding these as ‘regulatory abuse’ by a ‘runaway, controllable bureaucracy.’”

6

Together, these Acts greatly limited the Commission’s ability to promulgate rules at

will.

The Commission Cannot Supersede Statutory Limits & Even if it

Could, It Shouldn’t.

With such clear congressional intent and statutory language supporting the goal of

erecting, not lowering, barriers to agency rulemaking, at best the Commission has

only limited ability to “streamline” such procedures through its own internal

processes. And even if the Commission can, it shouldn’t.

First, the concerns that motivated Congress to impose the requirements are no less

prevalent today than they were in the late 20th Century. In fact, with a clearly

expressed desire on the part of some commissioners to divorce FTC enforcement

from the guide of consumer welfare and to use its enforcement power to promote

vague and often ill-defined social goals, these procedural safeguards and restrictio

will likely be more important than ever.

7

Second, the market is a dynamic and ever-evolving process that brings with it

incredible, consumer-benefiting innovation that is difficult, and often impossible

predict before it occurs. By artificially locking in per se rules that prohibit spec

types of conduct, the Commission risks chilling consumer-welfare-enhancing

innovation. In contrast, since the Section 18 rulemaking requirements took effect, the

FTC has focused primarily on adjudicating cases against specific defendants bas

on particularized allegations of consumer harm. This has allowed the FTC to address

instances of consumer harm without undermining market-driven innovation. The

FTC should therefore continue to focus on its adjudicative approach, which

maximizes consumer benefits without kneecapping American innovation and t

United States’ competitiveness in the global arena.

7 FTC Announces Agenda for July 1 Open Commission Meeting, Federal Trade Commission (Jun. 24, 2021),

https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-open-commissionmeeting; Lina M. Khan, Amazon’s Antitrust Paradox, 126 Yale Law Journal 564 (Jan. 2017),

https://www.yalelawjournal.org/note/amazons-antitrust-paradox; Lauren Feiner, How FTC Commissioner

Slaughter wants to make antitrust enforcement antiracist, CNBC (Sept. 26, 2020),

https://www.cnbc.com/2020/09/26/ftc-commissioner-slaughter-on-making-antitrust-enforcement-antira

cist.html.

6 Mark J. Moran & Barry R. Weingast, Congress as the source of regulatory decisions: The case of the

Federal Trade Commission, 72 American Economic Review 109 (1982).

| Page 3
Third, the FTC should consider that an increase in rulemaking would likely hurt small

businesses and up-and-coming entrepreneurs.

More Rulemaking—Streamlined or Not—Will Hurt Small

Businesses & the Economy.

Market entrants are already faced with an onslaught of overly restrictive rules and

regulations. As of November 2019, for example, there were over 1 million regulatory

restrictions in the U.S. Code of Federal Regulations.

8 Add to this the thousands of

state regulations businesses must comply with: California and New York alone have

over 695,000 regulatory restrictions.

9

Small businesses and entrepreneurs have already taken a particularly tough hit as a

result of the COVID-19 pandemic. Not only does the accumulation of rules hinder

their ability to succeed, it strengthens the position of the dominant players by

erecting artificial barriers to competition. The FTC’s rulemaking ability is particular

threatening because it is not limited to one sector of the economy or confined to

particular social issue. Instead, the FTC has broad jurisdiction over the entire United

States’ economy. While the FTC’s adjudicative approach focuses primarily on the

largest players and those that pose the greatest risk of harm, rulemaking applies to

all participants equally without regard to their particular needs or the context of their

conduct.

The Proposal Discards the FTC’s Consumer-First Focus.

As mentioned above, removing the restrictions on FTC rulemaking would open the

door to a regulatory approach that focuses less on the welfare of consumers and

more on the preferred policy considerations of a given commission. Rather than

having to justify particular enforcement decisions or prove consumer harm in

specific cases, the Commission could instead impose bright-line rules that gove

commercial activity for the foreseeable future—whether or not consumers actually

benefi

Indeed, rules could be enacted because they advance unrelated social goals rather

than out of some desire to protect consumers from anticompetitive conduct. While

some social goals may be worthy of government attention, it is for Congress—not the

FTC—to advance those goals.

For these reasons, we ask that you do not amend the statutorily-required procedures

for Section 18 rulemaking.

9

Id.

8 James Broughel, Patrick McLaughlin & Michael Kotrous, Quantifying Regulation in US States, Mercatus

Center (Nov. 13, 2019), https://www.mercatus.org/publications/regulation/quantifying-regulation-us-states.

| Page 4
Part 2. UMC Policy Statement

When the FTC approved its UMC Policy Statement in 2015, it saved itself (from itself).

While the statement is flexible—it allows the FTC to use its Section 5 authority f

standalone claims, for example—it provides necessary guidance to both the FTC and

the public. As the Commission surely knows, its authority under Section 5 has been

controversial for decades. To be sure, most recognize that it encompasses the

agency’s antitrust authority under federal statutes like the Sherman Act. But

whether it extends beyond those statutes was and is an open question.

When the FTC approved its UMC Policy Statement in 2015,

it saved itself (from itself).

But even confining Section 5 authority to the antitrust statutes is legally murky. T

agency’s organic statute—the FTC Act—fails to define “unfair,” for example. Witho

statutory guidance, and without the UMC Policy Statement, “unfair” will mean

whatever at least three commissioners want it to mean.

The FTC Shouldn’t Abandon Clear, Uniform, Predictable, &

Objective Standards that Protect Consumers & Promote

Innovation.

The movement away from clear guidance is a cause for concern. For starters, it is

unclear whether today’s Supreme Court, which is far more skeptical of agencies than

earlier courts, would countenance Section 5 agency action without such guidance.

Indeed, the Policy Statement seems to be the agency’s own effort to ward off

constitutional and legal attack. Repealing or broadening it risks invalidation or

judicially constructed limitations. At least for now, the Statement aligns with the

Supreme Court’s antitrust doctrines and thus stands a decent chance of surviving

judicial review.

Second, it is unclear whether Congress would countenance such open-ended

authority. Even if the current Congress is poised to support the agency’s actions,

future Congresses are likely to take issue with it. And if history is any indicator, the

FTC’s abuse of broad statutory language will spur hearings, condemnations, and

reforms.

In the meantime, businesses and consumers will be left guessing. Even if the courts

and Congress turn a blind eye, the rest of the country will be vulnerable to

unexpected and open-ended regulation. This regulatory environment will likely

dampen investment and chill innovation—which will be even worse if the agency

also “streamlines” its Section 18 rulemaking processes. Even worse, without the

| Page 5
Statement, the agency could return to the past, when it used vague enforcement

actions to coerce private parties into settling even when the alleged “harm” was far

from clear.

It is against this backdrop that the FTC adopted the UMC Policy Statement in 2015.

And it is for these reasons that the agency should maintain—and even

strengthen—the Statement.

The Existing Policy is Flexible Enough to Respond to New Market

Realities & Even Critics Should Support It.

Consider also that the Statement is flexible enough to adapt to new market realitie

In brief, it simply notes that when the agency decides to use its Section 5 authority, it

will do so based on the consumer welfare standard and will use the rule of reason to

evaluate potential action. None of this is radical. As the Commission knows, the

consumer welfare standard has been the guiding light of antitrust enforcement for

decades. The rule of reason, even longer. That these standards are so established in

federal law and so familiar to interested parties is a plus, not a minus.

Even critics of the consumer welfare standard should rejoice: the Statement

accommodates a more “aggressive” approach to enforcement.

10 For example, the

Statement does not include former-Commissioner Joshua Wright’s idea to create a

“safe harbor” from UMC enforcement if any business efficiency is shown. By rejecti

this proposal (sensible as it may be) and by adopting a balancing method instead,

the Commission left wiggle room to exercise its UMC enforcement power even when

defendant businesses provide evidence of procompetitive effects. Under this

balancing approach, the Commission retains the ability to weigh in on many

business practices. The sole limitation is simply that the Commission must identify

some consumer harm. That is, by any objective standard, not asking much.

Nor does the Policy Statement tie the FTC’s hands in defining “consumer harm.” F

from being limited to prices, the consumer welfare standard—and the Statement’s

use of it—leaves the Commission free to enforce actions against businesses that

harm quality, innovation, and inflict other harms on consumers identified by

Commission and economic literature. In other words, all the Statement does is

require the Commission to make its decisions based on consumers—not

competitors, not lofty social goals (no matter how well-meaning), and not individual

policy preferences. This objective standard developed over decades and represents

the accumulated wisdom of the courts, agencies, economists, and lawyers. It

10 N.B. We disagree with critics who claim the agency’s enforcement has been “lax” for the last decade or

more. As evidence shows, that’s far from true. But because “lax” has a subjective meaning and its

meaning does not change our argument above, we’ll assume the criticism matters.

| Page 6
shouldn’t be abandoned simply because it requires the FTC to shift through

evidence using an objective measure to guide (and sometimes abandon) its

enforcement actions.

The Existing Policy Supports the Rule of Law.

By conforming its Section 5 powers to its antitrust enforcement powers, the FTC in

2015 promoted clarity, predictability, and uniformity. These benefits should not 

taken for granted. By promoting clarity and predictability, the Policy Statement

insulates the FTC—to a degree—from legal challenges. And it gives businesses and

consumers insight into what behavior may or may not be permissible. This, of course,

helps businesses grow and innovate. Likewise, by promoting uniformity and

predictability, the Statement protects against arbitrary or politicized enforcement.

This supports the rule of law and fairness. Without guardrails that align with the

agency’s enforcement policies elsewhere, the Commission threatens to destabilize

the law and raise questions about whether its Section 5 authority is even

constitutionally or statutorily sound.

By promoting clarity and predictability, the Policy

Statement insulates the FTC—to a degree—from legal

challenges.

Aside from those benefits, the 2015 Statement is good on its own merits. Becau

the FTC’s authority extends so broadly, its actions can reshape entire markets and

industries. As the old adage goes, with great power comes great responsibility. The

Statement recognizes this, and reaches an appropriate balance between acting

when necessary to protect consumers and leaving businesses free to innovate. And it

appropriately situates the Commission’s Section 5 powers: Instead of viewing “unfair

methods of competition” as a standalone grant of power, the Statement treats it as a

gapfiller to cover conduct that is not expressly prohibited by other federal antitru

statutes but that would, left unchecked, undermine the purposes of those statutes.

Part 3. Compulsory Process

When Congress created the FTC, it sought to fill the agency with independe

experts and to insulate them from political pressure. As the Supreme Court long ago

put it, the FTC was designed to be “non-partisan” and to “act with entire

impartiality.”

11 To be sure, the agency is not entirely separate from

politics—presidents appoint commissioners based on their expertise and on their

political affiliation. At any given time, for example, the Commission can have no mo

than three commissioners of the same political party. But even that small nod to

11 Humphrey’s Executor v. United States, 295 U.S. 602, 624 (1935).

| Page 7
politics underscores the Commission’s apolitical nature. Rather than let any party

command the agency unfettered, Congress instead elevated bipartisanship and

consensus.

Congress also double-downed on the agency’s independence. Commissioners serve

for staggered seven-year terms and can be removed only for cause. And Congress

chose to make the FTC a multi-member Commission, not a unitary body like the

CFPB. Had Congress wanted commissioners and the agency’s staff to act unilaterally,

it would not have gone through the trouble of structuring the agency this way.

Whatever costs this multi-member, consensus-driven structure may impose on the

Commission’s speed, it more than makes up for in strengthening the Commission’s

reputation and insulating it from politics.

For that reason, the Commission should not “streamline” the subpoena process. By

allowing staff to unilaterally ask a single commissioner to unilaterally approve

compulsory process, the Commission risks undermining its reputation and

undercutting public support for its decisions.

The FTC Should Not Empower a Single Commissioner To

Unilaterally Approve Compulsory Process.

First, the FTC’s portfolio is broad. It is both the nation’s top consumer watchdog and

its primary antitrust enforcer. Under these roles, the Commission touches almost

every segment of our economy. And that sweeping jurisdiction—combined with the

Commission’s powers—means it has the potential to restructure entire markets and

even overhaul the economy. With the exception of Congress and the possible

exception of the Federal Reserve, few others have such capacity to affect so much so

quickly.

Maintaining (or better yet, strengthening) the current process is therefore necessary

to guard against claims—real or perceived—that the agency:

● Favors or disfavors certain markets, industries, or businesses;

● Does the bidding of the White House, Congress, or the opposition party; or

● Advances politics by other means.

It would indeed be strange to convert an independent agency into one that operates

more likely an executive agency from the inside. Given Congress’s intentional steps

to insulate the FTC, those at its helm owe it to both their predecessors and

successors to see to it that the agency lives up to Congress’s ideals.

Second, the agency inevitably runs into politically thorny issues. When these issues

arise, it is best for the agency to present a unified—or at least, mostly unified—fr

| Page 8
Consider the agency’s current investigation into Stephen Bannon, former President

Donald J. Trump’s chief strategist.

12 Whether fair or not, the agency’s investigation

into Mr. Bannon is likely to elicit criticisms from those who believe the agency is

politically motivated. Potential criticism should not sway the agency’s actions, but

common sense suggests that such criticism can be kept at bay through the current

approach. By contrast, one that allows agency staff to get sign-off by a single

commissioner (at their choosing) will be met with criticism—including from

Congress.

Third, because compulsory process is ripe for abuse and mistakes, the FTC should

require a majority of commissioners to approve a subpoena or other compulsory

process.

The Proposal is Ripe for Political Abuse (Real or Perceived).

Even if every sitting commissioner respects the rule of law and remains mindful of

the agency’s mission, mistakes happen. Acting on a staff report, a commissioner may

accidentally overlook a key consideration or fail to rigorously review the request. And

because the FTC’s duties are “neither political nor executive,” but instead rely on “the

trained judgment of a body of experts,”

13

it makes sense to vest such decisions in the

collective body rather than in a single expert. As everyone knows, having multiple

sets of eyes on something can be exhausting, but it often produces better results.

Even if it doesn’t, however, consensus benefits the Commission’s reputation and 

consistent with its founding.

Because compulsory process is ripe for abuse and

mistakes, the FTC should require a majority of

commissioners to approve a subpoena or other

compulsory process.

And when FTC staffers do not know which commissioner may sign off on a

subpoena application, they must tailor their arguments to the broader body and

ensure their arguments are appealing to commissioners of both parties. This in turn

supports Congress’s vision for the FTC as an independent body of experts from

across the political spectrum. But if a single commissioner can decide on behalf of

the whole, the FTC will function less like a body of apolitical experts and more like an

executive branch agency subject to unilateral dictates.

13 Humphrey’s Executor, 295 U.S. at 624 (internal quotation marks omitted).

12 FTC, Cases and Proceedings: Bannon, Stephen K. (last updated Feb. 12, 2021),

https://www.ftc.gov/enforcement/cases-proceedings/bannon-stephen-k.

| Page 9
This is neither necessary nor appealing. Our Constitution and the government it

establishes strongly prefers slow deliberation and painstaking consensus over quick

and efficient lawmaking and law enforcement. But that does not mean eve

institution of government must operate the same way. While Congress designed the

FTC to be independent and methodical, it allows executive agencies like the

Department of Justice to act with greater speed. Given the overlapping jurisdiction

between the FTC and DOJ, we needn’t worry that procedural safeguards at the FTC

will render bad actors outside the law’s bounds. Far from it. The politically

accountable branch may intervene quicker if the facts support doing so.

Conclusion

As always, we stand ready to work with the Commission to achieve benefici

outcomes that promote the interests of the United States and benefit Americ

consumers and innovation. We appreciate your consideration of our views.

Sincerely,

Carl Szabo, Vice President & General Counsel

Chris Marchese, Counsel

Trace Mitchell, Policy Counsel

| Page 10
1

From: Tom Hebert < >

Sent: Wednesday, June 30, 2021 11:20 AM

To: JulyPublicComments

Subject: Americans for Tax Reform public comment re: July 1 Open Meeting

Attachments: ATROCCDigital Liberty Comment on FTC's Possible Revocation of Section 5 Statement

of Enforcement Principles .pdf

_______________

Tom Hebert

Federal Affairs Manager, Americans for Tax Reform

Executive Director, Open Competition Center
The Honorable Lina Khan 

Chair, Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Re: Comment on the Federal Trade Commission’s Possible Revocation of the “Statement of 

Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the 

FTC Act”

Dear Chair Khan, 

We write to express concern over the Federal Trade Commission’s vote to revoke the “Statement of 

Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act” 

at the July 1, 2021 Open Commission Meeting. If the Commission rescinds this bipartisan 

agreement, it would be a significant blow to consumer welfare and will hinder our economic 

growth as we recover from the COVID-19 pandemic. 

Section 5 of the Federal Trade Commission Act outlaws “unfair methods of competition or in 

commerce.” Section 5 does not list specific business practices that qualify as unfair methods of 

competition (UMC), instead leaving that determination to the FTC to evaluate on a case-by-case 

basis. 

The Statement of Enforcement Principles is designed to limit the FTC’s “standalone” UMC authority 

when addressing anticompetitive conduct outside of the scope of the Sherman or Clayton Acts. The 

agreement was approved by the FTC in 2015 in a 4-1 vote, with all three Democratic commissioners 

voting in support. 

The agreement articulated the limits on the FTC’s UMC authority in three ways. 

First, the agreement emphasized the agency’s commitment to prioritizing consumer welfare when 

applying antitrust law. The long-held consumer welfare standard has anchored antitrust law for 

over four decades. Under the standard, enforcement action is only taken if consumers are being 

harmed through tangible effects like higher prices, decreased quality, or lack of choice. The 

consumer welfare standard prevents judges and regulators from using antitrust law as a vehicle to 

advance unrelated social priorities.

Second, the statement said that Section 5 enforcement should target “harm to competition or the 

competitive process,” but must consider whether there is a procompetitive justification for the 

conduct in question and whether it results in a countervailing benefit to consumers or competition. 

This is a key element of antitrust law under the consumer welfare standard, which protects the 

competitive process and consumers instead of protecting individual competitors in a marketplace. 

Robust competition among companies delivers better prices and better choices for all Americans. 
Third, the agreement states that the FTC would be less likely to challenge business conduct as an 

unfair method of competition if “...enforcement of the Sherman or Clayton Act is sufficient to 

address the competitive harm arising from the act or practice.” This is an important limit that 

ensures that the FTC exercises its standalone UMC authority only when business conduct violates 

the spirit, if not the letter, of the Sherman or Clayton Acts. 

Rescinding this bipartisan agreement would send two troubling signals. First, that the FTC is 

moving towards a European-style antitrust approach that props up inefficient competitors and 

disregards consumer harm. Second, that the FTC is actively working to shed all limits on its 

authority when it comes to antitrust enforcement. 

Taken together, these changes will hamper economic growth as we attempt to rebound from the 

pandemic. Companies fearful of predatory antitrust litigation would pull their punches when 

competing with rivals, reducing choice and access to goods and services for shoppers across the 

country. Bureaucrats would win, American shoppers would lose. 

For these reasons, we urge the FTC to leave the 2015 Statement of Section 5 Enforcement Principles 

in place. 

Sincerely, 

Grover Norquist

President, Americans for Tax Reform

Tom Hebert

Executive Director, Open Competition Center

Katie McAuliffe 

Executive Director, Digital Liberty
1

From: Bob Coleman < >

Sent: Wednesday, June 30, 2021 11:20 AM

To: JulyPublicComments

Subject: Public Comments FTC- July 1, 2021 Open Commission Meeting Submission

Attachments: FTC letter 6-30_.docx

June 30, 2021

Commissionner Rohit Chopra

United States of America

Federal Trade Commission

Washington, D.C. 20580

Re: Pharmacy Benefits Manager Anti-Competitive Behavior

Dear Commission Chair Khan,

Thank you for the opportunity to offer written comment. Thank you also for your May 28, 2021

statement regarding pharmacy benefits manager (“PBM”) practices, including PBM rebate

walls. GPhA was encouraged by your statement drawing attention to PBM practices – practices that

we believe are rife with conflicts of interest, a lack of transparency, and that appear to fall within the

very definition of anti-competitive behavior.

Your statement rightfully focuses on the role rebate practices of PBMs play in increasing the cost of

prescription drugs. It is also noteworthy that rebate and formulary practices reduce access to drugs

and often force patients to obtain brand name drugs where generic equivalent drugs are available for

less than the copay on the brand name drug for which the PBM is capturing a rebate.

While GPhA was pleased to see your attention to this matter the fact remains that, under the previous

administrations, the FTC failed to identify anti-competitive risks associated with vertical integration in

the health care space, including in mega mergers such as CVS’ acquisition of Aetna and Cigna’s

acquisition of Express Scripts. Anti—competitive practices are not the outlier - they are the norm, and

they are stamping out small businesses and compromising the care of millions of Americans.

Through virtually uncontested vertical integration, the big PBMs are not only affiliated with insurers,

but also with pharmacies that compete with other non-PBM affiliated pharmacies such as Walgreens

and independent community pharmacies whereby the PBMs are setting reimbursement rates for their
2

competitors. PBMs often reimburse non-affiliate pharmacies woefully under pharmacy acquisition

cost while billing their clients for those same drugs significantly more money, a practice known as

spread pricing.

In addition, PBMs often engage in the practice of recouping money retroactively from network

pharmacies (often referred to as DIR fees) which has resulted in the closure of untold community

pharmacies further reducing patient access to care. Ironically, or perhaps by design, many of these

closures result in the PBM affiliated pharmacies purchasing the prescription files from the competitor

pharmacy who closed for pennies on the dollar. In addition, the practice of imposing fees after the

point of sale often results in patients and plans overpaying based upon the price at point of sale while

PBMs enjoy the benefit of the post adjudication recoupment.

Aside from rebate practices that restrict choice and care, reimbursement practices that

simultaneously under reimburse competitors while raising the cost of prescription drugs to their

clients, and the imposition of retroactive fees that harm competitor pharmacies and inflate costs to

patients and payors, PBMs engage in a far more insidious practice that is not only anti-competitive,

but compromises patient care – PATIENT STEERING.

Everyday in this country our sickest patients, those fighting for their lives battling cancer, HIV, and

other life-threatening diseases, are forced to use pharmacies owned or affiliated with PBMs delaying

and compromising care while at the same time taking patients away from their choice of oncology and

other specialty physicians practices and pharmacies that compete with the PBM owned/affiliated

pharmacies. How are PBMs able to do this? They offer, design, and implement plans that mandate

patients use PBM owned/affiliated pharmacies or that penalize or deny coverage to patients who

seek to fill prescriptions at non-affiliate pharmacies.

In Georgia, steps have been taken to try and eliminate these practices. By way of example, in

connection with the CVS Aetna merger, the Commissioner imposed certain preconditions via the

Consent Order, including:

• CVS/Aetna allow Georgia patients to use any health care provider that is agreeable to

applicable terms and conditions; and

• Aetna invite non-CVS health care providers (pharmacies, physicians, clinics, etc.) to join its

networks, and allow patients to use any provider within their respective networks.

Additionally, in 2019 and 2020 the Georgia General Assembly passed legislation seeking to prohibit

these self referral practices finding, amongst other things, that these practices:

May limit or eliminate competitive alternatives in the health care services market, may result

in overutilization of health care services, may increase costs to the health care system, may

adversely affect the quality of health care, may disproportionately harm patients in rural and

medically underserved areas of Georgia, and shall be against the public policy of this state.

Ga. Code § 26-4-119.

Despite these attempts to rein in anti-competitive PBM steering practices, PBMs continue to steer in the state,

every day.

In light of the foregoing, we ask that the FTC make it a priority to rein in these anti-competitive practices

through its considerable investigatory, prosecutorial, and rule-making powers as soon as possible. The harm

to community pharmacies, oncology and other specialty practices, payors, and patients as a result of PBM

anti-competitive practices is acute and as a result stopping these practices should be an FTC priority.
3

Sincerely,

Bob Coleman | CEO

Georgia Pharmacy Association
June 30, 2021

Commissionner Rohit Chopra

United States of America

Federal Trade Commission

Washington, D.C. 20580

Re: Pharmacy Benefits Manager Anti-Competitive Behavior

Dear Commission Chair Khan,

Thank you for the opportunity to offer written comment. Thank you also for your May

28, 2021 statement regarding pharmacy benefits manager (“PBM”) practices, including

PBM rebate walls. GPhA was encouraged by your statement drawing attention to PBM

practices – practices that we believe are rife with conflicts of interest, a lack of

transparency, and that appear to fall within the very definition of anti-competitive

behavior.

Your statement rightfully focuses on the role rebate practices of PBMs play in increasing

the cost of prescription drugs. It is also noteworthy that rebate and formulary practices

reduce access to drugs and often force patients to obtain brand name drugs where

generic equivalent drugs are available for less than the copay on the brand name drug

for which the PBM is capturing a rebate.

While GPhA was pleased to see your attention to this matter the fact remains that,

under the previous administrations, the FTC failed to identify anti-competitive risks

associated with vertical integration in the health care space, including in mega mergers

such as CVS’ acquisition of Aetna and Cigna’s acquisition of Express Scripts. Anti—

competitive practices are not the outlier - they are the norm, and they are stamping out

small businesses and compromising the care of millions of Americans.

Through virtually uncontested vertical integration, the big PBMs are not only affiliated

with insurers, but also with pharmacies that compete with other non-PBM affiliated

pharmacies such as Walgreens and independent community pharmacies whereby the

PBMs are setting reimbursement rates for their competitors. PBMs often reimburse

non-affiliate pharmacies woefully under pharmacy acquisition cost while billing their
clients for those same drugs significantly more money, a practice known as spread

pricing.

In addition, PBMs often engage in the practice of recouping money retroactively from

network pharmacies (often referred to as DIR fees) which has resulted in the closure of

untold community pharmacies further reducing patient access to care. Ironically, or

perhaps by design, many of these closures result in the PBM affiliated pharmacies

purchasing the prescription files from the competitor pharmacy who closed for pennies

on the dollar. In addition, the practice of imposing fees after the point of sale often

results in patients and plans overpaying based upon the price at point of sale while

PBMs enjoy the benefit of the post adjudication recoupment.

Aside from rebate practices that restrict choice and care, reimbursement practices that

simultaneously under reimburse competitors while raising the cost of prescription drugs

to their clients, and the imposition of retroactive fees that harm competitor pharmacies

and inflate costs to patients and payors, PBMs engage in a far more insidious practice

that is not only anti-competitive, but compromises patient care – PATIENT STEERING.

Everyday in this country our sickest patients, those fighting for their lives battling cancer,

HIV, and other life-threatening diseases, are forced to use pharmacies owned or

affiliated with PBMs delaying and compromising care while at the same time taking

patients away from their choice of oncology and other specialty physicians practices

and pharmacies that compete with the PBM owned/affiliated pharmacies. How are

PBMs able to do this? They offer, design, and implement plans that mandate patients

use PBM owned/affiliated pharmacies or that penalize or deny coverage to patients who

seek to fill prescriptions at non-affiliate pharmacies.

In Georgia, steps have been taken to try and eliminate these practices. By way of

example, in connection with the CVS Aetna merger, the Commissioner imposed certain

preconditions via the Consent Order, including:

• CVS/Aetna allow Georgia patients to use any health care provider that is

agreeable to applicable terms and conditions; and

• Aetna invite non-CVS health care providers (pharmacies, physicians, clinics, etc.)

to join its networks, and allow patients to use any provider within their respective

networks.

Additionally, in 2019 and 2020 the Georgia General Assembly passed legislation

seeking to prohibit these self referral practices finding, amongst other things, that these

practices:

May limit or eliminate competitive alternatives in the health care services

market, may result in overutilization of health care services, may increase

costs to the health care system, may adversely affect the quality of health care,

may disproportionately harm patients in rural and medically underserved areas

of Georgia, and shall be against the public policy of this state.
Ga. Code § 26-4-119.

Despite these attempts to rein in anti-competitive PBM steering practices, PBMs continue to

steer in the state, every day.

In light of the foregoing, we ask that the FTC make it a priority to rein in these anti-competitive

practices through its considerable investigatory, prosecutorial, and rule-making powers as soon

as possible. The harm to community pharmacies, oncology and other specialty practices,

payors, and patients as a result of PBM anti-competitive practices is acute and as a result

stopping these practices should be an FTC priority.

Sincerely,

Bob Coleman

CEO, Georgia Pharmacy Association
1

From: K.J. Bagchi < >

Sent: Wednesday, June 30, 2021 9:53 AM

To: JulyPublicComments

Subject: Chamber of Progress Comments for July 1, 2021 Open Meeting Agenda

Attachments: Chamber of Progress Comments to FTC re Section 5 Policy Statement.pdf

Dear FTC Staff,

Please find attached the Chamber of Progress' comments in response to the July 1, 2021 meeting agenda. Happy to

answer any questions.

Thanks,

K.J.

--

To help protect your privacy, Microsoft Office prevented automatic download of this picture from the Internet. Koustubh "K.J." Bagchi

Senior Director, Federal Public Policy

Chamber of Progress

progresschamber.org
June 30, 2021

Comments of Koustubh “K.J.” Bagchi

Senior Director of Federal Public Policy, Chamber of Progress

Federal Trade Commission | July 1, 2021 Open Meeting

Response to “Statement of Enforcement Principles Regarding ‘Unfair Methods of

Competition’ Under Section 5 of the FTC Act”

The Chamber of Progress appreciates the opportunity to submit written comments in response to

the Federal Trade Commission’s July 1, 2021 agenda. Specifically, we seek to respond to the agen

item entitled, “Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under

Section 5 of the FTC Act” (2015).

The Chamber of Progress is a new tech industry coalition devoted to a progressive society,

economy, workforce, and consumer climate. Our organization works to ensure that all Americans

benefit from technological leaps, and that the tech industry operates responsibly and fairl

Most technology company leaders want to ensure that they use their power responsibly and fairly

-- towards consumers, workers, and other companies. The government has a critical role to play in

ensuring companies operate fairly, and Section 5’s of the FTC Act is a critical tool for doing so.

The FTC’s 2015 bipartisan policy statement provides companies with important guidance to ensure

their own fair behavior; it sheds deeper light on what the FTC will consider fair and unfair behavior.

And that in turn helps companies operate responsibly.

It is certainly within the Commission’s purview to update its 2015 policy statement to include new

advice to companies. In fact, technological advances since 2015 have posed new challenges that an

updated policy statement could address. But in simply revoking the 2015 statement, and leaving

nothing in its place, technology companies will have less overall guidance from the Commission on

how to operate fairly and responsibly.

Given the level of scrutiny the tech industry currently faces from regulators and the public, clear

guidelines around the application of Section 5 should be public and transparent. It’s important for

regulators and regulated companies to understand the same rules and act in good faith according

to those rules.

Consumers want companies to play fair -- and companies want that too. The 2015 guidance has

been a critical tool to ensure fair corporation behavior, and we encourage the FTC to amend rather

than revoke its guidance.
1

From: Marianela Lopez-Galdos < >

Sent: Wednesday, June 30, 2021 8:59 AM

To: JulyPublicComments

Subject: CCIA's Public Comment Submission Form for July 1, 2021 Open Commission Meeting

Attachments: CCIA's Section 5 FTC Act Comment.pdf

Dear Sir or Madam,

Please find attached the Computer & Communications Industry Association's (CCIA) public comments regarding the July

1 Open Commission Meeting.

Best,

Marianela.

--

Marianela López-Galdos, S.J.D.

Global Competition Counsel

Computer & Communications Industry Association
Before the

United States Federal Trade Commission

Washington, D.C.

In re

Comments submitted before the Federal Trade Commission with

respect to consideration to rescind the “Statement of Enforcement

Principles Regarding ‘Unfair Methods of Competition’ Under

Section 5 of the FTC Act”

COMMENTS OF

THE COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION (CCIA)

The Federal Trade Commission (FTC) has announced that it will hold an open meeting

on Thursday, July 1, 2021 and has requested public commentary on the proposed agenda for such

meeting. In response to this announcement, the Computer & Communications Industry 1

Association (“CCIA”) submits the following comments with respect to the consideration to 2

rescind the “Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’

Under Section 5 of the FTC Act” issued by the FTC in 2015 (Section 5 Policy Statement). Due 3

to the limited time period available for comment, CCIA’s comments are necessarily brief and

focus on one item of the proposed agenda. However, CCIA would be willing to expand its views

should the FTC consider providing more time to explore these important matters around Section

5 and other relevant rulemaking procedural discussions pertaining to the FTC Act.

3 Fed. Trade Comm’n, Statement of Enforcement Principles Regard “Unfair Methods of Competition” Under

Section 5 of the FTC Act (Aug. 13, 2015),

https://www.ftc.gov/system/files/documents/public_statements/735201/150813section5enforcement.pdf.

2 CCIA is an international nonprofit membership organization representing companies in the computer, Internet,

information technology, and telecommunications industries. Together, CCIA’s members employ nearly half a million

workers and generate approximately a quarter of a trillion dollars in annual revenue. CCIA promotes open markets,

open systems, open networks, and full, fair, and open competition in the computer, telecommunications, and Internet

industries. A complete list of CCIA members is available at http://www.ccianet.org/members.

1 FTC Announces Agenda for July 1 Open Commission Meeting, 24 June, 2021,

https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-open-commission-meeting

1
CCIA has been supportive of antitrust enforcement and has advocated for policies

promoting competition in the tech industry since 1972. In this respect, CCIA supports the FTC’s

willingness to use the FTC’s standalone authority under Section 5 of the FTC Act to address

market concerns negatively impacting consumers. However, it is important to recall that in the

1970s, the FTC unsuccessfully attempted to expand the use of its standalone Section 5 authority

and suffered numerous federal court losses. The FTC has not won a single standalone antitrust

Section 5 case since then.

In August 2015, in response to concerns from Members of Congress that the FTC’s

standalone Section 5 authority was undefined, the FTC issued a bipartisan written framework for

the application of this authority to acts or practices that fall outside the scope of Sherman Act or

Clayton Act violations. The FTC recognized in its Section 5 Policy Statement that Congress had

left the development of Section 5 to the FTC as an expert administrative body, which would

apply the statute on a flexible case-by-case basis, subject to judicial review. In this respect, the

Section 5 Policy Statement affirmed that the Commission’s standalone Section 5 authority

extends to unilateral conduct that violates the spirit of the antitrust laws and conduct that, if

allowed to mature or complete, could violate the Sherman or Clayton Act.

CCIA is of the view that the FTC’s mandate to protect consumers will not be served by

rescinding the Section 5 Policy Statement. First, another attempt to expand the use of Section 5

of the FTC Act beyond the scope established in the Section 5 Policy Statement risks repeating

litigation losses of the past, which is a poor use of agency resources, to the detriment of

consumers. Second, an attempt to shift a case-by-case adjudication system towards rulemaking

would run against Congress’s desire to establish a measure of flexibility with Section 5. Finally,

adopting a rulemaking approach with respect to other sections of the FTC Act by rescinding

established procedures as implied in the proposed agenda might raise concerns with respect to

the FTC’s procedural legitimacy when protecting consumers.

For all of the above reasons, CCIA encourages the FTC to preserve the Section 5 Policy

Statement and to advance its enforcement actions under the bipartisan framework adopted

therein. Similarly, CCIA discourages the FTC from favoring rulemaking over the adjudicative

2
process when enforcing the FTC Act overall, and to preserve its reputation as an enforcement

agency under the highest standards of judicial review.

Respectfully submitted,

Marianela López-Galdos

Global Competition & Regulatory Counsel

Computer & Communications Industry Association

30 June 2021

3
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:30 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:29Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Chris

LastName:Marchese

Affiliation:LawyerforNetChoice,TradeAssociationFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

NetChoiceCommentfortheRecord:

FTCOpenMeeting,July1,2021

NetChoiceisatradeassociationofleadinginternetbusinessesthatpromotesthevalue,convenience,andchoiceinternetbusinessmodelsprovideAmericanconsumers.Our

missionistomaketheinternetsafeforfreeenterpriseandforfreeexpression.Wealsoworktopromotetheintegrityandavailabilityoftheinternetonaglobalstage,andare

engagedonissuesinthestates,inWashington,D.C.,andininternationalinternetgovernanceorganizations.

Introduction

WewelcometheopportunitytoprovidetheFederalTradeCommissionwithfeedbackaboutthemanysignificantissuesitwilldiscussatitsopenmeetingonJuly1st,2021.As

discussedbelow,weaskthattheFTC:

Voteagainst“streamlining”Section18rulemakingprocedures.

TheproposalunderminestheMagnuson-MossActandCongress’sintentinpassingit,anditgreatlycurtailspublicinputinFTCrulemaking

Voteagainstrescindingoramendingtheadoptedprinciplesregarding“unfairmethodsofcompetition”underSection5oftheFTCAct.

The2015PolicyStatementprovidesaffectedpartiesandthepublicwithnoticeofwhatconductispermissible,supportstheruleoflaw,andappropriatelyconfinestheFTC’s

discretion;and

Voteagainstchangestoenforcementinvestigations.

CongressintentionallystructuredtheFTCtobeamulti-member,consensus-drivenorganization,andtheproposed“streamlined”subpoenaprocesswouldviolatethat

structure

WeappreciatetheCommission’sconsiderationofourviews,andwelcometheopportunitytoprovideanyadditionalinformationoransweranyquestions.

Part1.“Mag-Moss”Rulemaking

Section18oftheFTCActprovidestheFederalTradeCommissionwiththeauthoritytoprescribe“ruleswhichdefinewithspecificityactsorpracticeswhichareunfairor

deceptiveactsorpracticesinoraffectingcommerce”withinthemeaningofSection5(a)(1)oftheAct.

UnliketraditionalagencyrulemakingundertheAdministrativeProceduresAct(APA),rulemakingunderSection18,oftenreferredtoas“Magnuson-Moss”

rulemakingaftertheMagnuson-MossWarrantyAct,comeswithadditionalstatutoryrequirementsmeanttocurbtheFTC’sdiscretion.Thoseincluderequirementstoprovide

interestedpartieswithlimitedcross-examinationrightsduringinformalhearingsandshowthatthepracticestheproposedruleseekstoregulateare“prevalent”beforethe

rulemakingoccurs.

Theseproceduralsafeguardsareabenefit,notadrawback.TheFTCshouldcontinuetoadheretothem.

HistoryShowsthatMagnuson-MossRulemakingAuthorityisnotSupposedtobe“Streamlined.”

Tobegin,theFTClikelydoesnothavetheauthorityto“streamline”
2

Section18rulemakingprocedures.CongressimposedtheserulemakingrequirementsthroughexplicitstatutorytextandintentionallycurbedtheFTC’sdiscretion.Whilesome

mayopposetheadditionalprocedures,onlyCongresscansubstantively“streamline”orchangethem.

Duringthe1960sand70s,theFTC’srulemakingactivitybecamethesubjectofconsiderablecontroversyanddebate.ManyfelttheCommissionhadbecomeoverzealousinits

promulgationofrules.Considerthe(in)famousexampleofthe“KidVid”rulethatwouldhavebasicallyprohibitedanytelevisionadvertisingaimedatchildren.Thisdecisionand

thecircumstancessurroundingitresultedintheWashingtonPostdubbingtheFTCtheUnitedStates’“NationalNanny.”Assubsequentcommentatorshaveexplained,“the

FTCadoptedthereformers’causeuncritically,seeingitselfself-appointedchampionofAmericanchildren”suchthat“evenitssupportersacknowledgethattheFTCmadea

seriouspoliticalmiscalculation.”

CongresspassedtheMagnuson-MossWarrantyof1975andtheFTCImprovementsActof1980tocurbtheFTC’sexcessiverulemakingactivity.Congressdidnothideits

justificationforlimitingtheCommission’spowers.Inaseriesofhearingsheldinthelate1970s,“CongresspubliclylambastedtheCommissionforitsactivistprogramsbranding

theseas‘regulatoryabuse’

bya‘runaway,controllablebureaucracy.’”Together,theseActsgreatlylimitedtheCommission’sabilitytopromulgaterulesatwill.

TheCommissionCannotSupersedeStatutoryLimits&EvenifitCould,ItShouldn’t.

Withsuchclearcongressionalintentandstatutorylanguagesupportingthegoaloferecting,notlowering,barrierstoagencyrulemaking,atbesttheCommissionhasonly

limitedabilityto“streamline”suchproceduresthroughitsowninternalprocesses.AndeveniftheCommissioncan,itshouldn’t.

First,theconcernsthatmotivatedCongresstoimposetherequirementsarenolessprevalenttodaythantheywereinthelate20thCentury.Infact,withaclearlyexpressed

desireonthepartofsomecommissionerstodivorceFTCenforcementfromtheguideofconsumerwelfareandtouseitsenforcementpowertopromotevagueandoftenilldefinedsocialgoals,theseproceduralsafeguardsandrestrictionswilllikelybemoreimportantthanever.

Second,themarketisadynamicandever-evolvingprocessthatbringswithitincredible,consumer-benefitinginnovationthatisdifficult,andoftenimpossible,topredictbefore

itoccurs.Byartificiallylockinginperserulesthatprohibitspecifictypesofconduct,theCommissionriskschillingconsumer-welfare-enhancinginnovation.Incontrast,sincethe

Section18rulemakingrequirementstookeffect,theFTChasfocusedprimarilyonadjudicatingcasesagainstspecificdefendantsbasedonparticularizedallegationsof

consumerharm.ThishasallowedtheFTCtoaddressinstancesofconsumerharmwithoutunderminingmarket-driveninnovation.TheFTCshouldthereforecontinuetofocus

onitsadjudicativeapproach,whichmaximizesconsumerbenefitswithoutkneecappingAmericaninnovationandtheUnitedStates’competitivenessintheglobalarena.

Third,theFTCshouldconsiderthatanincreaseinrulemakingwouldlikelyhurtsmallbusinessesandup-and-comingentrepreneurs.

MoreRulemaking—StreamlinedorNot—WillHurtSmallBusinesses&theEconomy.

Marketentrantsarealreadyfacedwithanonslaughtofoverlyrestrictiverulesandregulations.AsofNovember2019,forexample,therewereover1millionregulatory

restrictionsintheU.S.CodeofFederalRegulations.Addtothisthethousandsofstateregulationsbusinessesmustcomplywith:

CaliforniaandNewYorkalonehaveover695,000regulatoryrestrictions.

SmallbusinessesandentrepreneurshavealreadytakenaparticularlytoughhitasaresultoftheCOVID-19pandemic.Notonlydoestheaccumulationofruleshindertheir

abilitytosucceed,itstrengthensthepositionofthedominantplayersbyerectingartificialbarrierstocompetition.TheFTC’srulemakingabilityisparticularlythreateningbecause

itisnotlimitedtoonesectoroftheeconomyorconfinedtoaparticularsocialissue.Instead,theFTChasbroadjurisdictionovertheentireUnitedStates’economy.

WhiletheFTC’sadjudicativeapproachfocusesprimarilyonthelargestplayersandthosethatposethegreatestriskofharm,rulemakingappliestoallparticipantsequally

withoutregardtotheirparticularneedsorthecontextoftheirconduct.

TheProposalDiscardstheFTC’sConsumer-FirstFocus.

Asmentionedabove,removingtherestrictionsonFTCrulemakingwouldopenthedoortoaregulatoryapproachthatfocuseslessonthewelfareofconsumersandmoreon

thepreferredpolicyconsiderationsofagivencommission.Ratherthanhavingtojustifyparticularenforcementdecisionsorproveconsumerharminspecificcases,the

Commissioncouldinsteadimposebright-linerulesthatgoverncommercialactivityfortheforeseeablefuture—whetherornotconsumersactuallybenefit.

Indeed,rulescouldbeenactedbecausetheyadvanceunrelatedsocialgoalsratherthanoutofsomedesiretoprotectconsumersfromanticompetitiveconduct.Whilesome

socialgoalsmaybeworthyofgovernmentattention,itisforCongress—nottheFTC—toadvancethosegoals.

Forthesereasons,weaskthatyoudonotamendthestatutorily-requiredproceduresforSection18rulemaking.

Part2.UMCPolicyStatement

WhentheFTCapproveditsUMCPolicyStatementin2015,itsaveditself(fromitself).Whilethestatementisflexible—itallowstheFTCtouseitsSection5authorityfor

standaloneclaims,forexample—itprovidesnecessaryguidancetoboththeFTCandthepublic.AstheCommissionsurelyknows,itsauthorityunderSection5hasbeen

controversialfordecades.Tobesure,mostrecognizethatitencompassestheagency’santitrustauthorityunderfederalstatutesliketheShermanAct.Butwhetheritextends

beyondthosestatuteswasandisanopenquestion.

WhentheFTCapproveditsUMCPolicyStatementin2015,itsaveditself(fromitself).

ButevenconfiningSection5authoritytotheantitruststatutesislegallymurky.Theagency’sorganicstatute—theFTCAct—failstodefine“unfair,”forexample.Without

statutoryguidance,andwithouttheUMCPolicyStatement,“unfair”willmeanwhateveratleastthreecommissionerswantittomean.

TheFTCShouldn’tAbandonClear,Uniform,Predictable,&ObjectiveStandardsthatProtectConsumers&PromoteInnovation.

Themovementawayfromclearguidanceisacauseforconcern.Forstarters,itisunclearwhethertoday’sSupremeCourt,whichisfarmoreskepticalofagenciesthanearlier

courts,wouldcountenanceSection5agencyactionwithoutsuchguidance.Indeed,thePolicyStatementseemstobetheagency’sownefforttowardoffconstitutionaland
3

legalattack.Repealingorbroadeningitrisksinvalidationorjudiciallyconstructedlimitations.Atleastfornow,theStatementalignswiththeSupremeCourt’santitrustdoctrines

andthusstandsadecentchanceofsurvivingjudicialreview.

Second,itisunclearwhetherCongresswouldcountenancesuchopen-endedauthority.EvenifthecurrentCongressispoisedtosupporttheagency’sactions,future

Congressesarelikelytotakeissuewithit.Andifhistoryisanyindicator,theFTC’sabuseofbroadstatutorylanguagewillspurhearings,condemnations,andreforms.

Inthemeantime,businessesandconsumerswillbeleftguessing.EvenifthecourtsandCongressturnablindeye,therestofthecountrywillbevulnerabletounexpectedand

open-endedregulation.Thisregulatoryenvironmentwilllikelydampeninvestmentandchillinnovation—whichwillbeevenworseiftheagencyalso“streamlines”itsSection

18rulemakingprocesses.Evenworse,withouttheStatement,theagencycouldreturntothepast,whenitusedvagueenforcementactionstocoerceprivatepartiesinto

settlingevenwhenthealleged“harm”wasfarfromclear.

ItisagainstthisbackdropthattheFTCadoptedtheUMCPolicyStatementin2015.Anditisforthesereasonsthattheagencyshouldmaintain—andevenstrengthen—the

Statement.

TheExistingPolicyisFlexibleEnoughtoRespondtoNewMarketRealities&EvenCriticsShouldSupportIt.

ConsideralsothattheStatementisflexibleenoughtoadapttonewmarketrealities.Inbrief,itsimplynotesthatwhentheagencydecidestouseitsSection5authority,itwilldo

sobasedontheconsumerwelfarestandardandwillusetheruleofreasontoevaluatepotentialaction.Noneofthisisradical.AstheCommissionknows,theconsumer

welfarestandardhasbeentheguidinglightofantitrustenforcementfordecades.Theruleofreason,evenlonger.Thatthesestandardsaresoestablishedinfederallawandso

familiartointerestedpartiesisaplus,notaminus.

Evencriticsoftheconsumerwelfarestandardshouldrejoice:theStatementaccommodatesamore“aggressive”approachtoenforcement.Forexample,theStatementdoes

notincludeformer-CommissionerJoshuaWright’sideatocreatea“safeharbor”fromUMCenforcementifanybusinessefficiencyisshown.Byrejectingthisproposal(sensible

asitmaybe)andbyadoptingabalancingmethodinstead,theCommissionleftwiggleroomtoexerciseitsUMCenforcementpowerevenwhendefendantbusinesses

provideevidenceofprocompetitiveeffects.Underthisbalancingapproach,theCommissionretainstheabilitytoweighinonmanybusinesspractices.Thesolelimitationis

simplythattheCommissionmustidentifysomeconsumerharm.Thatis,byanyobjectivestandard,notaskingmuch.

NordoesthePolicyStatementtietheFTC’shandsindefining“consumerharm.”Farfrombeinglimitedtoprices,theconsumerwelfarestandard—andtheStatement’suseof

it—leavestheCommissionfreetoenforceactionsagainstbusinessesthatharmquality,innovation,andinflictotherharmsonconsumersidentifiedbytheCommissionand

economicliterature.Inotherwords,alltheStatementdoesisrequiretheCommissiontomakeitsdecisionsbasedonconsumers—notcompetitors,notloftysocialgoals(no

matterhowwell-meaning),andnotindividualpolicypreferences.

Thisobjectivestandarddevelopedoverdecadesandrepresentstheaccumulatedwisdomofthecourts,agencies,economists,andlawyers.Itshouldn’tbeabandonedsimply

becauseitrequirestheFTCtoshiftthroughevidenceusinganobjectivemeasuretoguide(andsometimesabandon)itsenforcementactions.

TheExistingPolicySupportstheRuleofLaw.

ByconformingitsSection5powerstoitsantitrustenforcementpowers,theFTCin2015promotedclarity,predictability,anduniformity.Thesebenefitsshouldnotbetakenfor

granted.Bypromotingclarityandpredictability,thePolicyStatementinsulatestheFTC—toadegree—fromlegalchallenges.Anditgivesbusinessesandconsumersinsightinto

whatbehaviormayormaynotbepermissible.This,ofcourse,helpsbusinessesgrowandinnovate.

Likewise,bypromotinguniformityandpredictability,theStatementprotectsagainstarbitraryorpoliticizedenforcement.Thissupportstheruleoflawandfairness.Without

guardrailsthatalignwiththeagency’senforcementpolicieselsewhere,theCommissionthreatenstodestabilizethelawandraisequestionsaboutwhetheritsSection5

authorityisevenconstitutionallyorstatutorilysound.

Bypromotingclarityandpredictability,thePolicyStatementinsulatestheFTC—toadegree—fromlegalchallenges.

Asidefromthosebenefits,the2015Statementisgoodonitsownmerits.

BecausetheFTC’sauthorityextendssobroadly,itsactionscanreshapeentiremarketsandindustries.Astheoldadagegoes,withgreatpowercomesgreatresponsibility.The

Statementrecognizesthis,andreachesanappropriatebalancebetweenactingwhennecessarytoprotectconsumersandleavingbusinessesfreetoinnovate.Andit

appropriatelysituatestheCommission’sSection5powers:Insteadofviewing“unfairmethodsofcompetition”asastandalonegrantofpower,theStatementtreatsitasa

gapfillertocoverconductthatisnotexpresslyprohibitedbyotherfederalantitruststatutesbutthatwould,leftunchecked,underminethepurposesofthosestatutes.

Part3.CompulsoryProcess

WhenCongresscreatedtheFTC,itsoughttofilltheagencywithindependentexpertsandtoinsulatethemfrompoliticalpressure.AstheSupremeCourtlongagoputit,the

FTCwasdesignedtobe“non-partisan”andto“actwithentireimpartiality.”Tobesure,theagencyisnotentirelyseparatefrompolitics—presidentsappointcommissioners

basedontheirexpertiseandontheirpoliticalaffiliation.Atanygiventime,forexample,theCommissioncanhavenomorethanthreecommissionersofthesamepolitical

party.ButeventhatsmallnodtopoliticsunderscorestheCommission’sapoliticalnature.Ratherthanletanypartycommandtheagencyunfettered,Congressinsteadelevated

bipartisanshipandconsensus.

Congressalsodouble-downedontheagency’sindependence.Commissionersserveforstaggeredseven-yeartermsandcanberemovedonlyforcause.AndCongresschose

tomaketheFTCamulti-memberCommission,notaunitarybodyliketheCFPB.HadCongresswantedcommissionersandtheagency’sstafftoactunilaterally,itwouldnot

havegonethroughthetroubleofstructuringtheagencythisway.Whatevercoststhismulti-member,consensus-drivenstructuremayimposeontheCommission’sspeed,it

morethanmakesupforinstrengtheningtheCommission’sreputationandinsulatingitfrompolitics.
4

Forthatreason,theCommissionshouldnot“streamline”thesubpoenaprocess.Byallowingstafftounilaterallyaskasinglecommissionertounilaterallyapprovecompulsory

process,theCommissionrisksunderminingitsreputationandundercuttingpublicsupportforitsdecisions.

TheFTCShouldNotEmpoweraSingleCommissionerToUnilaterallyApproveCompulsoryProcess.

First,theFTC’sportfolioisbroad.Itisboththenation’stopconsumerwatchdoganditsprimaryantitrustenforcer.Undertheseroles,theCommissiontouchesalmostevery

segmentofoureconomy.Andthatsweepingjurisdiction—combinedwiththeCommission’spowers—meansithasthepotentialtorestructureentiremarketsandeven

overhaultheeconomy.WiththeexceptionofCongressandthepossibleexceptionoftheFederalReserve,fewothershavesuchcapacitytoaffectsomuchsoquickly.

Maintaining(orbetteryet,strengthening)thecurrentprocessisthereforenecessarytoguardagainstclaims—realorperceived—thattheagency:

Favorsordisfavorscertainmarkets,industries,orbusinesses;DoesthebiddingoftheWhiteHouse,Congress,ortheoppositionparty;orAdvancespoliticsbyothermeans.

Itwouldindeedbestrangetoconvertanindependentagencyintoonethatoperatesmorelikelyanexecutiveagencyfromtheinside.GivenCongress’sintentionalstepsto

insulatetheFTC,thoseatitshelmoweittoboththeirpredecessorsandsuccessorstoseetoitthattheagencylivesuptoCongress’sideals.

Second,theagencyinevitablyrunsintopoliticallythornyissues.Whentheseissuesarise,itisbestfortheagencytopresentaunified—oratleast,mostlyunified—front.

Considertheagency’scurrentinvestigationintoStephenBannon,formerPresidentDonaldJ.Trump’schiefstrategist.

Whetherfairornot,theagency’sinvestigationintoMr.Bannonislikelytoelicitcriticismsfromthosewhobelievetheagencyispoliticallymotivated.Potentialcriticismshouldnot

swaytheagency’sactions,butcommonsensesuggeststhatsuchcriticismcanbekeptatbaythroughthecurrentapproach.Bycontrast,onethatallowsagencystafftoget

sign-offbyasinglecommissioner(attheirchoosing)willbemetwithcriticism—includingfromCongress.

Third,becausecompulsoryprocessisripeforabuseandmistakes,theFTCshouldrequireamajorityofcommissionerstoapproveasubpoenaorothercompulsoryprocess.

TheProposalisRipeforPoliticalAbuse(RealorPerceived).

Evenifeverysittingcommissionerrespectstheruleoflawandremainsmindfuloftheagency’smission,mistakeshappen.Actingonastaffreport,acommissionermay

accidentallyoverlookakeyconsiderationorfailtorigorouslyreviewtherequest.AndbecausetheFTC’sdutiesare“neitherpoliticalnorexecutive,”butinsteadrelyon“the

trainedjudgmentofabodyofexperts,”itmakessensetovestsuchdecisionsinthecollectivebodyratherthaninasingleexpert.Aseveryoneknows,havingmultiplesetsof

eyesonsomethingcanbeexhausting,butitoftenproducesbetterresults.

Evenifitdoesn’t,however,consensusbenefitstheCommission’sreputationandisconsistentwithitsfounding.

Becausecompulsoryprocessisripeforabuseandmistakes,theFTCshouldrequireamajorityofcommissionerstoapproveasubpoenaorothercompulsoryprocess.

AndwhenFTCstaffersdonotknowwhichcommissionermaysignoffonasubpoenaapplication,theymusttailortheirargumentstothebroaderbodyandensuretheir

argumentsareappealingtocommissionersofbothparties.

ThisinturnsupportsCongress’svisionfortheFTCasanindependentbodyofexpertsfromacrossthepoliticalspectrum.Butifasinglecommissionercandecideonbehalfofthe

whole,theFTCwillfunctionlesslikeabodyofapoliticalexpertsandmorelikeanexecutivebranchagencysubjecttounilateraldictates.

Thisisneithernecessarynorappealing.OurConstitutionandthegovernmentitestablishesstronglyprefersslowdeliberationandpainstakingconsensusoverquickand

efficientlawmakingandlawenforcement.Butthatdoesnotmeaneveryinstitutionofgovernmentmustoperatethesameway.WhileCongressdesignedtheFTCtobe

independentandmethodical,itallowsexecutiveagenciesliketheDepartmentofJusticetoactwithgreaterspeed.

GiventheoverlappingjurisdictionbetweentheFTCandDOJ,weneedn’tworrythatproceduralsafeguardsattheFTCwillrenderbadactorsoutsidethelaw’sbounds.Farfrom

it.Thepoliticallyaccountablebranchmayintervenequickerifthefactssupportdoingso.

Conclusion

Asalways,westandreadytoworkwiththeCommissiontoachievebeneficialoutcomesthatpromotetheinterestsoftheUnitedStatesandbenefitAmericanconsumersand

innovation.Weappreciateyourconsiderationofourviews.

Sincerely,

CarlSzabo,VicePresident&GeneralCounselChrisMarchese,CounselTraceMitchell,PolicyCounsel

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/38
1

From: Sagar Golla < >

Sent: Tuesday, June 29, 2021 9:42 PM

To: JulyPublicComments

Subject: Google Assistant app market issues

Hello Sir/Madam,

I spoke to Lina Khan last year, I wanted to update and pursue Google's self preferencing in the

Assistant App Market with 100s of their own apps, linking all the major food brands.

Here is the link to video: https://youtu.be/clLAzaDLaQ0

Slide deck: https://docsend.com/view/c5waa9at4jbntdq5

Google's deceptive practices are detrimental to my young startup. I need immediate help, please

advise.

--

Sagar Golla

Founder, CEO

Hostbuddy, Inc.

https://invited.hostbuddy.io
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 8:44 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-08:44Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Samuel

LastName:Bowman

Affiliation:InternationalCenterforLawandEconomicsFullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

Inantitrustlaw,theConsumerWelfareStandard(CWS)directscourtstofocusontheeffectsthatchallengedbusinesspracticeshaveonconsumers,ratherthanonalleged

harmstospecificcompetitors.Criticsofthestandardclaimthisfocusonconsumerwelfarefailstocaptureawidevarietyofharmfulconduct.Inadditiontobelievingthatharm

tocompetitorsisitselfavalidconcern,criticsoftheCWSbelieveitleadstoharmfulconcentrationsofpoliticalandeconomicpowerbybiasingantitrustenforcementagainst

intervention.Underthisview,theCWScontributestosuchharmsasenvironmentaldegradation,incomeinequality,andbargainingdisparitiesforlabor.

Butreturningtoapre-CWSstateofthelawwouldleadantitrustenforcementtobecomeconfused,contradictory,andineffectiveatpromotingcompetition.

TheCWSmakesantitrusteconomicallycoherentanddemocraticallyaccountable,andabandoningitwouldremoveanimportantconstraintontheFTCthathelpstokeepit

focusedoncompetition,andnotothergoals.

*TheCWSisagnosticabouthowmuchantitrustenforcementisnecessary*.

Indeed,manyadvocatesofmorevigorousantitrustenforcementarealsodefendersoftheCWS.Thestandardusesobjectiveeconomicanalysistoidentifyactualharmsandto

recommendremedieswhenthoseharmsarenotoutweighedbycountervailingbenefitstoconsumers.WhiletheissuestheCWScriticscareaboutmaybeimportant,

antitrustlawisabadwaytoaddressthem.

*Competitionusuallyhastohurtcompetitors*.Prioritizingcompetitorwelfareoverconsumerwelfare,assomeproposalswould,meansabandoningcompetitionasthegoal

ofantitrust.Businesseswantaquietlifeandlargeprofits.Ifonefirmoutcompetesanotherwithabetterproductoralowerprice,itdisadvantagesthatcompetitorbylowering

itsprofitsorforcingittoworkhardertomaintainthem.Theconsumerultimatelywinsinthisstruggle.Basingantitrustliabilityonconductthat“materiallydisadvantages”

competitorswouldimposeliabilityfortheactofcompetingitself.

*Theoldmodelofantitrustwasincoherentandunaccountable*.BeforetheriseoftheCWS,antitrustenforcementwasincoherentandlackedunderlyingneutralprinciples.In

thewordsofJusticePotterStewart,theonlyconsistencywasthat“thegovernmentalwayswins.”Competitivepracticescouldbecondemnedbecausetheyhurtthe

profitabilityofsomebusinesses

(See:

https://laweconcenter.org/wp-content/uploads/2020/05/house_joint_antitrust_letter_20200514.pdf#page=5).

Sometimescourtswouldworrythatpricesweretoolowandwouldthereforepermit“pricefloors”toprotectsmallbusiness(See:

https://casetext.com/case/brown-shoe-co-v-united-states?).Thislackofconsistencyledtoabodyoflawthatwascontradictoryandunpredictable,andthatregularly

underminedcompetition.Byentrustingenforcementandantitrustpolicytothediscretionofunelectedenforcementofficials,competitionpolicywaseffectivelyremovedfrom

democraticoversight.

*TheCWSgroundsantitrustinobjectiveeconomicsandtractableevidence*.

AdherencetotheCWSrendersantitrustjudgmentstransparentandquantifiablebygivingaclearbenchmarkforeconomicanalysis.WithouttheCWS,courtsmighttrade

reducedcompetitionandconsumerwelfareforareductionin,forexample,abusiness’spoliticalinfluence.Whileachievingthelattermay(ormaynot)beaworthygoal,there

isnoobjectivewaytoassesstrade-offsbetweenthetwopriorities.TheCWSrequirestestableclaimsandcounterclaimsaspartofacompetitioncase.Itallowsantitrustcasesto

focusonaquestionthatcanbeansweredobjectively:“Isthechallengedconductlikelytomakeconsumersbetterorworseoff?”

*TheCWSconsidersinnovationandquality,aswellasprice*.TheCWShasalwaysencompassedaspectsofcompetitionbeyondprice,includinginnovation,quality,and

productvariety.TheCWSisthusfullycompatiblewithmarketswhereproductsareofferedatazeropricetoconsumers,orwheretheallegedsourceofharmisthelossof
2

innovation.USv.Microsoft,forexample,hingedonaninnovationtheoryofharm,asdidtheU.S.JusticeDepartment’slawsuitagainsttheVisa/Plaidmerger,whichledtothe

mergerbeingabandoned.Asinothersupplymarkets,anticompetitiveconductbybusinessesinthelabormarkethasbeenruledillegalundertheCWSandbothofthefederal

antitrustagencieshavebroughtcasesagainstthiskindofconduct.

*Antitrustisnotapublicpolicyswissarmyknife*.Antitrustisabadtooltoachievegoalsotherthanincreasedcompetition,becauseitisoftenimpossibletoobjectivelycompare

thevalueofdifferentcompetingends.

Wheredifficulttrade-offsmustbemadebetweencompetingsocialgoals,suchasbalancingeconomicgrowthwiththeenvironmentorworkers’welfare,thelegislative

processisabettermechanismtoweighsociety’spreferencesthanthejudgementofacourt.Tryingtouseantitrusttoachievetheseendsisoftenanattempttobypassthe

democraticprocesswhenthatprocessdoesnotdelivertheoutcomesthatadvocateswant.

ForamoredetaileddiscussionoftheCWS,seeICLE'ssubmissiontotheFTC'sHearingsonCompetition&ConsumerProtectioninthe21stCentury:

https://laweconcenter.org/wp-content/uploads/2019/07/Antitrust-Principles-and-Evidence-Based-Antitrust-Under-the-Consumer-Welfare-Standard-FTC-Hearings-ICLEComment-5.pdf

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/10
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Tuesday, June 29, 2021 12:09 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonTuesday,June29,2021-12:08Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Jeff

LastName:Chester

Affiliation:ExecutiveDirector

FullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:

ChairmanKhanandCommissioners:

TheCenterforDigitalDemocracy(CDD)looksforwardtothepotentialpromiseofthecommission’sworkonthedigitalmarketplacefinallyfulfilled--afterdecadesoffailures.

Therehasbeenalackofrigorintermsofanalyzingonlinemarketplacepracticesthatimpactallofourlives—includingourprivacy,thepriceswepay,thekindsofserviceswecan

obtain,itsimpactonournextgenerationofyouthandtheverystructureofourdemocraticexperience.Formanyyears,publicinterest,privacy,consumerprotectionandcivil

rightsgroupshavetoldthecommission,regardlessofpartyincharge,aboutthedataprotectiondangers,unfairbusinesspractices,manipulativeadtacticsandinsatiable

appetitetoswallowuprivalandrelatedcompanieslargeandsmall—tohardlyanyavail.

Indeed,thereasonweintheU.S.havenoprivacytodayinourdigitalenvironmentisverymuchduetotheFTC’spoliticaltimiditythathasoperatedfortoolong. The

commissionbasicallylookedtheotherwayascompaniessuchasGoogle(andeveryoneelse)developedasurveillancebusinessmodelthattracksallofusallthetime,across

devices,applications,outside,insideandnowusessophisticatedandunaccountableAI&machinelearningsystemstoanalyzeand“activate”(andoften

manipulate)individualsandgroupstoengagewiththeretail,ecommerce,entertainment,healthandpoliticalsectors,amongothersectors. CDDandpartnersincludingEPIC,

USPIRG,CFAandothershavecontinuallyraisedtheseconcernswithcommissionersandstaffs,includingaboutthefailuresofthecommission’sconsentdecreestoensure

GoogleandFacebookliveduptotheircommitments.

TheFTCmustnowaddressthedigitalindustry’smovestoredohowitdevelopsandoperationalizesits“identity”managementschemesinthe“post-cookie”era,suchas

Google“FloC”andtheTradeDesk-led“UnitedIDSolution2.0.” Weshouldnotallowpowerfulprivateindustryactorstodefineanddeterminewhatprivacymeansfor

Americans(andmanyothersthroughouttheworld).

Weexpectthecommissiontoadoptaplatformthatwillensuregreatercompetitioninthedigitalmarket;protectprivacy;promotefairconsumerpractices;andhelpfostera

morerobustandjusteconomy. Thatincludeslongover-dueactiontoensureequity,opportunityandnon-discriminationin

theonlinemarketplace. CDDstandsreadytohelp.

Thankyou,

JeffChester

ExecutiveDirector

CenterforDigitalDemocracy

Washington,DC/Ventura,CA

www.democraticmedia.org
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 9:11 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-09:10Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Nancy

LastName:Piwowar

Affiliation:PrivateCitizen

FullEmailAddress:

ConfirmEmailAddress:

Telephone:(

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

AretheCommissionersandtheFTCawareofthenewtoolinthehealthcaremonopoliestoolbox?

Medicalnon-competerestrictivecovenantsonformerhospitalrealestate.

Afor-profitdeveloperwasgrantedaredevelopmentplanwithmixed-usesincludingresidentialapartmentsandmedicalusesonaformernon-profithospitalpropertybythe

localplanningboard. However,afteracourthearingonthesaleoftheformerhospitallandandafterthedeedoftransferwasrecorded,fivemedicalnon-competerestrictive

covenantsthatlastforadecadewereincludedonthedeed. Theserestrictivemedicalnon-competecovenantslimit,hinder,andrestrictthemedicalusesthatcancompete

withtheformer(sellers)controllingentity’sneighboringmedicalproperty. Theserestrictionsdenymedicalcompetitiontoademographicallydiversecommunity.

Thesamedeveloper,hasanotherproposeddeed,notyetrecorded,foramentalhealthfacility,andthemedicalnon-competerestrictivecovenantwouldlimittheuseforas

longastheproposedmentalhealthuseisinexistence. Thedeveloper’sneighboringmedicalmixed-usepropertycannotcompetewiththisproposedstateuniversitymental

healthfacility.

Thisappearstobeapattern,andbothofthesemedicalnon-competerestrictioncovenantsappeartobeunconstitutionalunderthe1964CivilRightsActandthe14th

Amendmentbecausetheyunfairlylimitmedicalusesandcreatemedicalmonopoliesonalocallevelinamedicallyunderservedcommunitythathasaverydiversepopulation

whichhasessentiallybecomeahealthcaredesertsincetheformerhospitalwasclosed.

WhyshouldtheFTCcareaboutlocaldeedrestrictions? Theoriginalcontrollingentitythatinitiatedthesaleoftheformerhospitalpropertyforredevelopmentstillhasalimited

medicalfootprintonaneighboringproperty,andisoneofthelargestmergedhealthcare/hospitalsystemsinNewJersey.Anyofthecurrent,proposedorrestrictedhealthcare

usesandentitieswouldbeeligibleforfederalfundingunderMedicareandfederalhealthbenefitsplans. Thesetwomedicalnon-competeagreementsplacedbyaprivateforprofitbusinessentityandanon-profithealthcaresystementityarenotinthepublicinterest,andcreatethepossibilitythatmedicalnon-competerestrictionswillbecomea

cancer,andthesewillserveasanexampleinthefutureofthehealthcareindustry. ThemergedhealthcaresystemhasareachthatextendsacrosstheStateofNewJersey,and

controlsalotofrealestate.Medicalnon-competeagreementsarecommoninanemployer/employeerelationship,butnotwhenitcomestorealestate. Hasthisoccurredin

otherpartsofthecountryorarethesemedicalnon-competerestrictiveagreementsspecifictoNewJersey?

TheFTChaslookedatlocalzoning,andhasheldpublicworkshopsonnon-competeintheworkplace,butnowtheFTCneedstoinvestigateorregulatetheuseofnoncompeterestrictivecovenantsinrealestatetransfersinthehealthcareindustryinordertoprotectthepublicinterestfromhealthcaremonopolies.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/14
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 9:50 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-09:49Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Koustubh"K.J."

LastName:Bagchi

Affiliation:ChamberofProgress

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

TheChamberofProgressappreciatestheopportunitytosubmitwrittencommentsinresponsetotheFederalTradeCommission’sJuly1,2021agenda.

Specifically,weseektorespondtotheagendaitementitled,“StatementofEnforcementPrinciplesRegarding‘UnfairMethodsofCompetition’UnderSection5oftheFTCAct”

(2015).

TheChamberofProgressisanewtechindustrycoalitiondevotedtoaprogressivesociety,economy,workforce,andconsumerclimate.Ourorganizationworkstoensurethat

allAmericansbenefitfromtechnologicalleaps,andthatthetechindustryoperatesresponsiblyandfairly.

Mosttechnologycompanyleaderswanttoensurethattheyusetheirpowerresponsiblyandfairly--towardsconsumers,workers,andothercompanies.

Thegovernmenthasacriticalroletoplayinensuringcompaniesoperatefairly,andSection5’softheFTCActisacriticaltoolfordoingso.

TheFTC’s2015bipartisanpolicystatementprovidescompanieswithimportantguidancetoensuretheirownfairbehavior;itshedsdeeperlightonwhattheFTCwillconsider

fairandunfairbehavior. Andthatinturnhelpscompaniesoperateresponsibly.

ItiscertainlywithintheCommission’spurviewtoupdateits2015policystatementtoincludenewadvicetocompanies.Infact,technologicaladvancessince2015haveposed

newchallengesthatanupdatedpolicystatementcouldaddress.Butinsimplyrevokingthe2015statement,andleavingnothinginitsplace,technologycompanieswillhave

lessoverallguidancefromtheCommissiononhowtooperatefairlyandresponsibly.

Giventhelevelofscrutinythetechindustrycurrentlyfacesfromregulatorsandthepublic,clearguidelinesaroundtheapplicationofSection5shouldbepublicandtransparent.

It’simportantforregulatorsandregulatedcompaniestounderstandthesamerulesandactingoodfaithaccordingtothoserules.

Consumerswantcompaniestoplayfair--andcompanieswantthattoo.The

2015guidancehasbeenacriticaltooltoensurefaircorporationbehavior,andweencouragetheFTCtoamendratherthanrevokeitsguidance.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/18
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:38 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:38Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Nicholas

LastName:Beale

Affiliation:Sciteb

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

MayIdrawyourattentiontotheUnethicalOptimizationPrinciple-publishedbyRoyalSocietyOpenScience(linkbelow).ThisprovesthatIfanartificialintelligenceaimsto

maximizerisk-adjustedreturn,thenundermildconditionsitisdisproportionatelylikelytopickanunethicalstrategyunlesstheobjectivefunctionallowssufficientlyforthisrisk.

Furthermore(exceptunderexceptionalconditions)thelargerthestrategyspaceinwhichtheAIoperates,themorelikelyitistopickunethicalstrategies.

TheimplicationsmostrelevanttoFTCmaybe:

1.Evenifthereisnointentionbyacompanyoritsmanagementtoactunethically,delegatingdecisionstoAIdisproportionatelyraisestheriskofunethicalactions.

2.Increasingthesizeofthestrategyspace,egbyhavingmultiplemajorplatformsunderthesameoverallcontrol, willunderfairlygeneralconditionsincreasethelikelihoodof

unethicalstrategiesbeingselected.

Consequentlythereisa(mathematicallyverifiable)reasonwhysubstantialconcentrationsofownershipofmajorplatformsisinherentlylikelytocauseharm,evenifthereisno

specificintentiontodoso. [Somecomparisonmightbemadetodrivingacarveryfastindeedonaroad.Itwouldnotbeasustainablepositiontosuggestthatnorestrainton

thespeedofavehiclecouldbejustifiedunlessitcouldbeshownthatthedriverhadactuallycausedaseriousaccidentorwasintendingtodoso.]

WewouldofcoursebedelightedtoworkprobonowithFTCstafftoelaborateanyofthesepoints.

Thefullscientificpaperisat:

https://royalsocietypublishing.org/doi/10.1098/rsos.200462

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/42
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:15 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:14Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Greg

LastName:Pence

Affiliation:MemberofCongress(IN-06)

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

https://m.youtube.com/watch?v=pHboLM9BbN8&feature=youtu.be

Submitwrittencomment:

CongressmanPencehereonbehalfofIndiana’sSixthDistrict.

TheextenttowhichBigTechandtheirplatformsengulfourlivesisreminiscenttotheall-encompassingentitieswe’veseenoverthepastcentury.

Fromdatasecurityandlaborconcernstoexclusionandmoderationpractices–theseplatformsarebecomingadestructive,rougeentitytooursocietybecauseoftheirattacks

onfreedomofspeechandthetruth.

Wecannotwaitanylonger.

It’stimewefindaviablesolutionconsistentwiththeFirstAmendmentthatenablesindividualstoexpressthemselvesfreelyandprotectstherightofprivatecompaniesto

controltheirproperty.

WemustaddresstheseurgentissuesthreateningfreespeechandencourageBigTechtoembraceourAmericanvaluesthatsupportdemocracy.

MyquestionfortheFTCtoday–isitappropriateforBigTechtomakemoneyoffofHoosier,andAmerican’sIntellectualProperty?

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/30
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Tuesday, June 29, 2021 10:54 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonTuesday,June29,2021-10:53Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Aurelien

LastName:Portuese

Affiliation:TheSchumpeterProject(ITIF)FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

https://www.dropbox.com/s/fgx8jp5hqphrhf8/FTC%20Comments.mp4?dl=0

Submitwrittencomment:

TheFTC’sintenttorescindthe2015Section5policystatementisunderstandableasweagreewiththen-CommissionerMaureenK.Ohlhausenthatthepolicystatementdid

notprovidemeaningfulguidance.

However,currentadvocacyforrulemakingunderSection5doesnotprovidenecessaryclarificationandconstitutesapplicationoftheprecautionaryprincipletoantitrust:Exanteruleswouldprohibitsomeconductthatispro-competitiveandwouldundermineneededdisruptiveinnovation.

Theaversionofantitrustthroughadjudicationrepresentsaregrettableattempttounderminetheruleofreasoninfavorofrulesofperseillegality.Withnojustificationandwith

areversedburdenofproof,precautionaryantitrusttowardinnovationwouldfurtherdevelopthroughrulemaking.

TheFTChasamandatetodetermineunfairmethodsofcompetition,buttherapidlychangingnatureoftoday’smarketsshouldnotleadtotheFTCadoptingprecautionaryexanterules.TheFTCmustpreservethedynamicprocessofcreativedestruction,notpreemptivelyinhibitit.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/18
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Tuesday, June 29, 2021 11:40 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonTuesday,June29,2021-23:39Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Jim

LastName:Polucha

Affiliation:ValleyDrug

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:Iamanindependentpharmacistwishingtodiscusstheanti-competitivenatureofpharmacybenefitsmanagers(PBMs). Overthepasttwo

decades,PBMshavecreateda'take-it-or-leave-it'approachtocontracting. Theyhavecreateduniqueclausesthatmaximizetheirprofitabilitywhileminimizingpharmacy's

profits. Ever-changingMAClists,DIRfees,networkperformancefees,andgenericeffectiveratesareSOMEofthecreativemechanismstheyusetolimitpharmacy'sprofits.

Thishasresultedinmanyclosuresandcommunitieswithoutapharmacy. PBMsalso

funnelbusinesstopreferredprovidersthrough'PreferredNetworks'. How

muchprofitdoesapharmacyhavetogivetogetinaPreferredNetwork? Istheservicelevelthesame? DoesCVS/caremarkreimburseitspharmaciesthesameamountfor

theidenticaldrugforthesamepatientvs.otherpharmacies?

HowwouldtheFTCoraplansponsorknow? IhaveseenpatientshaveaHIGHERco-payatanationalchainpharmacyvs.anindependentfortheidenticalNDC. Howcan

thatbe? PBMshaveSpecialtyPharmacieswithincreasedGrossMargins. Thatbusinesshasessentiallybeentakenawayfrommostretailpharmacies. Thatisthedefinitionof

anti-competitive. ItsimplyistimefortheFTCtolookdeeplyatthedamagePBMshavedonetothemarket,itsstakeholders,anddivestfromthecurrentanti-competitive

structure. ItistimeforpharmacytohavemorecontroloveritsfutureratherthanthePBMsdictatingthetermsofengagement.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/62
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:15 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:14Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Greg

LastName:Pence

Affiliation:MemberofCongress(IN-06)

FullEmailAddress:

Telephone

FTC-RelatedTopic:

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

https://m.youtube.com/watch?v=pHboLM9BbN8&feature=youtu.be

Submitwrittencomment:

CongressmanPencehereonbehalfofIndiana’sSixthDistrict.

TheextenttowhichBigTechandtheirplatformsengulfourlivesisreminiscenttotheall-encompassingentitieswe’veseenoverthepastcentury.

Fromdatasecurityandlaborconcernstoexclusionandmoderationpractices–theseplatformsarebecomingadestructive,rougeentitytooursocietybecauseoftheirattacks

onfreedomofspeechandthetruth.

Wecannotwaitanylonger.

It’stimewefindaviablesolutionconsistentwiththeFirstAmendmentthatenablesindividualstoexpressthemselvesfreelyandprotectstherightofprivatecompaniesto

controltheirproperty.

WemustaddresstheseurgentissuesthreateningfreespeechandencourageBigTechtoembraceourAmericanvaluesthatsupportdemocracy.

MyquestionfortheFTCtoday–isitappropriateforBigTechtomakemoneyoffofHoosier,andAmerican’sIntellectualProperty?

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/30
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 10:14 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-10:14Submittedbyanonymoususer: Submittedvaluesare:

FirstName:William

LastName:Cade

Affiliation:BoardMember,Repair.org

FullEmailAddress: ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:Agriculture,acriticalinfrastructureoftheUnitedStates,suffersfromalackofcompetition. JohnDeereisusingitslargemarketshare,especiallyin

precisionagriculture,torestrictrepairoptions,requirepostsalepurchases,andchargeexcessiveprices. Thetransitiontocomputer-controlledproductsallowsJohnDeerein

concertwithitsdealerstoexclusively“VINBurn”partstospecificmachines.

Additionally,thesoftware-controlledrepairprocessrequirespurchaseofJohnDeerepartsexclusivelyandonlybyJohnDeeredealers. Thisprocessisdemandedbythe

requirementfor“Payload”fileswhichisthesoftwarenecessarytoconnecthardwarewiththecontrollingsoftware. JohnDeeredealerscanonlydeliverthenecessaryfilesafter

submittingserialnumbers,ownership,andotherinformationtoJohnDeere. Deerethenprocessthatinformationandencryptsthesoftwarethatisdeliveredbyadealer

technician’scomputertotheproduct. Onlythenistherepairfunctional.

Thisprocesseliminatesanypossibilityofthird-partypartsorserviceforthesekindsofrepairs. Becauseofthissystemdealerscanrequireextensivedealertechniciantimeand

coststogenerateunwarrantedfees. Thisunfairprocesseliminatestheproducerofagriculturalproductstheopportunitytorepairtheirequipmentorhireathirdpartyoftheir

ownchoosingtodotherepairs.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/26
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Tuesday, June 29, 2021 9:35 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonTuesday,June29,2021-21:34Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Sagar

LastName:Golla

Affiliation:HostBuddyInc

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:https://youtu.be/clLAzaDLaQ0Submitwrittencomment:

HostBuddyisno-codeconversationalcommerceplatform,leadingtheAssistantAppMarket,untilGooglereleasedtheirownFoodOrderingapp.Googlecontrolseverysingle

invocationof"OrderFood"byconsumerwithGoogleAssistant,theseordersareroutedtotheirselectpartners.Tobecomepartner,Ineedtohaveadmanageraccount.Not

onlyinvocation,GoogleliterallyoccupiedAssistantAppMarketwith"WebApps"notDuplextheypromised.Googleappsdon'tfollowtheAssistanttransactionpolicy,theyare

unfit.Theyremovedmyapp6-7timesandreinstated.Pleasecheckthedemovideosforbothforyourowndetermination.

Thesechoicechoicesbelongstoconsumersandrestaurantowners,pleasecheckmyslidedeckforthedetails:

https://docsend.com/view/c5waa9at4jbntdq5

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/54
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 4:51 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-04:50Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Hunter

LastName:Lee

Affiliation:SwarthmoreCollege

FullEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:Warmcongratulationstothenewlyappointedchair,andthankyouforincreasedtransparencyintotheFTC.Ihadtwoquestions.

First,whatistheFTC’sstanceonsuper-apps,likeGrabinSoutheastAsiaandWeChatinChina,foundmoreandmoreprevalentaroundtheworld—doesitstiflecompetition

orenableinnovationbyscale,andhowdoesitaffectviewsongiantslikeAmazonandGoogle?Second,whatistheFTC’sviewonthedataeconomy—databeingparamount

tosuccessinthemachinelearningsector,willtheFTCurgeCongresstoensurefair,equalaccesstodataforbothstartupsandestablishedcompanies?

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/2
1

From: John Bodnovich < >

Sent: Thursday, July 1, 2021 4:48 PM

To: JulyPublicComments

Subject: Public Comment Submission for July 1 Open Commission Meeting

Attachments: 21 7.1 FTC July Meeting Public Comment - ABL.pdf

To Whom it May Concern:

Please include the attached public comment for the record.

Thank you,

John

John Bodnovich | Executive Director

American Beverage Licensees (ABL)

America’s Beer, Wine & Spirits Retailers
American Beverage Licensees | | www.ablusa.org

PRESIDENT

J.J. Moran

Four Winds Liquor & Lounge

Cheyenne, WY

VICE PRESIDENT

Jay Gesner

Souse’s Lounge

Rockford, IL

VICE PRESIDENT

Bobby Greenawalt

B&B Bartending

Auburn, AL

VICE PRESIDENT

Chris Marsicano

The Village Supper Club

Delavan, WI

VICE PRESIDENT

Juan Negrin

Super Wine Warehouse

Paterson, NJ

TREASURER

Mat Dinsmore

Wilbur’s Total Beverage

Fort Collins, CO

PAST-PRESIDENT

Steve Morris

Jorgenson’s Restaurant & Lounge

Helena, MT

EXECUTIVE DIRECTOR

John Bodnovich

American Beverage Licensees

Bethesda, MD

July 1, 2021

The Honorable Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Ave., NW

Washington, DC 20850

Re: Public Comment for July 1 Commission Meeting

Dear Chair Khan:

American Beverage Licensees (ABL) appreciates the opportunity to submit 

comment for the Federal Trade Commission (FTC) July 1 Commission 

Meeting. The ability to submit comment at this meeting is a welcome 

opportunity to bring important competition issues to the FTC’s attention, 

and we encourage you to continue this practice.

ABL is a trade association representing the retail tier of the U.S. alcohol 

industry. Its members include thousands of bars, taverns, and package 

liquor stores that sell beer, wine and spirits in states across the country. As 

an important cog in the hospitality industry economic machine, direct retail 

beverage alcohol sales in the United States create more than 2.03 million 

well-paying jobs and generate over $27.9 billion in federal taxes and $20.0 

billion in state and local taxes. 

ABL members compete every day with their fellow beverage alcohol 

retailers under state-based three-tier systems which, when their integrity is 

maintained, foster a level playing field for beverage licensees large and 

small to the benefit of states, communities, businesses and, most 

importantly, consumers. This success story has been made possible by the 

delicate balancing of federal alcohol laws and states’ primary authority to 

regulate how alcohol is distributed and sold within their borders.

Following the repeal of Prohibition, federal laws such as the Federal Alcohol 

Administration Act were enacted to prevent the retail tier of the alcohol 

industry from being subjected to tied-house and other market evils 

perpetrated by alcohol suppliers before Prohibition. However, retail 

consolidation has shifted alcohol market leverage to large, corporate fastmoving consumer goods (FMCG) retailers, who now wield meaningful power 

over other industry stakeholders. 

Given their national footprints, and despite state-by-state laws that work 

effectively for intra-state alcohol commerce and create competitive markets 

that benefit consumers, these retailers can leverage their national business

with distributors and suppliers to induce other parties in the three-tier 

ecosystem to act in anticompetitive ways. In some instances, this power has 

led to the inability of small retailers to access familiar products or receive a

level of service afforded to large retail corporations. 
American Beverage Licensees | | www.ablusa.org

Large FMCG retailers – at times abetted by other, non-retail alcohol 

industry stakeholders – have also sought to undermine pro-competitive 

state alcohol laws through recklessly deregulatory policy initiatives, all to 

the detriment of appropriately-regulated local beverage businesses and the 

customers they serve. These efforts, if successful, will ultimately lead to 

less consumer choice, higher prices and a homogenized beer, wine and 

spirits marketplace dominated by a handful of firms at each level of the 

three tiers.

ABL urges the FTC to evaluate and prioritize enforcement of the RobinsonPatman Act and other laws that ensure fair competition for small beverage

alcohol businesses so they can meet the needs of their communities and 

operate in a fair and truly competitive marketplace. ABL thanks the FTC

for creating a public forum for sharing important competition and antitrust 

matters. 

Sincerely,

John Bodnovich

Executive Director

American Beverage Licensees
June 30, 2021

The Honorable Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Honorable Noah Joshua Phillips

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Honorable Rohit Chopra

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Rebecca Kelly Slaughter

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Christine S. Wilson

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

Dear Chair Khan, Commissioners Chopra, Phillips, Slaughter, and Wilson:

ACT | The App Association appreciates the opportunity to provide its views as 

part of the Federal Trade Commission’s (FTC) July 1, 2021 open meeting.1 The FTC’s

approach to competition and consumer protection policies and approach to enforcement

directly affects each of the App Association’s members and the consumers who use 

their products/services.

ACT | The App Association is a not-for-profit trade association representing 

thousands of small business software application development companies and 

technology firms located across every state. Alongside the rapid adoption of mobile 

technologies, our members compete by developing innovative applications and 

connected products that improve countless consumer and enterprise systems and 

experiences that are increasingly leveraging the Internet of Things effect. Today, the 

app ecosystem is worth more than $1.7 trillion annual, is responsible for 5.9 million 

American jobs, and serves as a key driver of the $8 trillion IoT revolution. Notably, Our 

members provide the consumer-facing or most-downloaded apps in the Apple App 

Store and Google Play store as well as connected IoT technologies, which is a small 

1 https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting. 
2

fraction of the app economy. Our members also build software and connected 

technologies for other companies across countless use cases that are not consumerfacing, such as software management systems for internal use by a hospital, 

manufacturer, or brewery.

In light of the agenda items being addressed during the July 2021 open meeting, 

the App Association discusses below the need for FTC action to protect competition and 

innovation in the context of standard essential patent (SEP) abuse. We further offer

views on a range of issue areas and developments related to agenda items, particularly 

those related to Unfair Methods of Competition under Section 5 of the FTC Act as well 

as enforcement investigations, in appended testimony and positions.

The FTC and Standard Essential Patent Abuse

Open and consensus standards will drive the development of the internet of 

things, and a successful standards system is essential to creating new products and 

services that further allow small businesses to innovate and compete. App Association 

members actively participate in the development of technical standards; additionally, 

App Association members create (sometimes through contributions that contain 

patented technologies), use, and sell products that implement those standards. The 

small business innovator community that we represent, more than any other, needs to 

be able to effectively utilize technical standards in order to build new products and 

innovate. Therefore, it is extremely important to make reasonable access to SEPs in 

standards a priority of the FTC. To this end, countless small business innovators rely on 

SEP holders’ voluntary promises to license access to their SEPs on fair, reasonable, 

and non-discriminatory (FRAND) terms for certainty in the research and development

phases and other business planning. Our members need to know they can count on 

reasonable access to standards without risk of expensive and lengthy litigation that 

easily drive them out of business.

FTC action is absolutely necessary to end the effects of the anticompetitive 

behavior demonstrated to be in violation of U.S. competition law and to set a precedent 

our members need to continue to thrive. A continuation of abusive practices in the SEP 

context will harm the ability of countless small businesses to make necessary planning 

decisions, receive venture capital funding, and grow in markets often dominated by the 

biggest players. For example, our members have faced, and continue to face, refusals 

to license and other abusive practices in the SEP licensing context. Years of unchecked 

abusive patent licensing practices are emboldening further abusive patent licensing 

behavior and are stripping small businesses of vital capital, and will continue to do so 

should they be permitted to persist.

In the aftermath of the FTC v. Qualcomm decision in the Ninth Circuit Court of 

Appeals, it is more important than ever that the FTC continue to protect and advance 

the public interest through supporting the use of standards and the ability to use patents 

essential to those standards subject to the FRAND commitment. We call on the FTC to

take action to give much-needed certainty to the entire SEP licensing stakeholder 
3

community (particularly the small business community), and to provide FTC leadership 

in defending established, bipartisan policy approaches consistent with guidance to date 

from the U.S. courts. 

We support the FTC’s leadership in protecting consumers and advancing 

competition in the United States and urge your careful consideration of our views above

and attached.

Sincerely,

Brian Scarpelli

Senior Global Policy Counsel
February 17, 2021

The Honorable Frank Pallone The Honorable Cathy McMorris Rodgers

Chairman Republican Leader

Committee on Energy and Commerce Committee on Energy and Commerce

United States House of Representatives United States House of Representatives

Washington, District of Columbia 20515 Washington, District of Columbia 20515

Dear Chairman Pallone and Leader McMorris Rodgers,

We deeply appreciate your leadership as the House Committee on Energy and Commerce plots a 

course for the 117th Congress to address the COVID-19 pandemic and to get our economy back 

on track. As part of these efforts, we ask that you continue the bipartisan work of crafting a single 

set of rules governing the privacy practices of entities that generally fall under the Federal Trade 

Commission’s (FTC’s) jurisdiction. Recent events and the forced shift of daily and essential 

activities—especially core healthcare services—to the digital space underscore the need to act 

decisively on this issue.

ACT | The App Association (the App Association) is a trade group representing about 5,000 mobile 

software and connected device makers in the app economy. Our industry is a $1.7 trillion 

ecosystem led by U.S. companies and supporting about 5.9 million American jobs, including in 

New Jersey and Washington. Consumer trust is fundamental for competitors in the app economy, 

especially for smaller firms that may not have substantial name recognition. Strong privacy 

protections that meet evolving consumer expectations are a key component of developing 

consumer trust in tech-driven products and services. The App Association helps shape and 

promote adherence to privacy laws and best practices in a variety of contexts, including for apps 

directed to children and digital health tools.

The productive use of healthcare data no longer only occurs with healthcare providers and other 

entities under the jurisdiction of the Health Insurance Portability and Accountability Act (HIPAA). 

The creation and flow of healthcare data outside the HIPAA umbrella has accelerated, and 

although the FTC takes an active role in enforcing the prohibition on unfair or deceptive acts or 

practices (UDAP), it should have tools that adapt better to the risks healthcare data presents. From 

our perspective, the answer is not to extend HIPAA to cover healthcare tools and services not 

currently subject to HIPAA. HIPAA’s overarching purpose is to ensure the portability of health data 

between covered entities and business associates, and it was not primarily designed to give 

consumers better control over their own healthcare. Instead of expanding this approach, we urge 

you to establish a set of federal requirements that puts in place baseline consumer rights and 

curbs data processing activities that exposes consumers to undue privacy risks. The Committee’s 

bipartisan staff draft legislation circulated last Congress was a positive start representing 

substantial agreement on aspects of privacy that previously struggled for consensus. We urge you 

to continue the work on this effort, and we stand ready to support negotiations and oversight 

activities around it.

The recent settlement between the FTC and fertility and period tracking app Flo is emblematic of 

the FTC’s limitations, as well as the health-related privacy risks future legislation should address. 

The FTC’s complaint alleges that Flo shared the “health information of users with outside data 
analytics providers after promising that such information would be kept private.”1 The mischief here 

is reminiscent of previous activities the FTC punished. Not only did Flo mislead consumers about 

its data sharing practices, but it also allowed third parties to use the data it shared for their own 

purposes.2 In some cases, this occurred in violation of the terms of service of those third parties, 

the data having been shared via software development kits (SDKs) they provided to Flo.3 These 

privacy missteps are especially concerning given the sensitive nature of the health information at 

issue. A federal law more intentionally focused on curbing privacy harms should empower 

consumers to exert more control over their sensitive personal information, including the rights to 

access, correction, and deletion of such information. Sensitive personal information should also be 

subject to some flexible limits on processing activities that pose too great a risk to consumers.

Although Flo’s core deceptive statements in this case enabled the FTC to enjoin further harmful 

conduct, the recurrence of these privacy harms involving health information highlight the need for 

risk-based privacy regulation at the federal level. Each and every headline detailing the deceptive 

conduct of firms using healthcare data outside the HIPAA umbrella threatens to further erode 

consumer trust, which is a key necessity for our member companies. The healthcare innovations 

our member companies produce—from heart health and chronic condition monitoring to simply 

managing digital health information across health systems—are far too important for us to let them 

fall victim to foundering consumer trust in digital health earned by bad actors. In this case, 

unlocking the innovative potential for life-saving technologies involves the establishment of a single 

set of strong, national privacy requirements. We look forward to working with you toward this goal 

in the 117th Congress.

Sincerely,

Morgan Reed

President

ACT | The App Association 

1 Press release, “Developer of Popular Women’s Fertility-Tracking App Settles FTC Allegations that It Misled 

Consumers About the Disclosure of their Health Data,” Fed. Trade Comm’n (Jan. 13, 2021), available at 

https://www.ftc.gov/news-events/press-releases/2021/01/developer-popular-womens-fertility-tracking-appsettles-ftc. 2 Fed. Trade Comm’n, Flo Health, Inc., complaint (published Jan. 13, 2021), available at 

https://www.ftc.gov/system/files/documents/cases/flo_health_complaint.pdf. 3 Id.
April 20, 2021

The Honorable Amy Klobuchar The Honorable Mike Lee

Chairwoman Ranking Member

Senate Committee on the Judiciary Senate Committee on the Judiciary

Subcommittee on Competition Policy, Subcommittee on Competition Policy,

Antitrust, and Consumer Rights Antitrust, and Consumer Rights

Washington, District of Columbia 20510 Washington, District of Columbia 20510

Antitrust Applied: Examining Competition in the App Stores 

Dear Chairwoman Klobuchar, Ranking Member Lee, and Members of the Subcommittee,

We applaud this Subcommittee for its examination of the competitive dynamics of tech-driven 

markets, including app stores, with tomorrow's hearing, "Antitrust Applied: Examining Competition 

in App Stores." ACT | The App Association (the App Association) is the leading trade group 

representing small mobile software and connected device companies in the app economy, a $1.7 

trillion ecosystem led by U.S. companies and employing 108,260 in Minnesota and 65,520 in Utah 

alone.

1 Our member companies create the software that brings your smart devices to life. They 

also make the connected devices that are revolutionizing healthcare, education, public safety, and 

virtually all industry verticals. They propel the data-driven evolution of these industries and compete 

with each other and larger firms in a variety of ways, including on privacy and security protections.

The witnesses in this hearing underscore highly publicized conflicts between large companies and 

software platforms (the app store / operating system combinations that facilitate app companyconsumer transactions). However, while our member companies are always pushing software 

platforms to provide more value for the amounts they pay for developer services, they are 

concerned about how government intervention to solve disputes between well-resourced firms and 

software platforms will affect them. We appreciate that showcasing the breadth of views on app 

store competition presents challenges. However, the cross-section of issues these witnesses 

highlight provides only a narrow sliver of how competition is working in app store markets. To the 

extent that advocates are using perceived unfair treatment of multibillion-dollar firms like Spotify as 

evidence to support an expansion of antitrust law to protect non-platforms, our member 

companies have concerns and urge you to consider the impacts of such intervention on their 

businesses, the value they get from developer services, and their clients and consumers.

 

I. Competition is Alive and Well in the Markets Relevant to App Stores 

 

The consumer-facing side of the market. Some commenters have argued that the major app 

stores do not compete with each other for consumers.

2 According to the proposed logic, the App 

Store does not compete with the Google Play store because an Apple customer cannot 

immediately access the Google Play store and vice versa.3 However, dynamics like this do not 

insulate market actors like app stores from competition. For example, consider local markets for 

discount retail clubs or other services that require memberships. Costco members cannot 

1 ACT | THE APP ASSOCIATION, STATE OF THE U.S. APP ECONOMY: 2020 (7th Ed.), available at

https://actonline.org/wp-content/uploads/2020-App-economy-Report.pdf. 2 See id. at 95. 3 Id.
immediately access Sam's Club and vice versa (unless a consumer is a member of both 

simultaneously). A membership is generally required before you can begin using the services of 

either store, so there are some time and resource commitments that need to be made before you 

can switch. Similarly, an Apple iPhone owner must spend the time and resources to trade in their 

device for another smartphone that runs on Android instead, in order to access the Google Play 

store. These are properly viewed as switching costs—which are prevalent in markets where 

network effects are present—but these costs alone hardly justify a conclusion that the competitors 

in that market “do not compete against one another.”4 Critics cite logistical difficulties in switching,

but in reality, switching is straightforward and assisted by the app store operators themselves.5 In 

fact, a recent report indicates that it generally costs just $16 to switch from an iPhone to a 

Samsung device and $40 to switch from a Samsung device to an iPhone, including opportunity 

cost of time spent on switching.6 Not only that, but it is also fairly common for someone to have a 

tablet that runs on Android and a smartphone that runs on iOS, or vice versa. Ultimately, these 

consumers are likely making their choices based on a combination of the app store offerings, 

operating systems, device features, and default apps on smart devices. That there are switching 

costs involved with leaving one app marketplace for another is simply not evidence that they do 

not compete with each other for consumers.

The developer services side of the market. The Google Play store and the App Store compete 

vigorously in the other side of the market, for developers and developer services. Google benefits a 

great deal from attracting the next great app and so does Apple7 and the investments these 

platforms make to attract developers reflect this.8 Moreover, Google and Apple have a history of 

trying to outdo one another with respect to the offerings they provide for developers. As 

“shopper’s guides” to the two main app stores describe, the App Store and Google Play store 

respond to each other’s offerings, vying to be the platform that provides better toolkits, APIs, and,

of course, quicker (yet rigorous) app review processes.9 In fact, over their respective lifespans, the 

4 See, e.g., Wing Man Wynne Lam, “Switching Costs in Two-Sided Markets,” TOULOUSE SCHOOL OF ECON., 

Working Paper (Aug. 2014), available at http://publications.ut-capitole.fr/16551/1/wp_tse_517.pdf

(examining the characteristics of competition between app stores for consumers, including the impacts on 

competition and consumer benefits when app stores adjust their various offerings). 

5 Avery Hartmans, “Here’s the best and easiest way to switch from an Android device to an iPhone,” 

Business Insider, (May 21, 2019), available at https://www.businessinsider.com/switching-from-android-toiphone-how-to-2018-5#step-1-back-up-all-your-data-1. 6 ELLIOTT LONG, WHY USERS AREN’T LOCKED INTO THEIR SMARTPHONE BRAND, PROGRESSIVE POLICY INSTITUTE

(Apr. 8, 2021), available at https://eadn-wc05-3904069.nxedge.io/cdn/wp-content/uploads/2021/04/WhyUsers-Arent-Locked-Into-Their-Smartphone-Brand4.8.21.pdf. 7 Ohio et al. v. Am. Express et al., 585 U.S. __ (2018) ("Unlike traditional markets, two-sided platforms exhibit 

"indirect network effects," which exist where the value of the platform to one group depends on how many 

members of another group participate."). 8 Opposition brief of Apple Inc., Epic Games, Inc. v. Apple Inc., Case No. 4:20-cv-05640-YGR, at 5 (N.D. 

Cal. 2020), available at 

https://www.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.73.0.pdf (“In 

the interest of stoking more creativity, and to bring more apps to its users, Apple supports developers in a 

variety of ways, investing billions in tools that simplify the development process, across Apple’s iOS.”). 9 See Yana Poluliakh and Victor Osadchiy, “What to expect from the App Store and the Google Play Store 

When you Launch Your First App,” YALANTIS, available at https://yalantis.com/blog/apple-app-store-andgoogle-play-store/; Nikita, “Apple App Store vs. Google Play Store: A Comparison,” 21 TWELVE INTERACTIVE, 

Blog (Sept. 20, 2019), available at https://www.21twelveinteractive.com/apple-app-store-vs-google-playstore-a-comparison/; Priya Viswanathan, “iOS App Store vs. Google Play Store,” LIFEWIRE (Mar. 9, 2020), 

available at https://www.lifewire.com/ios-app-store-vs-google-play-store-for-app-developers-2373130. 
major app stores have demonstrated a clear track record of competing with each other for 

developers, as our recent report details.10 Lastly, the analysis of the relevant developer-facing side 

of the market does not end with whether there is competition between those two app stores, as 

there are other software distribution options that can serve as alternatives: smart TV app stores, 

gaming console app stores, and even video conferencing platforms11 (a development accelerated 

by the pandemic). The open internet can also be a workable alternative for developers and 

consumers to the two major app stores (especially for larger developers with an established 

customer base or market share).12 And for consumers who favor less data-intensive apps (for 

example, because they have limited data plans) or want to access certain apps across devices and 

browsers, progressive web apps13 are a means of accessing mobile content and services outside 

the major app stores. As described above, however, there is plenty of evidence that the generalpurpose app stores do compete with each other both for consumers and for developers. And if 

they are competing, that means the app stores are a) driving better services and offerings for 

developers, while b) pushing each other to provide the most attractive, diverse, and safe 

marketplace for consumers. And consumers currently benefit from differentiated products, as the 

App Store provides a more "premium" offering with tighter privacy and security controls, while the 

Google Play store boasts a greater variety.

Platforms have helped create or expand markets like digital health services. Just as ridesharing 

fundamentally changed how we get around, developers and platforms also revolutionized how we 

access healthcare. Digital health capabilities are maturing at a critical time when the pandemic has 

forced American patients to rely on virtual visits and remote monitoring. Secure smart devices and 

the software platforms that animate them are foundational elements to our current ability to 

manage healthcare wherever we happen to be. But this would not be possible if not for software 

platforms performing a gating function and securing operating systems and app stores from 

fraudulent apps and other threats to healthcare data. Those functions make smart devices worthy 

of the trust we must place in them to keep sensitive health data or conduct virtual physician visits 

on them. 

There is reason to believe digital health will continue to play a central role in care delivery in the 

United states. A current shortage of about 30,000 physicians in the United States—projected to 

increase to up to 90,000 in the next five years14—contributed to the need for caregivers and 

10 ACT | The App Association, A Brief History of Time: The App Stores (Apr. 7, 2021), available at 

https://actonline.org/wp-content/uploads/A-Brief-History-of-Time-The-App-Stores.pdf. 11 See Vishal Mathur, “Apple’s Response Proves App Store Isn’t Any More a Monopoly Than the Google Play 

Store,” NEWS18 (May 30, 2019), available at https://www.news18.com/news/tech/apples-response-provesapp-store-isnt-any-more-a-monopoly-than-the-google-play-store-2164875.html; David Pierce, “Zoom has a 

plan to dominate the virtual events industry,” PROTOCOL (Oct. 14, 2020), available at

https://www.protocol.com/onzoom-virtual-events (describing Zoom’s new Zapps app store). 12 Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship, hearing before the House 

Judiciary Committee, Subcommittee on Antitrust, Commercial, and Administrative Law (statement of Morgan 

Reed, President, ACT | The App Association) 7 (Jul. 17, 2019), available at https://actonline.org/wpcontent/uploads/Online-Platforms-and-Market-Power-Part-2-Innovation-and-Entrepreneurship-1.pdf. 13 Sam Richard and Pete LePage, “What are Progressive Web Apps?” WEB.DEV (Feb. 24, 2020), available at 

https://web.dev/what-are-pwas/. 14 See Connected Health Initiative, “Testimony of Morgan Reed, Executive Director, The Connected Health 

Initiative, Before the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) 

Subcommittee on Primary Health and Retirement Security,” (Sept. 25, 2018), available at 

https://actonline.org/wp-content/uploads/CHI-Testimony-Health-Care-in-Rural-America.pdf.
patients to find new ways of communicating. Compounding the caregiver shortage, 133 million 

Americans currently live with chronic conditions—most of them residing in rural areas with long 

drives to their nearest provider.15 Devices, sensors, and software are now capable of gathering and 

analyzing physiological data like movement, heart rate, electrocardiogram, or pulse oximetry so 

that physicians can better monitor their patients at home and address potential problems before 

they occur or worsen.16 Studies show that preventive care regimes that use connected health tools 

are especially useful for patients with chronic conditions like diabetes and heart failure, which tend 

to affect underserved and rural communities in particular.

17 But how do these capabilities reach 

patients and consumers, specifically those who need them most? Most Americans already interact 

with platforms, through a variety of devices. We know that smartphone adoption rates are 

increasing among underserved populations in the United States and that for many, their handheld 

device is their only means of accessing the internet.18 Here again, developers are leveraging the 

ubiquity and trusted framework of platforms to produce healthcare innovations that address a 

variety of health conditions. Moreover, in this case, the platform-developer dynamic helps 

caregivers reach patients in rural and underserved areas.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 See Id.

16 Id.

17 See, e.g., Clinical Outcomes, Care innovations, at 2, available at http://www.connectwithcare.org/wpcontent/uploads/2017/06/2016_Outcomes_Clinical-1.pdf (showing the results of a study by Care 

innovations and University of Mississippi Medical Center, indicating that the first 100 patients with diabetes 

enrolled in a program with a remote monitoring component saved the state $336,184 in Medicaid dollars 

over six months); Testimony of Michael P. Adcock, Exec. Dir., University of Mississippi Med. Ctr., Hearing on 

“Telemedicine in the VA: Leveraging Technology to Increase Access, Improve Health Outcomes & Lower 

Costs,” (May 4, 2017), available at https://www.appropriations.senate.gov/imo/media/doc/050417-AdcockTestimony.pdf (“The Mississippi Division of Medicaid extrapolated this data to show potential savings of over 

$180 million per year if 20 percent of the diabetics on Mississippi Medicaid participated in this program”).

18 Charkarra Anderson-Lewis, MPH, PhD, et al, “mHealth Technology Use and Implications in Historically 

Underserved and Minority Populations in the United States: Systematic Literature Review,” (Jun. 18, 2018), 

available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6028762/.
II. Developers are Pushing for More from the Platforms 

 

Software platforms have historically responded to the needs of developers and consumer 

demands as those forces have evolved. Right now, app companies are pushing for several things 

from software platforms that government intervention would likely undermine. Specifically, app 

companies are seeking:

1. Expedient removal of scam apps, fake reviews, and fraudulent actors. Scam and fraud apps 

have slipped through the review and removal cracks,19 and our member companies are concerned 

about these incidents. We strongly disagree, however, with suggestions that software platforms 

should give up on the exclusive app store model. The fact that app stores have such a high volume 

of apps to review, posing security review difficulties, is cited as a reason for steamrolling Apple's 

closed App Store system with a government prohibition on app store exclusivity. If our member 

companies choose to distribute through the App Store, they expect tough security reviews and 

fast removal of bad actors. A complete removal of the gatekeeping function would accomplish the 

exact opposite.

2. Better security. App companies depend on software platforms to provide a trusted marketplace. 

Software platforms ensure security by both reviewing proposed apps and by pushing out security 

updates for a device operating systems. These functions are exceptionally important for a trusted 

marketplace, and investment should reflect this importance.

3. Better privacy. App companies compete on privacy. They are working hard to produce techdriven privacy features that address evolving consumer expectations and technical realities, and 

some of them provide products and services focused solely on privacy protections.20 The privacy 

functions of software platforms, however, are also critical to foster a trusted ecosystem in which to 

operate. 

4. More investment in developer relations. Software platforms have significantly lowered barriers to 

entry for software sellers. But the app stores can seem vast and impersonal for the smallest app 

companies, and rejections or other adverse decisions can seem impossible to surmount without 

proper explanations or personal interactions with software platform staff. A lack of personal 

attention can lead to dissatisfaction and resentment, so it is in software platforms' best interests to 

help developers find success on the platform. Conversely, individual attention for the smallest app 

companies helps nurture the truly robust app marketplace where the best ideas flourish from the 

most surprising corners—and that is what consumers, software platforms, and app companies 

alike want most.

Subjecting software platforms to substantially heightened antitrust liability for managing app stores 

to better protect privacy, security, remove fraudulent actors, and provide individual services would 

undermine everything our member companies are asking for from software platforms. Similarly, 

creating nondiscrimination or other regulatory regimes specifically for current incumbents would 

inadvertently create a regulatory moat around them, protecting each from known competitive 

19 Statement of Morgan Reed, president, ACT | The App Association (Feb. 11, 2021), available at 

https://actonline.org/statements/. 20 See, e.g., “The Rise of Privacy Tech Helps Privacy Tech Founders Solve Their Biggest Pain Points,” 

TROPT (Jun. 5, 2020), available at https://www.riseofprivacytech.com/tropt-helps-privacy-tech-founderssolve-pain-points/.
pressures and from potentially unforeseen entrants providing increasingly analogous services like 

Square. Such protection removes their incentives to respond to developer demands, supplanting it 

with bureaucracy and lobbying battles.

 

II. Antitrust Intervention to Limit Software Platform Functions Would Harm Small App Companies 

In the software platform context, policymakers are considering a variety of structural or quasistructural remedies from a Glass-Steagall-like separation of lines of business to prohibitions on 

specific kinds of exclusivity. Mostly, concerns about the economic health of these markets animate 

legislative interest, but policymakers are also examining possible political motives behind app store 

decisions. Some of those inquiries are already leading to broad ideas of exposing software 

platforms to additional liability related to speech or other causes of action for trial attorneys.21

Although lawmakers are raising these concerns against a backdrop of concentrated markets, 

expanding antitrust law is not the optimal path to address perceived political externalities arising 

from app store rejections. We agree that departing from the consumer welfare standard could 

"cripple our economy at a time when millions are already struggling . . . and . . . undermine one of 

the foundational principles of our republic."22 The last thing our member companies want is for app 

store functions to get bogged down in decade-long antitrust litigation over what are essentially 

political disagreements. 

Aside from these concerns, there is a fair amount of interest in examining the ability and "incentive 

to impede competition in lines of business dependent on" platforms.23 This is a worthy line of 

inquiry with a framework that should respect the fact-driven analysis involved with identifying and 

stopping harms to competition and consumers. Accordingly, an important step in this process is to 

examine the benefits for smaller software competitors of ongoing and recent activities by software 

platforms that have drawn antitrust scrutiny in light of proposals to separate them from adjacent 

markets or restrict their functions as platforms. Those in favor of structural separation and other 

competition remedies in software markets seem to target two areas of perceived "gatekeeper" 

power: 1) control over the kinds of software that can be downloaded onto a device's operating 

system; and 2) control over the kinds of software that can be offered via an app store. These are 

important functions for our member companies, which caution against weakening them too much 

to benefit other competitors.

Prohibitions on exclusivity. Several state legislatures have considered or are actively considering 

proposals that would impose a quasi-structural restriction at the operating system level by 

prohibiting software platforms from acting as gatekeeper for software installed on a device.24

Among other things, the bills bar operating systems from accepting software unless it is distributed 

exclusively through a certain app store marketplace and prohibit "retaliation" against software 

developers that circumvent approval through that distribution channel.25 Although this may sound 

21 Republican Leader McMorris Rodgers, Big Tech Accountability Platform, House Committee on Energy and 

Commerce, Memorandum (Apr. 15, 2021), available at https://republicans-energycommerce.house.gov/wpcontent/uploads/2021/01/Big-Tech-Accountability-Platform-Memo.pdf. 22 Press Release, "Sen. Lee Sets Senate Republican Antitrust Agenda for 117th Congress," Sen. Mike Lee 

(Feb. 6, 2021), available at https://www.lee.senate.gov/public/index.cfm/2021/2/sen-lee-sets-senaterepublican-antitrust-agenda-for-117th-congress. 23 ACAL Report at 35 (citing report accompanying Antitrust Reform Act of 1992). 24 See, e.g., SB 2333, 67th North Dakota General Assembly (2021), available at

https://www.legis.nd.gov/assembly/67-2021/documents/21-1044-01000.pdf. 25 Id.
like it lowers a barrier to entry by weakening the platforms' gatekeeper capabilities, it does the 

exact opposite and removes a steppingstone to the market. Moreover, the proposals' supporters 

are some of the largest companies on the app stores that openly seek to avoid their obligations to 

pay at all for the software platforms' developer service bundles.26 The bundles include a wide 

variety of services for developers and, contrary to how some are characterizing them, are not just a 

"payment processing fee."27 Specifically, those services include:

- Immediate distribution to hundreds of millions of consumers across the globe;

- Marketing through the platform;

- Accessibility features;

- Platform level privacy controls;

- Assistance with intellectual property (IP) protection;

- Security features built into the platform;

- Developer tools;

- Access to hundreds of thousands of application programming interfaces, or APIs; and

- Payment processing.

From these services, small app companies obtain easy access to a global market, the ability to 

offload overhead (like managing payment options and preventing piracy), but most importantly, 

they can leverage consumer trust. Consumer trust is fundamental for competitors in the app 

economy, especially for smaller firms that may not have substantial name recognition. Larger firms, 

meanwhile, may have the resources to put together the bundle of services and generate consumer 

trust in a known brand name all on their own. Therefore, they might think of the software platform 

bundle as less valuable to them than it is to smaller companies, which may help explain their calls 

for government intervention to diminish those services. They simply have less to lose and more to 

gain from such intervention than do App Association members and consumers.

The state bills reflect a view that takes for granted the platform functions necessary to fuel a trusted

ecosystem that lives on our smart devices now. Consumers now depend on mobile devices to 

store their most important information, and the ability to protect that data is vital. Banning software 

platforms' gatekeeping function puts users' most vital data at risk. App Association member 

companies—much more so than the large companies selling software on the app stores—depend 

on strong privacy, security, and IP protections at the platform level. Therefore, proposals to require 

platforms to allow circumvention of these protections would harm consumers and app economy 

competitors alike. Platforms currently work to keep apps that violate user trust out of their stores. 

In one example, some bad actors market their device-monitoring apps designed to track children’s 

mobile device use as a way to track anyone, including adults, without their knowledge or 

permission. These “stalker apps” operate outside the bounds of what is allowable in app stores or 

mobile operating systems by accessing troves of personal data including location, messaging, and 

26 Order Granting in Part and Denying in Part Motion for Preliminary Injunction, Epic Games v. Apple Inc., 

Case No. 4:20-cv-05640-YGR (N.D. Cal. Oct. 9, 2020) (“Epic Games moves this Court to allow it to access 

Apple’s platform for free while it makes money on each purchase made on the same platform. While the 

Court anticipates experts will opine that Apple’s 30 percent take is anti-competitive, the Court doubts that an 

expert would suggest a zero percent alternative. Not even Epic Games gives away its products for free.”). 27 The full set of developer services software platforms provide includes immediate distribution to tens of 

millions of consumers globally; marketing through the platform; platform level privacy controls; assistance 

with intellectual property protection; security features built into the platform; developer tools; access to 

hundreds of thousands of application programming interfaces, or APIs; and payment processing.
calls. In 2019, the Federal Trade Commission (FTC) pointed to the important function software 

platforms perform in its first ever action against a purveyor of stalker apps, Rentina-X. The FTC 

stated in its enforcement action that “the purchasers were required to bypass mobile device 

manufacturer restrictions, which the FTC alleges exposed the devices to security vulnerabilities and 

likely invalidated manufacturer warranties.”28 Similarly, as the FTC has investigated and enforced 

against consumer protection harms on the app stores, the contemplated—and actual—remedies 

required the platform to act as gatekeeper.29 Consumer protection efforts encounter difficulty in 

these marketplaces unless a platform is able to enforce the requirements it imposes on apps, 

including platform-level controls that prevent videogame companies from taking advantage of 

children's tendencies toward in-app purchasing if left unchecked.

Limitations on exclusionary conduct. To ameliorate perceived issues with self-preferencing on 

software platforms, policymakers are considering amendments to antitrust law that fall somewhat 

short of a set of nondiscrimination rules but expand liability for categories of exclusionary conduct. 

Again, pointing to the "incentive and ability to abuse"30 their dominant position against third parties, 

policymakers are considering an "abuse of dominance" standard applied to software platforms 

(and generally). 

Setting aside the particulars of existing proposals, we urge this Subcommittee to consider a couple 

of factors when contemplating such an expansion of liability. First, many of the actions of software 

platforms that have drawn antitrust criticism also have countervailing benefits. For example, 

Apple's decision to require opt-in consent for ad tracking between apps caught attention in the 

antitrust space but has a powerful justification in privacy protection. In a stark example of privacy 

versus antitrust interests, the French Competition Authority recently rejected a competition 

complaint to enjoin Apple's opt-in framework, noting that it is part of "Apple's long-standing 

strategy to protect the privacy of iOS users."31 Second, self-preferencing activities on software 

platforms that appear to harm some competitors often benefit others and consumers. For 

example, the installation of pre-loaded apps on smart devices can greatly benefit developers by 

enabling them to rely on a single default functionality like a camera app while making the device 

itself more attractive to the consumers App Association members wish to reach. Said Parag Shah 

of App Association member company Vee̅mos in a recent antitrust panel discussion, consumers 

"want to be able to buy [a smart device] from a store, they want to be able to turn it on, and they 

want it to work on the basic levels of 'I can text someone, I can call someone, I can open up a web 

browser . . . I want some basic functionality.'" In this case, although the pre-installation of apps 

plainly advantages a software platform's own offerings over alternative camera, messaging, or 

browser apps, the benefits to consumers and other competitors of doing so are equally evident. 

The considerations here weigh against tilting liability for exclusionary conduct too far such that 

28 Press Release, Fed. Trade Comm'n, FTC Brings First Case Against Developers of “Stalking” Apps (Oct. 

22, 2019), available at https://www.ftc.gov/news-events/press-releases/2019/10/ftc-brings-first-caseagainst-developers-stalking-apps. 29 Press Release, “Apple Inc. Will Provide Full Consumer Refunds of At Least $32.5 Million to Settle FTC 

Complaint It Charged for Kids’ In-App Purchases Without Parental Consent,” Fed. Trade Comm’n (Jan. 15, 

2014), available at https://www.ftc.gov/news-events/press-releases/2014/01/apple-inc-will-provide-fullconsumer-refunds-least-325-million. 30 ACAL Report. 31 Press Release, “Targeted advertising / Apple's implementation of the ATT framework. The Autorité does 

not issue urgent interim measures against Apple but continues to investigate into the merits of the case,” 

Autorité de la concurrence (Mar. 17, 2021), available at https://www.autoritedelaconcurrence.fr/en/pressrelease/targeted-advertising-apples-implementation-att-framework-autorite-does-not-issue.
conduct that appears to harm a certain class or classes of competitors is foreclosed or strongly 

discouraged, even though it is ultimately better for App Association members, competition, and 

consumers.

III. More Resources and Enforcement in Standards-Setting 

We support recommendations to "[i]ncreas[e] the budgets of the Federal Trade Commission and 

the Antitrust Division."32 Antitrust cases are a highly resource-intensive undertaking, and federal 

enforcers are underequipped to carry out their important task.

One area we urge the Subcommittee to focus on in particular, and where the federal enforcement 

agencies must bring those resources to bear, is the applicability of antitrust law to standardessential patent (SEP) abuse. In your respective states and districts, the ability for innovators to 

create jobs and produce cutting-edge products and services in an increasingly broad set of 

industry verticals depends on strong technical standards like USB, Wi-Fi, 4G, and 5G. However, in 

order to safeguard the continued growth and success of these key industries and to protect the 

consumers of their end products and services, Congress must ensure that antitrust law effectively 

prevents SEP licensing abuses. Incorporating a patent declared as essential into a standard 

typically confers market power on a SEP owner, so SEP owners make voluntary commitments 

pursuant to those declarations to license those SEPs on fair, reasonable, and nondiscriminatory 

(FRAND) terms.33 These commitments balance the market power SEP owners obtain with the 

need for innovators to license the patented inventions essential to use the standard. When kept, 

FRAND commitments prevent anticompetitive licensing behavior by curtailing, in most cases, the 

ability of an SEP licensor to leverage its market power through exclusionary relief; by rewarding an 

SEP owner with damages for infringement of a valid patent that are commensurate with the scope 

of its patented invention; and by ensuring that an SEP licensor cannot discriminate between firms 

in the manufacturing supply chain when licensing its SEPs. The SEP context is distinct from 

situations where companies own unencumbered patents or are competing with each other to 

provide the best vertically integrated product or service. Through standards-setting, stakeholders 

supplant part of the competitive process with a mechanism for interoperability, necessitating closer 

antitrust involvement. Unfortunately, some SEP owners break their FRAND promises and engage in 

activities that harm competition and consumers by increasing prices, reducing the quality and 

variety of products and services, and diminishing innovation.

34 Breaking these promises implicates 

antitrust law, in addition to other sources of law.

Conclusion 

As this Subcommittee continues its work on antitrust in tech-driven markets, we hope the 

perspective of small mobile software and connected device companies that leverage software 

platforms helps guide your work. Antitrust is rightfully a fact-intensive inquiry that must assure the 

competitive process serves consumers as well as possible. To that end, we support providing 

more resources for the two federal agencies tasked with enforcing antitrust law—they are woefully 

32 ACAL Report, at 403. 33 See Brian T. Yeh, “Availability of Injunctive Relief for Standard-Essential Patent Holders,” CONG. 

RESEARCH SERV. Summary (Sept. 7, 2012), available at 

https://www.everycrsreport.com/files/20120907_R42705_9c71ac36b1c0030af0d1bd97b53e8b7ba6fd3e73

.pdf. 34 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 318 (3d Cir. 2007), available at 

https://caselaw.findlaw.com/us-3rd-circuit/1069408.html. 
under-resourced to carry out the important and extremely costly task of stopping antitrust harms.

In general, our member companies are worried that large, well-resourced companies may 

successfully create for themselves a new avenue for bending the market in their favor by 

reorienting antitrust law so that it protects certain (large, well-resourced) competitors to the 

detriment of smaller companies and consumers. We appreciate this opportunity to weigh in on 

your important inquiry and look forward to further engagement with you throughout the 117th 

Congress and beyond.

Sincerely,

Morgan W. Reed

President

ACT | The App Association
January 24, 2020

 

Comments of ACT | The App Association

House Committee on Energy and Commerce

Draft Framework of Online Privacy Act of 2019

ACT | The App Association appreciates your leadership on consumer privacy. The touchstone of 

privacy is trust. Members of your Committee noted repeatedly that individuals are beginning to 

mistrust technology, and any legislation Congress considers should help restore this consumer

trust. The specific privacy lapses the Energy and Commerce Committee examines generally involve 

larger companies with business models that depend on complex data processing activities. To the 

extent Congress intends legislation to address these observed privacy issues, it should also 

proceed carefully so as to preserve competitive forces where they tend to improve privacy 

outcomes for consumers. Small companies, like our members, lead the way in developing 

competition-driven privacy tools to give consumers more control and mitigate privacy risks. 

The App Association is a trade group representing about 5,000 small to mid-sized software and 

connected device companies across the globe. In the United States, our member companies are 

part of a $1.3 trillion industry, supporting about 5.7 million jobs. We regularly work to keep our 

member companies up to speed on the latest policy and legal developments and to translate those 

into practical and useable guidance to ease the burden of compliance.1 Further, we commit to 

promoting proactive approaches to ensuring end-user privacy and participate frequently in the 

privacy debate at the federal level, including by serving on panels in Federal Trade Commission 

(FTC or Commission) workshops and filing comments with congressional committees.

2

Commercial privacy is not a static concept, and yet products and services should, and are 

expected to, respect user privacy as part of their design. Often an ongoing dialogue with users that 

accounts for changing contexts and expectations is the only way to accomplish this. Our member 

companies compete with each other and larger companies to create better, more efficient privacy 

protection measures. They work hard to comply with privacy laws, best practices, and regulations. 

But they also know that their clients, customers, and users usually have a choice, and the kinds of 

privacy practices they employ inform that choice. This is a foundational concept that Congress 

must consider as it proceeds with negotiations over a federal privacy framework. It forms the core 

of our privacy philosophy and guides our policy recommendations, laid out in more detail in these 

comments.

I. Rulemakings 

Numerous sections of the draft bill would require the FTC to promulgate rules using Administrative 

Procedure Act (APA) processes. In many of these instances, these provisions could be sharper to 

 1 See, e.g., ACT | The App Association, General Data Protection Regulation Guide (May 2018), available at 

https://actonline.org/wp-content/uploads/ACT_GDPR-Guide_interactive.pdf. 2 See, e.g., https://www.ntia.doc.gov/files/ntia/publications/2018-11-09_-_ntia_-_privacy_filing_-_final.pdf; 

http://actonline.org/wp-content/uploads/2018-04-10-FTR-ACT-the-App-Association-Facebook-PrivacyFINAL.pdf; https://www.ftc.gov/news-events/events-calendar/future-coppa-rule-ftc-workshop; Statement for 

the Record from ACT | The App Association to Senate Committee on Commerce, Science, and 

Transportation, hearing, “Small Business Perspectives on a Federal Data Privacy Framework,” (Apr. 5, 2019). 
2

more narrowly authorize the Commission to “clarify” the rest of the section. For example, Section 3 

includes a detailed list of items covered entities must include in privacy policies and further requires 

the FTC to conduct a potentially open-ended rulemaking imposing the requirements that appear in 

statute. It may be a bit redundant to require the FTC to issue rules that impose the same 

requirements that appear in statute, unless their purpose is simply to clarify those statutory 

provisions. As reflected in our redline, we recommend specifically stating that the purpose of the 

rules is to “clarify” the requirements that appear in the legislative or statutory provision. Otherwise, 

various constituencies may push and eventually convince the Commission to broadly read these

rulemakings to give it more flexible authority to interpret the sections than the drafters intend.

II. Small Business Treatment 

The App Association generally does not ask for carveouts for small companies when it comes to 

privacy. The typical App Association member competes with much larger companies for clients, 

often in highly regulated industries such as finance or healthcare. For some of our members, in 

order to remain competitive, they must show that they effectively comply with the major privacy 

laws like the General Data Protection Regulation (GDPR)—or have some sort of certification of 

compliance with private sector developed guidelines or best practices—so there is no perception 

of being less protective than their competitors. And if they win contracts with large clients (which 

may have an international or Californian customer base), they find themselves under contractual 

provisions that require them to meet GDPR and other compliance mandates that do not otherwise 

directly affect them.

Nonetheless, the provisions in Section 5, requiring covered entities to respond to requests to 

access and delete information about themselves, are complex and would require substantial 

resources to implement. The ability for small businesses to delete covered information in lieu of 

complying with the correction requirements of the draft is a positive step. However, you should 

also consider applying all of the requirements only to covered entities that generated $25,000,000 

in the previous year. Whether one of our member companies would need to verify a consumer 

request to edit or delete that consumer’s data, the virtual infrastructure would need to be in place 

to adequately verify the identity of the requesting consumer. Substantial resource costs would be 

incurred whether the request is to delete or to correct inaccurate information, so the allowance the 

staff draft provides does not save small companies all that much in compliance costs.

It is one thing that many of our member companies are now “complying by proxy” with GDPR’s 

consumer rights provisions, and thus, answerable to contract damages or at least disciplined by 

competition. It is another thing, however, to subject the typical App Association member—which 

averages roughly between one and 10 employees—to these complicated requirements and, by 

extension, to the up to $43,000 per-individual-violation civil penalty if they get it wrong. Additionally, 

applying consumer rights only to larger companies would not lessen the “complying by proxy” 

effect we see now among smaller companies like App Association members—more likely, the 

competitive pressure would only increase. If you ultimately decide to maintain the Section 5(a)(4)(B) 

alternative option for small businesses to delete in lieu of correcting information (instead of a 

broader small business carve-out), a preemption provision becomes even more important for small 

businesses to avoid possibly conflicting differences in how they must honor consumer rights.

Finally, you should consider providing more time for small businesses under the statute to become 

compliant with the deletion and access requirements. This would allow small businesses to plan for 

compliance over time as opposed to allocating essential capital to the cost of immediate 

compliance.
3

a. The Approved Compliance Guidelines Program 

The approved compliance program in Section 13 of the draft bill may help alleviate some of the 

concerns described above. The App Association members who opt for the safe harbor may be 

slightly less terrified of business-ending civil penalties if the FTC must first show that they strayed 

from the compliance program that certified them. That buffer would provide a level of comfort and 

probably would result in more robust economic activity without its presence. However, the similar 

Safe Harbor Program under the Children’s Online Privacy Protection Act (COPPA) was largely a 

failed experiment, so we should carefully avoid the pitfalls experienced in that exercise. 

There are reasons to believe that the compliance guidelines program in your draft bill would not fail 

for the same reasons as COPPA’s. First, no COPPA safe harbor program could avoid the 

insurmountable difficulty for regulated companies of requiring parents to provide “verifiable parental 

consent” (VPC). The requirements in your draft do not appear to require such onerous tasks of 

consumers themselves. Second, experience shows that companies are so loath to deal with VPC 

that they alter their products and services completely to appeal to general audiences, avoiding (or 

trying to avoid)3 COPPA altogether. The scope of your draft bill is (rightly) so comprehensive that 

companies are not likely able to slip away from its requirements and find themselves under less 

onerous regulations. Ultimately, however, even if the approved compliance program successfully 

serves its purposes, the entire array of requirements in the draft bill (with a few exceptions) applies 

to the smallest and largest companies in equal measure. An approved compliance program must 

include almost every requirement, from providing a right to access and delete information to 

creating a comprehensive data security program with the eight main features described in Section 

9. Realistically, an approved compliance program would not lighten the draft’s substantial 

regulatory burden by much, but we support its inclusion as a meaningful incentive for small 

companies to compete and comply by providing limited protection from steep penalties.

III. Limitations on Processing Covered Information 

The draft’s treatment of consent as implied “to the extent the processing is consistent with the 

reasonable consumer expectations within the context of the interaction” is an appropriate and 

flexible standard. Although the Commission may have some trouble applying the standard in 

complex circumstances, such is the nature of privacy harms—and the examples of appropriate 

processing activities that are likely consistent with reasonable consumer expectations are helpful.

We urge the Committee to include internal data analytics for the purposes of “product 

development and improvement” (the bracketed text) as an example of the kinds of processing 

activities that may be consistent within the context of a covered entity’s interaction with 

consumers. Our app developer members use their clients’ or customers’ in-app activities (which 

may be covered information) to analyze how people with certain attributes use parts of their 

products and services and under which circumstances. Understanding user behavior is key not 

just to developing better versions of what they’ve already made, but also to developing new 

products, systems, and services. The last thing we want is to discourage app developers from 

using personal data to make better products and services.

 3 See, e.g., https://www.ftc.gov/enforcement/cases-proceedings/172-3083/google-llc-youtube-llc. 
4

IV. Prohibition on Discriminatory Use of Data 

 

We agree that covered entities should not have permission to use personal information to 

discriminate against consumers on the basis of race, gender, sexual orientation, or other protected 

attributes. It may be more efficient, however, to require the FTC to enter a memorandum of 

understanding (MOU) with the agencies that enforce antidiscrimination laws. The draft appears to 

impose a separate prohibition on discriminatory activities and conscripts the FTC to act as a civil 

rights enforcement agency. The emerging issues we observed where companies are using 

personal data as part of a scheme to discriminate against consumers are mainly new ways of 

violating old laws that fall outside the Energy and Commerce Committee’s jurisdiction. The problem 

Section 11 should set out to solve, then, is a problem of evidence rather than the creation of a new 

prohibition on discrimination. The FTC is better situated to understand and collect the evidence, 

while the respective enforcement agencies have more experience and a better shot at success in 

court. 

V. Covered Information 

The draft’s definition of covered information includes information “linked or reasonably linkable to a 

specific . . . consumer device.” We urge the Committee not to include consumer devices in the 

definition of covered information because doing so would discourage the use of certain privacy 

protective measures from which App Association members benefit. For example, some consumer 

device makers, including smartphone makers, use rotating, ephemeral, unique device identifiers 

(UDIDs) to pinpoint precise location. Smartphone owners know that devices have gotten better 

over time at locating their precise location. This improvement is thanks in part to the ability for 

device makers to continuously add device locations to an encrypted database. In this process, the

precise location is associated with a given device for a transient period of time, using a randomly 

generated UDID. The UDID is then deleted, and the location data becomes part of the dataset, 

where it is no longer associated with a specific device.

App Association members never have to use this dataset, and yet it is enormously valuable 

because it makes any application on your device that depends on your location more accurate. 

Even more importantly, the dataset accomplishes this without identifying the device or the person 

to whom it belongs. And yet, because the data must link to a device for a brief period of time, it 

could be considered covered data under the draft’s definition. The inclusion of consumer devices 

in the definition of covered information, therefore, would discourage the more privacy-protective 

measure of ephemerally linking key data to a person’s device. With transient UDIDs included in 

covered information, businesses would likely abandon those resource-intensive measures and 

simply leave data associated with devices and consumers, subjecting themselves to the provisions 

of the draft. If you ultimately decide to keep consumer devices in the definition of covered 

information, an alternative way of dealing with this issue could be to clarify that ephemeral UDIDs, 

which are disposed of when the associated data is stored, are an example of deidentified 

information in the bill. We believe this would be consistent with the current deidentified information 

provision, which excludes information “for which an entity takes reasonable measures to . . . 

ensure that identifying information has been removed.”

VI. Preemption and Private Right of Action 

The prospect that congressional action on privacy alone might establish a single national standard 

is not a guarantee. Therefore, we recommend that any privacy legislation Congress drafts include a 
5

provision explicitly preempting state laws and rules dealing with privacy within the framework of the 

legislation. We acknowledge that some Members of Congress want to avoid a discussion of 

preemption until after other provisions have been addressed. From a small business standpoint, 

however, preemption is one of the most important elements of a federal privacy framework. If 

legislation does include a preemptive provision, we agree with many advocates that state attorneys 

general should be authorized to enforce the provisions of the law. Similar laws like COPPA have 

benefited from empowering state attorneys general to police for prohibited conduct. Moreover, we 

believe that Congress should authorize additional funds for the FTC to police privacy practices 

under a new federal privacy framework.

If negotiators agree on a private right of action, we urge you to ensure there are a few protections 

in place to guard against abusive litigation. First, remedies should be limited. In this case, if a 

private right of action applies generally to most or all provisions of the bill, the drafters should avoid 

creating a honey pot like liquidated or statutory damages for plaintiffs’ attorneys. Making 

injunctions available would empower individuals to stop prohibited behavior or compel required 

actions. Whether a company is large or small, its employees want to focus on the company’s 

customers and clients instead of litigation. The availability of an injunction gives substantial leverage 

to individual consumers to bring companies of all sizes to the table. Second, a private right of 

action should require the plaintiff to show some level of scienter. We would encourage drafters to 

require private litigants to show that a putative defendant knowingly violated the provision of the 

draft at issue. The wide variety of requirements in any comprehensive privacy bill are simply too 

numerous not to become a game of “gotcha” by trial attorneys absent a requirement to show 

scienter. Third, covered entities (especially smaller companies) should be afforded a period of time 

to correct alleged violations before a court will consider a claim. Under such a provision, the court 

would likely stay the complaint pending the “correction” period. If the plaintiff believes the 

defendant failed to cure the alleged violation, the court could then consider the evidence of the 

violation itself along with the evidence that it had been remedied within the allotted time period. 

Fourth, the provision could require a court to impose sanctions on an attorney that is found to have 

violated Rule 11(b) of the Federal Rules of Civil Procedure. This provision could help deter lawsuits 

that are baseless or filed primarily to harass the putative defendant. These are some basic 

safeguards that could ameliorate the potential litigation burden and prevent abusive lawsuits from 

clogging the courts (potentially locking out legitimate claims).

VII. Conclusion 

We appreciate this opportunity to comment on your proposed legislation. We look forward to 

keeping in contact as you work toward potential introduction and take further steps.
May 29, 2021

Rebecca Kelly Slaughter 

Acting Chair

Federal Trade Commission

600 Pennsylvania Avenue NW

Suite CC-5610 (Annex B)

Washington, D.C. 20580

Re: Comments of ACT | The App Association re the Federal Trade Commission’s

Request for Comment Regarding Topics to be Discussed at Dark Patterns 

Workshop

Dear Acting Chair Slaughter, 

ACT | The App Association (App Association) respectfully submits its views to the Federal 

Trade Commission (FTC) on its request for public comment in relation to its “Bringing 

Dark Patterns to Light” workshop. The App Association appreciates the Commission’s 

interest in this important topic and urges the Commission to focus on outright deceptive 

design decisions as the Commission seeks to establish greater oversight of dark patterns

going forward.

I. Introduction and Statement of Interest 

The App Association represents approximately 5,000 small business software application 

development companies and technology firms globally that create the technologies 

driving internet of things (IoT) use cases across consumer and enterprise contexts. 

Today, the App Association represents an ecosystem valued at approximately $1.7 trillion 

and is responsible for 5.9 million American jobs. Our members create innovative solutions

that drive the world’s rapid embrace of mobile technology. Their products power 

consumer and enterprise markets across modalities and segments of the economy.

The App Association serves as a leading resource in the privacy space for thought 

leadership and education for the global small business technology developer community.

1

We regularly work to keep our members up to speed on the latest policy and legal 

developments and to translate those into practical and useable guidance to ease the 

burden of compliance.2 Furthermore, through our Innovators Network Foundation Privacy 

Fellowship, we support thought-leadership that covers a wide range of privacy issues, 

1 See e.g., ACT | The App Association, What is the California Consumer Privacy Act (January 2020), 

available at: https://actonline.org/wp-content/uploads/What-is-CCPA.pdf

2 See e.g., ACT | The App Association, General Data Protection Regulation Guide (May 2018), available 

at: https://actonline.org/wp-content/uploads/ACT_GDPR-Guide_interactive.pdf;
including dark patterns.

3 Relevant output from current fellows that touches on dark 

patterns include Lourdes Turrecha’s work exposing the deceptive design choices that 

undermine user privacy within the Clubhouse app,

4 as well as Lorrie Cranor’s research 

into the design choices that make it difficult for consumers to exercise their privacy 

choices on many websites.

5

II. Introduction and Statement of Interest 

Generally, the App Association agrees with conceptual framework posed in Harry 

Brignull's oft-cited definition of dark patterns, though we advocate for a more expansive 

scope. Brignull writes that, “Dark Patterns are tricks used in websites and apps that make 

you buy or sign up for things that you didn't mean to.”6 He further refines his definition 

through a taxonomy of 12 different types of dark pattern, including "roach motel" and 

"confirmshaming", which helpfully elucidate the breadth and depth of the manipulation 

and deception under question.

7 Yet while these categorizations are a useful starting point,

"dark patterns" remains a frustratingly elusive concept to define and arguably includes a 

far greater range of players than currently recognized. 

Dark patterns are by no means a design tactic relegated exclusively to the domain of

cutting-edge startups or mobile applications. Cranor’s research found inconsistent and

at-times misleading user opt-out controls for email communications within a sample of 

150 websites drawn from Alexa’s ranking of global top 10,000 websites. The list includes 

websites from industries as diverse as finance, health, media, sports, and of varying 

sophistication and user design prowess.

8

It is also important to recognize that dark patterns are extensions of tactics used in the 

physical world. Brignull's "roach motel" category includes design choices that require 

users to take exhaustive steps to effectuate a preference that may conflict with the 

business' preference. As an example, when examining the email opt-out procedure at the

New York Times Cranor and Habib found that, “deleting the data they’d gathered on us 

required completing 38 different actions, including finding and reading the privacy policy, 

following a link to the data deletion request form, selecting a request type, selecting up to 

22 checkboxes, filling in eight form fields, selecting four additional confirmation boxes, 

3 ACT | The App Association, Innovators Network Foundation Announces 2020-21 Privacy Fellows 

(December 2020), available at: https://actonline.org/2020/12/08/innovators-network-foundationannounces-2020-21-privacy-fellows/

4 Lourdes Turrecha, “When FOMO Trumps Privacy: The Clubhouse Edition”, February 19, 2021. 

https://medium.com/privacy-technology/when-fomo-trumps-privacy-the-clubhouse-edition-82526c6cd702

5 Hannah Habib and Lorrie Cranor, “An Empirical Analysis of Data Deletion and Opt-Out Choices on 150 

Websites”, Soups 2019, August 2019. 

https://www.usenix.org/system/files/soups2019-habib.pdf

6 Harry Brignull, “What are Dark Patterns.” https://www.darkpatterns.org/

7 Harry Brignull, “Types of Dark Patterns.” https://www.darkpatterns.org/types-of-dark-pattern

8 Lorrie Cranor and Hannah Habib, “An Empirical Analysis of Data Deletion and Opt-Out Choices on 150 

Websites”, Soups 2019, August 2019. 

https://www.usenix.org/system/files/soups2019-habib.pdf
and completing an “I am not a robot” test.”

9 Of course, the roach motel model was 

pioneered and perfected for years outside of the website and app context. Casino

designers, for example, are notorious for constructing floor plans that intentionally 

disguise exits with the goal of manipulating guests into spending extra time within the

facility. Few would call that a dark pattern because it occurs within the physical world, yet

it seems equally manipulative to the opt-out practices at the New York Times. 

It might also be more useful to think of dark patterns as design choices in any type of 

business-to-user interaction that cause the consumer to purchase or sign up for things 

they didn’t mean to. For example, the use of dark patterns in political advertising and 

fundraising, often conducted over email rather than through a website or app, is extremely

well-documented. Examining a corpus of over 100,000 emails sent during the 2020 U.S.

election cycle, researchers found manipulative tactics in 43 percent of communications, 

with 99 percent of campaigns using such tactics at least occasionally.

10 Insofar as the 

FTC seeks to bolster its monitoring of the marketplace for examples of dark patterns, it 

should remain aware that the practice is widespread, cross-cutting between industries, 

and endemic to many types of communication technologies.

Clearly, part of the issue in defining dark patterns stems from an ongoing migration of 

markets from analogue to digital spaces, across industries. Some dark patterns, such as

"confirmshaming", are clearly holdovers from longstanding face-to-face sales tactics in 

which salespeople employ behavioral nudges in order to close a sale or upsell a service.

As with such sales tactics, confirmshaming should be understood to encompass a wide 

range of activities that run from innocuous to outright deceptive, the latter of which should 

be the main source of attention from regulators. Confirmshaming, as currently 

understood, could include a prompt as simple as "are you sure you wish to opt-out", a 

necessary piece of developer due diligence that could be construed as guilting a 

customer. While certainly starker when presented plainly on a website or app than when 

spoken aloud in a sales context, such a prompt hardly seems out of place in the broader 

marketplace and surely does not constitute an unfair or deceptive trade practice. The App 

Association would urge the FTC to focus its attention on examples of dark patterns that 

clearly deceive and bring harm to a user.

III. Conclusion

The App Association urges the commission to carefully consider a definition of dark 

patterns. While there is a great opportunity to clarify and rid the market of harmful 

practices, an ambiguous or overinclusive definition may harm app developers simply 

seeking to do the right thing. The most prudent path may be to define dark patterns as

9 Lorrie Cranor and Hannah Habib, “It’s shockingly difficult to escape the web’s most pervasive dark 

patterns”, Fast Company, November 4, 2019. https://www.fastcompany.com/90425350/its-shockinglydifficult-to-escape-the-webs-most-pervasive-dark-patterns

10 Hamin et al., “Manipulative Tactics are the Norm in Political Emails”, Princeton University Center for 

Information Technology Policy, October 5, 2020. https://electionemails2020.org/assets/manipulativepolitical-emails-working-paper.pdf
technology-agnostic communication practices that outright deceive users into purchasing 

services the user did not intend to. We thank the Commission for the opportunity to 

comment and hope the information we provided assists its thinking on this important 

issue.

Sincerely, 

Brian Scarpelli 

Senior Policy Counsel 

Matt Schwartz

Privacy Fellowship Coordinator

ACT | The App Association 

1401 K St NW (Ste 501) 

Washington, DC 20005 
1401 K Street NW Suite 501

Washington, DC 20005

202.331.2130 @ACTonline

www. ACTonline.org /ACTonline.org

C ompetition in Digital Technology Mar kets:

Examining Self-Preferencing by Digital Platforms

Testimony of 

Morgan Reed

President

ACT | The App Association

Before the

U.S. Senate Judiciary Committee,

Subcommittee on Antitrust, Competition Policy and 

Consumer Rights
1

I . I n t r o d u c t i o n

We thank the Senate Judiciary Subcommittee on Antitrust, Competition Policy and 

Consumer Rights for holding this hearing on the effect large, technology-driven platform 

companies have on competition. This hearing provides an important venue for the 

debate around how certain public policy concepts, including competition law, apply in a 

variety of markets characterized by the presence of large companies with global reach. 

ACT | The App Association is the voice of small business tech entrepreneurs, and we 

appreciate the Subcommittee welcoming the views of our members on how best to 

safeguard innovative market activity and job creation in tech-driven industries.

The App Association is a trade group representing about 5,000 small to mid-sized 

software and connected device companies across the globe. In the United States, our 

member companies are part of a $1.7 trillion industry, supporting about 5.9 million jobs. 

If these seem like surprisingly high figures, it could be because there is a tendency to 

look only at the consumer-facing or most-downloaded apps in the Apple App Store or 

Google Play when referencing the market for apps. But these are a small fraction of the 

app economy. Most of our member companies make white label software—that is, they 

build software and provide services for other companies. If a member company makes 

an app for another firm, it’s usually the client’s logo that goes on the app. And the app 

itself may not be consumer-facing at all, it may be a management program for internal 

use by a brewery, hospital, or manufacturer. What virtually all of them have in common, 

though, is that they leverage software platforms to reach their clients and customers. 

We urge the Subcommittee to look beyond sales to consumers when thinking about the 

App Association’s members and the app economy in general.

We actively facilitate engagement between app developers, investors, and platforms in 

fora across the country.1 For example, just last month, we concluded a series of 12

events across the nation (Developed | The App Economy Tour) highlighting local 

success stories from the app ecosystem. Our destinations included Minneapolis,

Charleston, and St. Louis. Our panelists ranged from founders of fledgling small mobile 

software companies to venture capitalists to legal experts discussing subjects like 

federal and state privacy legislation, access to funding, and workforce development.

2

The constituents of members of this Subcommittee drive competition in the app 

ecosystem, and with these events, we showcased the innovation happening 

everywhere in the United States. We urge this Subcommittee to carefully consider how 

any potential changes to relevant federal law would affect your constituents. As the App 

Economy Tour highlighted, competition is alive, well, and thriving in the states you 

represent. The tour itself, which featured small startups and innovators taking on major 

challenges, is a testament to how software platforms have helped democratize 

entrepreneurship, seeding thriving app ecosystems in every state across the nation.

1 See, e.g., ACT | The App Association, “Queen City Mobile Summit highlights Cincinnati as mobile tech 

hub,” (Feb. 23, 2016), available at https://actonline.org/2016/02/23/queen-city-mobile-summit-highlightscincinnati-as-mobile-tech-hub/.

2 See ACT | THE APP ASSOCIATION, DEVELOPED | THE APP ECONOMY TOUR, https://actonline.org/developed/

(last visited Mar. 9, 2020).
2

In this hearing, the Subcommittee is examining the characteristics of competition 

between larger companies that act as both platforms and competitors in adjacent 

markets. Our testimony focuses not on social media or retail platforms, but on software 

platforms. Software platforms are the app stores—which in some cases come with 

operating systems and smart devices—on which developers sell their apps and from 

which our member companies buy developer services. It is through this root system that 

the app economy has permeated and redefined the economy as a whole, rendering 

notions of a separate “tech industry” outdated. Software platforms and developers—

leveraging ubiquitous connectivity and access to cloud computing—are superimposing

a tech-driven element to virtually all industries across the economy from agriculture to 

healthcare. As a result, competition has new and dynamic characteristics not just in 

tech, but everywhere. App Association member companies are at the center of these 

market changes, and their continued ability to create jobs in your states depends on 

robust enforcement of antitrust laws where appropriate and allowing competition to take 

place where intervention is inappropriate.

We urge the Subcommittee to take a few important considerations into account in this 

inquiry. First, software platforms have reduced barriers to entry for tech entrepreneurs 

and enhanced choices for consumers. Second, software platforms help innovators enter 

and even create new markets. Third, the antitrust concerns that focus on software 

platforms are often overstated and should be weighed against other policy 

considerations. Fourth, software platforms are not perfect. Developers want more 

transparency and continued improvements to security and safety. Our member 

companies want platforms to compete for their business, and they want to ensure 

competition is robust.

II. P l a t f o r m s H a v e R e d u c e d C o s t s f o r D e v e l o p e r s 

and E n h a n c e d C o m p e t i t i o n a n d C h o i c e s f o r 

C o n s u m e r s 

Consumers and developers experienced significant changes since the introduction of 

various mobile software platforms. In addition to having more choices, consumers also 

benefit from lower prices for software and even access to new markets that did not 

previously exist. Similarly, developers benefit from lower overhead costs, built-in 

customer trust, and wider distribution and market access.

Choices proliferated because entry into the software market is much easier now than it 

was before platforms.3 Before platforms, the nature of the marketplace forced software 

developers to take on tasks that were well beyond their core competencies—from 

marketing to protecting their intellectual property and negotiating with a variety of 

different types of companies to distribute their products. The transaction costs of taking 

3 Daniel Ershov, The Effects of Consumer Search Costs on Entry and Quality in the Mobile App Market, 

TOULOUSE SCHOOL OF ECON. (Apr. 18, 2018), available at 

https://www.cemfi.es/ftp/pdf/papers/wshop/DErshov_MobileAppCompetition_Jan2018.pdf.
3

on all these extra tasks were significant, and platforms have eliminated many of them.

The resulting environment is one in which small companies like App Association 

members can retain their size, stay where they were founded, and thrive. Our member 

companies experience a wide variety of growth trajectories, meaning growth to the size 

of companies like Facebook or Uber is not the only measure of success. To fully 

appreciate the depth of the app economy and its potential, one must look well beyond 

the “Top 10” apps in the major app stores or the eye-catching headlines covering the 

initial public offerings of unicorn companies.

Before the ubiquity of mobile platforms, the software ecosystem ran on personal 

computers. This forced early app companies, often with teams of just one or two 

developers, to wear many hats to develop, market, and manage their products. App 

companies were not only required to write code for their products, but they were also 

responsible for: 1) managing their public websites, 2) hiring third parties to handle 

financial transactions, 3) employing legal teams to protect their intellectual property, and 

4) contracting with distributors to promote and secure consumer trust in their product. 

App developers, trained in software coding and project management, were not wellequipped to carry out these tasks, and the additional steps cost them valuable time and 

money, with little tangible benefit.

Without platforms, developers had to take all of these additional steps, creating friction 

at each point, which meant that the only software titles that were available to the public 

were those that made the complicated journey from development to publishers to 

retailers like CompUSA or Best Buy. In 2003, CompUSA rolled out an early concept of a 

software platform consisting of a kiosk that burned made-to-order CDs containing 

software applications. With this system, the retailer could offer more software programs 

than it could fit on its shelves (which is how software was sold at that time), providing 

1,200 titles from 200 different publishers.4 Now, there are more than 317,673 

companies active in the mobile app market in the United States5 and more than 2 million 

apps available on the major app platforms. The kiosks are now in our smartphones—

there are more than 5.28 billion mobile broadband subscriptions worldwide as of 

20186—which are attached to smartphones in the pockets of over 80 percent of 

Americans,

7 saving them the trip to Best Buy to purchase the box software.8

In the internet economy, immediate consumer trust is almost impossible without a 

substantial online reputation, and not attaining that trust spells death for any app 

company. However, what does “trust” mean? In this context, trust refers to an 

4 Brian Osborne, “CompUSA offers software vending machines,” GEEK.COM (Dec. 12, 2003), available at 

https://www.geek.com/news/compusa-offers-software-vending-machines-551706/.

5 DELOITTE, THE APP ECONOMY IN THE UNITED STATES (Aug. 17, 2018), available at http://actonline.org/wpcontent/uploads/Deloitte-The-App-Economy-in-US.pdf.

6 Mike Murphy, “Cellphones now outnumber the world’s population, QUARTZ (Apr. 29, 2019), available at 

https://qz.com/1608103/there-are-now-more-cellphones-than-people-in-the-world/.

7 Adam Lella, U.S. Smartphone Penetration Surpassed 80 Percent in 2016, COMSCORE (Feb. 3, 2017) 

Available at: http://bit.ly/2pT04qo.

8 See, Ashley Durkin-Rixey, “Out of the Box: How Platforms Changed Software Distribution,” (Sept. 28, 

2018), available at https://actonline.org/2018/09/28/out-of-the-box-how-platforms-changed-softwaredistribution/. 
4

established relationship between the app company and customer where the customer

has the confidence to install the app and disclose otherwise personal information to an 

app company. Prior to platforms, software developers often handed over their products 

to companies with a significant reputation to break through the trust barrier. 

At first, developers were reluctant to join platforms, worried that the model might not 

accommodate their ability to “launch fast and iterate”9their apps. But successful 

platforms changed the app ecosystem by providing app developers with ubiquitous 

access to a broader swath of consumers. Platforms provide a centralized framework for 

app developers to engage and secure visibility with the 3.4 billion app users10

worldwide. With lower costs and barriers to entry, both fledgling and established app 

developers can find success. For example, educational app company L’Escapadou 

secured 1.3 million downloads and earned more than $1.5 million from app sales 

between 2010 and 2014,11 a success attributed to the centralized nature of platforms. 

Founder Pierre Abel specialized the language, content, and pricing of each of his apps 

based on consumer and market needs and marketed them on different platforms to 

reach a variety of consumers around the world.

I I I . T h e r e ’ s a P l a t f o r m f o r T h a t

As successful as the past 12 years have been for the app economy, the next decade 

could be even better. In just the third quarter of 2019, the two major app stores 

generated $21.9 billion in revenue—a robust 23 percent year-over-year increase from 

the third quarter of 2018.12 This growth suggests the developer-platform model is still 

succeeding. Moreover, app economy growth is likely to endure because developers are 

continuing to create new products, services, and markets that did not exist prior to 

platforms. Perhaps the most notable of these is the market for ridesharing. Connecting 

a driver—using his or her own car—to a potential passenger in real-time for an ondemand ride to a destination selected by the passenger was impossible before 

developers could use the GPS capabilities and data connections of smartphones. 

Ridesharing is an important example of how app developer ingenuity meets the 

capabilities, built-in trust, and developer services of platforms to create new options for 

consumers. 

Just as ridesharing fundamentally changed how we get around, developers and 

platforms also revolutionized how we access healthcare. A current shortage of about 

30,000 physicians in the United States—projected to increase to up to 90,000 in the 

9 To launch fast and iterate is often used to describe a software developer’s business plan, where 

software developers like to launch products as soon as they are finished and like to update newer 

iterations of their product actively. Paul Graham, “Apple’s Mistake,” PAULGRAHAM.COM (Nov. 2009), 

available at http://www.paulgraham.com/apple.html.

10 Simon Kemp, “The global state of the internet in April 2017,” TNW (Apr. 11, 2017), available at

https://thenextweb.com/contributors/2017/04/11/current-global-state-internet/.

11 Steve Young, “Making $1.5 Million with Educational Apps with Pierre Abel,” APP MASTERS (Apr. 30, 

2015), available at http://bit.ly/2hgDzZH.

12 Craig Chapple, “Global App Revenue Grew 23% Year-Over-Year Last Quarter to $21.9 Billion,” Sensor 

Tower Blog (Oct. 23, 2019), available at https://sensortower.com/blog/app-revenue-and-downloads-q3-

2019.
5

next six years

13—contributed to the need for caregivers and patients to find new ways of 

communicating. Compounding the caregiver shortage, 133 million Americans currently 

live with chronic conditions—most of them residing in rural areas with long drives to 

their nearest provider.14 Devices, sensors, and software are now capable of gathering 

and analyzing physiological data like movement, heart rate, or blood oximetry so that 

physicians can better monitor their patients at home and address potential problems 

before they occur or worsen.15 Studies show that preventive care regimes that use 

connected health tools are especially useful for patients with chronic conditions like 

diabetes and heart failure, which tend to affect underserved and rural communities 

especially.16 But how do these capabilities reach patients and consumers, specifically 

those who need them most? Most Americans already interact with platforms, through a 

variety of devices. We know that smartphone adoption rates are increasing among 

underserved populations in the United States and that for many, their handheld device 

is their only means of accessing the internet.17 Here again, developers are leveraging 

the ubiquity and trusted framework of platforms to produce healthcare innovations that 

address a variety of health conditions. Moreover, in this case, the platform-developer 

dynamic helps caregivers reach patients in rural and underserved areas. 

One of the central markets at issue is the market for developer services, where a 

developer pays a platform for assorted services including distribution, marketing, etc. 

This market also experiences vigorous competition. There is a tendency to include only 

two platform companies, Apple and Google, in this category of competitors. But for 

developers, the market is much wider. A game developer can choose platforms like 

Epic or Steam, and enterprise developers can look to hundreds of proprietary, custom 

platforms or could create their own. For example, companies like App47 create app 

platforms for everything from “bulldozers to ultrasound devices.”18 Moreover, for 

developers looking to reach a general audience, using the web is an alternative, 

especially for companies that are looking for different kinds of distribution or search 

services than those available on platforms. Additionally, software developers could 

choose to advertise on Facebook or distribute their products through Amazon, or one of 

13 See Connected Health Initiative, “Testimony of Morgan Reed, Executive Director, The Connected 

Health Initiative, Before the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) 

Subcommittee on Primary Health and Retirement Security,” (Sept. 25, 2018), available at 

https://actonline.org/wp-content/uploads/CHI-Testimony-Health-Care-in-Rural-America.pdf.

14 See Id.

15 Id.

16 See, e.g., Clinical Outcomes, Care innovations, at 2, available at http://www.connectwithcare.org/wpcontent/uploads/2017/06/2016_Outcomes_Clinical-1.pdf (showing the results of a study by Care 

innovations and University of Mississippi Medical Center, indicating that the first 100 patients with 

diabetes enrolled in a program with a remote monitoring component saved the state $336,184 in Medicaid 

dollars over six months); Testimony of Michael P. Adcock, Exec. Dir., University of Mississippi Med. Ctr., 

Hearing on “Telemedicine in the VA: Leveraging Technology to Increase Access, Improve Health 

Outcomes & Lower Costs,” (May 4, 2017), available at 

https://www.appropriations.senate.gov/imo/media/doc/050417-Adcock-Testimony.pdf (“The Mississippi 

Division of Medicaid extrapolated this data to show potential savings of over $180 million per year if 20 

percent of the diabetics on Mississippi Medicaid participated in this program”).

17 Charkarra Anderson-Lewis, MPH, PhD, et al, “mHealth Technology Use and Implications in Historically 

Underserved and Minority Populations in the United States: Systematic Literature Review,” (Jun. 18, 

2018), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6028762/.

18 APP47, available at https://app47.com/.
6

the giant Chinese platforms. It is worth noting, however, that there are some important 

distinctions between software platforms—like the App Store or Google Play which 

provide a marketplace for software apps—and social media platforms or “aggregators”

that connect people with information and run on data.19 Aggregators like Facebook and 

Twitter, for example, connect people with information and other people (and generate

valuable data in the process), while the Google Play store and the App Store provide a 

marketplace for consumers and app developers to transact directly. These differences 

illustrate the diversity in the market for distribution methods, as developers may prefer 

one model over another.

Perhaps most importantly, the universe of platforms is continuing to evolve and expand 

as diverse kinds of hardware connect to the network. New platforms are cropping up for 

wearables made by companies like Garmin. Connected home devices and cars drive

cross-platform interoperability so that Alexa can communicate with your Samsung 

appliances or your Ford Fusion—further weighing against conceptions of platform 

markets where a single player wields market power. These characteristics tend to show 

that developer services will continue to improve and evolve along with demand. Federal 

intervention may be necessary where market power exists and raises prices 

undisciplined by competition or maintain a monopoly position in order to reduce quality 

or decrease output. But when those factors are not present and competition drives the 

market, as it does in developer services, intervention is unlikely to help and may harm 

competition or consumer welfare.

I V .A n t i t r u s t C o n c e r n s S p e c i f i c t o S o f t w a r e 

P l a t f o r m s a r e O f t e n E x a gg e r a t e d a n d S h o u l d b e 

W e i g h e d A g a i n s t O t h e r P o l i c y C o n s i d e r a t i o n s 

Platforms play an important role not just in tech-driven markets but also across a variety 

of economic sectors. They exist to bundle together a set of services for sellers and 

connect those sellers with specific categories of buyers, thus “disintermediating” the 

market. Under a typical antitrust analysis, self-preferencing by platforms is in most 

cases procompetitive because it is an example of vertical integration.

20 Where vertical 

integration or self-preferencing lead to greater efficiency, better quality, or lower costs 

for consumers, there is no antitrust issue, and there is also no reason to consider 

extending antitrust law to bar such pro-consumer activity. For example, requiring Apple 

or Google to uninstall software supporting the cameras on smartphones would probably 

not be a pro-consumer development—the vertical integration of that feature into the 

platform is on balance a good thing for smartphone users. But make no mistake, vertical 

integration does not get a free pass. Antitrust authorities should analyze instances of 

self-preferencing and vertical integration generally and they have brought enforcement 

19 See, e.g., Ben Thompson, “Tech’s Two Philosophies,” STRATECHERY (May 9, 2018).

20 See Maurits Dolmans and Tobias Pesch, “Should We Disrupt Antitrust Law?” Cleary Gottlieb Steen & 

Hamilton LLP (Jul. 18, 2019), available at https://www.clearygottlieb.com/-/media/files/should-we-disruptantitrust-law-pdf.pdf.
7

actions against companies that apply the antitrust laws on the books, establishing

important precedent that bars harmful vertical integration. Nonetheless, with 

smartphones serving as music players, cameras, and multimodal communications 

devices, a skeptical view of the integration of those features into the devices is 

incongruous with the way consumers experience them. Moreover, we can expect 

competition to discipline examples where self-preferencing is bad for consumers 

because they can leave the platform. Just like other categories of market activity, an 

antitrust inquiry into self-preferencing is generally only appropriate where the company 

at issue has market power (in other words, a lack of adequate competition) and where it 

is using that market power to harm competition and consumers. Unfortunately, the 

European Union (EU) has proposed flipping the burden to platforms to show that selfpreferencing has “no long-run exclusionary effects” and “either the absence of adverse 

effects on competition or an overriding efficiency rationale.”21 We would discourage

such a proposal in the United States because it would chill market activity that is likely 

to benefit consumers.22 Although it would appear to help some of our member 

companies in the short run to target self-preferencing, the long-term effects of making 

procompetitive activity more difficult or illegal would tend to harm the economy and 

ultimately our member companies as well.

Some competitors are asking for an increase in the scope of antitrust law, but they tend 

to overstate the problems they identify. For example, advocates for legislative 

intervention point to the cost of the services software platforms provide to developers as 

evidence that Congress should expand antitrust law.

23 To show that paying for 

developer services is unfair, they compare the cost of software distribution to the cost of 

payment processing.24 This is kind of like comparing the cost of a set of tires to the cost 

of a car. Yes, the tires are a part of the car, but nobody thinks a car is only a set of tires 

or that tires should always cost the same as a car. Similarly, payment processing is just 

one element of the array of services you get on a software platform, which include: 

immediate availability through hundreds of millions of people’s devices; payment 

processing; marketing through the app store; privacy features embedded in the 

platform; assistance with intellectual property protection; and security features built into 

the platform. The stated problem, therefore, seems to be that software platform 

developer services are too expensive. But again, the problem is overstated because this 

cost is being compared to the cost of a much less substantial service. Therefore, it does 

not appear to be a compelling reason to expand antitrust law or create a regulatory 

regime with a purpose of reducing the price of developer services.

21 HEIKE SCHWEITZER, JACQUES CRÉMER AND YVES-ALEXANDRE DE MONTJOYE, COMPETITION POLICY FOR THE 

DIGITAL ERA: FINAL REPORT 7 (2019) (the “EU Report”), available at

https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf. 

22 It is unclear how the EU would apply this concept and researchers point to a lack of direct caselaw on 

the theory of harm as it was raised in a case against Google. See Beata Mäihäniemi (LL.D.), “Lessons 

from the Recent Commission’s Decision on Google. To Favour Oneself or Not, That is the Question,” 

Working Paper, The Legal Tech Lab, Univ. of Helsinki 13 (“This new theory of harm . . . is however, 

difficult to apply . . . in practice, as one cannot find any direct case law on the issue in question.”).

23 Online Platforms and Market Power, Part 5: Competitors in the Digital Economy: Hearing Before the H. 

Judiciary Comm., Subcomm. on Antitrust, Commercial, and Admin. L., 116th Cong. 7 (2020) (statement 

of David Heinemeier Hansson, CTO & Cofounder, Basecamp) (“Most mobsters would not be so brazen 

as to ask for such an exorbitant cut . . ..”) (Basecamp Testimony).

24 Id. at 7.
8

The other evidence advocates offer to show harm to competition is that making software 

available on the open internet is free (it is not),

25 whereas software distribution on a 

platform generally costs money.26 As alluded to above, selling software on the open 

internet requires the seller to take on several tasks the software platform bundles 

together (including marketing, intellectual property policing, privacy controls, security 

features, and payment processing). And even taking it at face value, the premise has

the inconvenient characteristic of proving the opposite point—that is, selling software on 

the open internet can be a substitute for selling software on a platform. Not only that, 

detractors of software platforms say they have no choice but to submit to software 

platform demands and then in the next paragraph, admit that they need not submit to 

software platform demands because they sell their software on the open internet 

instead.27 It is hard to imagine that this internal inconsistency goes unnoticed, and 

observers likely cannot help but discern from this that software sellers have options.

Indeed, other developers have made the transition off platforms without claims of 

anticompetitive conduct.28 Substitutes, even when they are not identical, are common in 

market economies and tend to signal healthy competition.

The other conclusion we can draw from these arguments is that policymakers should be 

wary of opportunistic behavior by well-resourced competitors disguised as antitrust 

concern. Those who are most vocal often imply they are speaking for the app economy 

as a whole,29 but in reality, they tend to be larger companies seeking to use antitrust law 

or other policy levers to undermine competitors. Right now, the largest software 

platforms charge the same (as a percentage of revenue) for developer services 

regardless of the company’s size or political clout. Smaller developers have the 

advantage in this arrangement because they do not have the leverage to negotiate 

better terms on their own, as larger companies do. Overtures to have Congress involve 

itself in developer-platform relations, therefore, may benefit the largest software 

companies on the platforms but may actually make small developers like App 

Association members worse off. If large software companies are able to convince 

Congress to require software platforms to give them a better deal, App Association 

members and their clients and customers are forced to subsidize the resulting discount

for these larger companies. Adding insult to injury, many of our member companies 

25 If a software company opts to reach its customers through the open internet instead of a software 

platform, the company still needs to invest in overhead costs the platform would otherwise handle, 

including marketing, intellectual property management, privacy and security features, and payment 

processing.

26 Id.

27 See, e.g., Basecamp Testimony at 7.

28 See, e.g., Nick Statt, “Fortnite for Android will ditch Google Play Store for Epic’s website,” THE VERGE

(Aug. 3, 2018), available at https://www.theverge.com/2018/8/3/17645982/epic-games-fortnite-androidversion-bypass-google-play-store (“CEO Tim Sweeney says the primary motivation here is twofold. Epic 

wants to maintain its direct relationship with consumers.”); Chris Welch, “Netflix stops offering in-app 

subscriptions for new and returning customers on iOS,” THE VERGE (Dec. 28, 2018), available at 

https://www.theverge.com/2018/12/28/18159373/netflix-in-app-subscriptions-iphone-ipad-ios-apple.

29 Daniel Ek, Founder and CEO, Spotify, “Consumers and Innovators Win on a Level Playing Field,” 

Spotify (Mar. 13, 2019), available at https://newsroom.spotify.com/2019-03-13/consumers-andinnovators-win-on-a-level-playing-field/ (“So, let me be clear that this is not a Spotify-versus-Apple issue. 

We want the same fair rules for companies young and old, large and small.”).
9

compete with these larger firms, so the advantage handed to the larger companies 

could directly disadvantage App Association members. 

Even as the antitrust concerns expressed in this area are often overstated, a 

competition analysis of these dynamics is not always the final say, and antitrust 

concerns may conflict with countervailing policy priorities. For example, policymakers 

raised alarms over measures software platforms use to protect consumer privacy. In 

one instance, a software platform faced antitrust concerns after a decision to curtail 

apps’ ability to track a consumer’s location even when the app is not running unless the 

consumer clearly consents. Advocates exert a steady stream of pressure on software 

companies and platforms to improve their privacy practices, especially with respect to 

location data.30 They often point to the opaque or even misleading manner in which 

companies collect such sensitive personal information. As one advocate argues, 

“[p]rivacy is often framed as a matter of personal responsibility, but a huge portion of the 

data in circulation isn’t shared willingly—it’s collected surreptitiously and with 

impunity.”31 Privacy controls at the platform level help ameliorate this perceived problem 

by making it easier to set collection rules for all or specific apps. 

Policymakers at all levels have made it clear that companies should embed privacy into 

the design of their products and services.32 Accordingly, the purpose of a privacy 

prompt from the platform’s operating system should not be to confuse a consumer into 

selecting an option that gives away more data than they intended. It follows that 

requiring platforms to make it easier to provide location data (even when an app is not 

running) than it is to protect that data runs headlong into the policy imperative of privacy 

by design. Looking at the issue solely from a competition lens is, therefore, an 

incomplete view. Moreover, the more privacy protective approach of one software 

platform differentiates it competitively from other platforms that arguably make it easier 

for developers to collect sensitive data. In resolving these policy tangles, the focus 

should be on what works best for consumers. Antitrust law by itself rightfully addresses 

consumer welfare—it does not seek to benefit competitors. So, if a platform has an 

offering that a consumer prefers over the offering of an independent developer, 

policymakers should ask whether the complaints of powerful competitors necessitate 

legislating away that choice. 

App Association members are selective about the markets they enter, but they compete 

aggressively. And the presence of a powerful and well-resourced competitor is not 

always enough to totally discourage entry. For example, our Minneapolis-based 

member company Vemos provides a dashboard for nightlife and event venues to 

manage the growth of their businesses.33 The presence of incumbents like Eventbrite 

30 See, e.g., EPIC.ORG, LOCATIONAL PRIVACY, available at https://epic.org/privacy/location/.

31 “EFF Report Exposes, Explains Big Tech’s Personal Data Trackers Lurking on Social Media, Websites, 

and Apps,” Press Release (Dec. 2, 2019), available at https://www.eff.org/press/releases/eff-reportexposes-explains-big-techs-personal-data-trackers-lurk-social-media (quoting Bennett Cyphers, EFF staff 

technologist and report author).

32 See, e.g., “FTC Issues Final Commission Report on Protecting Consumer Privacy,” Press Release, 

FED. TRADE COMM’N (Mar. 26, 2012), available at https://www.ftc.gov/news-events/pressreleases/2012/03/ftc-issues-final-commission-report-protecting-consumer-privacy.

33 VEMOS, https://www.vemos.io/ (last visited Mar. 9, 2020).
10

was not a deterrent because Vemos differentiates itself from incumbents by compiling 

data from and interoperating with a variety of event management tools and analyzing 

the data to provide insights into how clients can improve their events and businesses.

Having a lot of resources is an undeniable advantage as a competitor (whether it is a 

platform or not), but our member companies exist because they fill a niche with a 

differentiated product, they can compete on price, or they can simply outmaneuver the 

larger competitors. The continued existence and success of camera apps on the two 

largest app stores are an example of companies competing directly with a platform. 

Camera+ was an early app that exceeded the software capabilities of Apple’s early 

camera app, pressing Apple to produce better camera software. Now, Camera+, 

ProCamera, Halide, and several other camera apps are all popular downloads and offer 

iPhone users a variety of options aside from the native app.34 But that is not to say a 

company with a competing offering should never be purchased by a larger company. 

There are three main definitions of success for a small company: passing the company 

along to the next generation; being purchased by a larger company; or (much less 

often) an initial public offering (IPO). Being purchased is often the best of these three 

options for the business owner and consumers—after all, IPOs are expensive and 

fraught with risk.

35 A purchase that helps produce better products or services for 

consumers is both a natural and beneficial end for some companies and healthy from a 

competition perspective.

V . P l a t f o r m s A r e n ’ t P e r f e c t

Although developers can choose from multiple platforms, there is no such thing as a 

perfect platform. Our member companies pay a fee to platforms for developer services, 

and they expect those services to meet their needs. Just as online companies must 

clearly communicate their data practices to consumers, so must platforms clearly define 

the requirements and details of their terms of service to developers. For example, when 

platforms change their developer guidelines, they must communicate clearly and ensure 

developers understand what the changes mean for them and their customer 

relationships. Occasionally, we hear from a member company that an ill-defined change 

significantly impacted their business. For example, a software platform recently put a 

member company that provides a call blocking app on notice for temporary removal 

unless it made changes to how it obtained permission for gathering incoming call data.36

The platform did not clearly explain how its policies changed or why they would 

necessitate action on the app’s part, but it was the first removal notice of its kind in the 

34 See Tara Schatz, “10 best camera apps for iPhone that beat the iOS camera,” MACPAW (Dec. 24, 

2018, updated Feb. 13, 2019), available at https://macpaw.com/how-to/best-iphone-camera-apps.

35 See Will Rinehart, “Welcome to the Kill Zone? A closer look at merger and start-up data suggests it’s a 

cultivation zone,” THE BENCHMARK (Feb. 27, 2020), available at https://medium.com/cgobenchmark/welcome-to-the-kill-zone-852339601fbb (“For startups, going public isn’t a sure path to 

success. Companies typically sign away 4 to 7 percent of their gross proceeds to an investment bank to 

sell shares of the stock. They also tend to incur an additional $4.2 million in costs to go through the 

process of getting listed. On top of this, a company will have to fork over another $1 to $2 million for 

federal compliance every year. Most IPOs perform worse than the overall market.”).

36 Graham Dufault and Madeline Zick, “What’s More Control with Fewer Options?” ACT | THE APP 

ASSOCIATION (May 21, 2019), available at https://actonline.org/2019/05/21/whats-more-control-with-feweroptions/.
11

app’s nine years on the platform. Ultimately, the platform did not remove the app, but 

the process for remaining on the store was opaque and difficult enough to navigate that 

the company looked to us, their trade association, for help. Relevantly, this occurred 

amid a major update to California’s privacy laws, so it may be an example of the 

unintended consequences of government intervention.

Especially for enterprise app developers, a software platform’s safety and security are 

essential elements of developer services. Software platforms’ security features 

improved markedly over the course of their existence. Whereas unlocking a device used 

to require a four-digit passcode, devices are now capable of biometric-based 

authentication, and software platforms make these authentication measures available to 

developers as well so that they can also benefit from these heightened security 

measures. But the game of cat-and-mouse between cybersecurity professionals and 

hackers will never end, and security must continue to evolve to meet and beat the 

threats. Although some platforms do not control device security, developers want the 

platform’s security features to work seamlessly with any relevant hardware and that they 

account for all attack vectors. Software platforms should continue to improve their threat 

sharing and gathering capabilities to ensure they protect developers across the 

platform, regardless of where threats originate. Moreover, they should approve and 

deploy software updates with important security updates rapidly to protect consumers 

as well as developers and their clients and users. The same is true when it comes to 

privacy controls. App developers strongly desire platform-level privacy controls they can 

adapt for their products and services. The types and nature of these controls vary 

among platforms and this variation should result in continuously improving options that 

iterate with end user expectations and privacy risks. 

Similarly, software platforms play a significant role in helping small developers enforce 

their intellectual property (IP) rights. Our member companies’ IP helps eliminate the 

inherent disadvantages of being a small, innovative company by enabling them to 

protect the fruits of their ingenuity from larger firms that might want to take it. 

Unfortunately, some of our member companies fall victim to IP thieves that succeed in 

selling the pirated content or using it to steal ad revenue on platforms. Ad networks can 

and do help mitigate the pirated ad revenue problem,37 but platforms must also 

vigorously police their app stores for stolen content. With vast online stores, it is difficult 

for a platform to verify legitimate requests to remove allegedly pirated content. But a 

single app developer should not need the help of a legal team or trade association to 

resolve the issue. In one instance, an App Association member company, Busy Bee 

Studios, approached us when it was unable to convince the platform to investigate an 

app that appeared to have been stolen from Busy Bee. With our assistance, the 

platform investigated the issue and found that the infringing app was in fact stolen 

content.38 But the time and resources it took our member company—which only has a 

few employees—to resolve the issue were significant and could have gone toward the 

development of their next app. Since this issue arose, IP resolution processes improved 

37 See, e.g., Trustworthy Accountability Group, available at https://www.tagtoday.net/.

38 See Alex Cooke, “Member Monday: How One Small Developer Fought a Rogue App,” (Nov. 26, 2018), 

available at https://actonline.org/2018/11/26/member-monday-how-one-small-developer-fought-a-rogueapp/.
12

across the board, but the story is a reminder that they are important and in-demand

developer services that platforms should improve in order to compete for developers.

V I . C o n g r e s s Ca n H e l p M a i n t a i n a L e v e l P l a y i n g 

F i e l d

Our members’ ability to create jobs and develop innovative software depends on strong 

IP protections, a stable standards-setting system, and access to talent. In order to 

ensure the growth of the app economy, small, innovative companies must be able to 

pursue IP claims affordably and challenge claims that should not have been granted in 

the first place. For instance, we applaud the House of Representatives’ recent passage 

of the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2019 (S. 1273), 

which would establish a voluntary small claims board at the Copyright Office, a lessexpensive alternative for companies with important infringement claims but fewer 

resources. Similarly, when it comes to patents our members support the current process 

for inter partes review (IPR) because IPR proceedings cost on average in the low sixfigure range versus up to $5 million for a typical patent in federal court. While the low 

six-figures is still out of reach financially for many small businesses, an IPR provides

much-needed leverage to companies faced with the possibility of litigation in federal 

court.

Another IP-related issue important to our members is their ability to rely on technical 

standards like WiFi, 4G, and 5G. In the United States, the private sector leads 

standards setting, with the participation of government actors. For example, IEEE 

recently finalized the WiFi 6 (or IEEE 802.11ax) standard.39 Like many technical 

standards, WiFi 6 consists of technologies, many of which are patented, volunteered by 

companies who seek to make their IP “essential” to the standard. In other words, in 

order to manufacture a device that interconnects to WiFi 6, the manufacturer must 

obtain a patent license from each of the companies with patents essential to WiFi 6. As 

a corollary, the companies that own these standard-essential patents (SEPs) must 

agree to license their SEPs to any willing licensee on terms that are fair, reasonable, 

and non-discriminatory (FRAND).40 When SEP owners go back on these promises and 

instead refuse to license to manufacturers, and then seek exorbitant license fees from 

downstream companies, antitrust concerns are raised. This is an area where antitrust 

law certainly plays a role and should be appropriately enforced by regulators. The 

Federal Trade Commission (FTC) recently brought such an antitrust complaint against 

Qualcomm, and the App Association filed an amicus brief supporting the FTC’s 

claims.41 The case is on appeal with the 9th Circuit. If Qualcomm successfully overturns 

39 Robert Saracco, “WiFi 6 is Rolling,” IEEE BLOG (Nov. 8, 2019), available at 

https://cmte.ieee.org/futuredirections/2019/11/08/wifi-6-is-rolling/.

40 DEPT. OF JUSTICE, NAT’L INSTITUTE FOR STANDARDS AND TECH., AND UNITED STATES PATENT AND 

TRADEMARK OFFC., POLICY STATEMENT ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT TO 

VOLUNTARY F/RAND COMMITMENTS (Dec. 19, 2019), available at 

https://www.justice.gov/atr/page/file/1228016/download.

41 Brief of Amicus Curiae ACT | The App Association in opposition to Qualcomm’s Motion for Partial Stay 

Pending Appeal, Fed. Trade Comm’n v. Qualcomm Inc., 9th Cir. No. 19-16122 (filed Jul. 19, 2019).
13

the ruling against it at the district court level, it could have dire consequences—not just 

for the smartphone ecosystem but for automakers and the IoT ecosystem generally42—

as SEP owners adopt the licensing practices at issue in that case. We urge this 

Subcommittee to ensure antitrust law is enforced vigorously where SEP abuse harms 

competition and consumers.

V I I . C o n c l u s i o n

We appreciate this opportunity to provide testimony in this important hearing. Our 

member companies have a strong interest in maintaining a competitive app economy 

that enables them to compete with larger firms worldwide through innovative products 

and services for their customers and clients. The entry of platforms created novel 

opportunities for consumers and developers. But while platforms provide some of the 

infrastructure, developers bring smart devices to life. Without apps, a smartphone is just 

a phone. The symbiotic relationship between apps and platforms is not perfect, but it 

has created a powerful ecosystem that continues to benefit consumers. We look 

forward to discussing the pro-competitive effects and public policy concerns platforms 

have generated and welcome the discussion around how large, tech-driven firms affect 

smaller counterparts.

42 “FTC v. Qualcomm – The Big Tech Case Nobody’s Talking about,” ACT | THE APP ASSOCIATION (Feb. 7, 

2020), available at https://actonline.org/2020/02/07/ftc-v-qualcomm-the-big-tech-antitrust-case-nobodystalking-about/.
14

Appendix: App Economy Innovators in Your

Districts 

Majority 

Chairman Michael Lee (UT) 

Company: 1564B 

Located in Salt Lake City, 1564B is a one-man management consulting group that 

provides advice on marketing and content development as it relates to technical 

markets, like the internet of things (IoT). Founded in 2014, 1564B’s clients range from 

startups and growing companies to global corporations. 

Senator Chuck Grassley (IA) 

Company: Higher Learning Technologies 

Higher Learning Technologies (HLT) works to empower learners through easy-to-use 

textbook and test prep platforms spanning a variety of disciplines such as medical, 

dental, and business, as well as preparatory tests for college and military entrance 

exams. Located in Coralville, Iowa, and founded in 2012, HLT offers services on the 

App Store, Google Play store, and through web browsers. 

Senator Mike Crapo (ID) 

Company: TaxAct 

Founded in 1998, TaxAct is a leading provider of affordable digital and downloadable 

tax preparation solutions for individuals, business owners, and tax professionals. Their 

flagship product promises users the highest degree of accuracy and was designed by 

their own in-house programmers and tax accountants. All available forms are IRS and 

state approved, and they introduced a mobile application in 2018. 

Senator Joshua Hawley (MO) 

Company: Topik 

In 2015, two friends co-founded Topik, a mobile blogging application that makes it easy 

for anybody to create and share blog posts on an easy to use mobile platform. Based in 

St. Louis, Missouri, Topik is completely self-funded and, with only two employees, is set 

to launch their first mobile app later this year. 

Senator Marsha Blackburn (TN) 

Company: Quiet Spark 

Established in 2011 in LaVergne, Tennessee, a wife and husband team founded Quiet 

Spark after noticing their son’s issues with spelling. Their first app was SuperSpeller, 

an iOS app that makes learning spelling fun for children through learning games and 

reward features. They have also created other apps that help users keep track of their 

lives through categories like exercise, reading time, scheduling, homework, and more. 
15

Minority

Ranking Member Amy Klobuchar (MN)

Company: VEMOS.io

Located in the Twin Cities and founded in 2013, Vemos is a platform solution for bars, 

restaurants, and other venues as a one-stop-shop for the digital tools needed to 

manage and grow their businesses. Operating with only eight full-time employees, 

Vemos found a way to harness and present a venue’s data in a humanized way, which 

helps venues understand who their customers are and how to market to them 

effectively.

Senator Patrick Leahy (VT)

Company: Aprexis Health Solutions

Aprexis Health Solutions is a cloud-based software that helps patients with personalized 

services for Medication Therapy Management and includes more than 1,000 

participating pharmacies and more than 1 million patients. Founded in 2009, Aprexis 

works with health plans, pharmacy networks, corporate employers, and providers to 

deliver improved, patient-centric health outcomes.

Senator Cory Booker (NJ)

Company: Micro Integration Services, Inc.

Founded in 1985, Micro Integration Services is a father and son team who transitioned 

from selling and maintaining hardware to an entirely software-based consulting 

business. MIS is focused on solving problems and helping their clients develop software 

for mobile and web turnkey business solutions. Although they have maintained their 

two-man team, Micro Integration Services works with major corporations like Kraft and 

the Philadelphia Eagles.

Senator Richard Blumenthal (CT)

Company: Pixellet

Located in Stamford, Connecticut, Pixellet is a full-service web and mobile development 

and design firm with dozens of offered services, including digital marketing and ecommerce. Founded in 2014, Pixellet only has one employee and has served a variety 

of industries including real estate, health care, financial services, and education, among 

others. 
August 20, 2020

Federal Trade Commission

Office of the Secretary

600 Pennsylvania Avenue NW

Suite CC-5610 (Annex B)

Washington, District of Columbia 20580

RE: Federal Trade Commission Review of Health Breach Notification Rule

ACT | The App Association’s Connected Health Initiative (CHI)1 appreciates the 

opportunity to provide input to the Federal Trade Commission (FTC) on whether 

changes should be made to a the Health Breach Notification Rule, which requires 

vendors of personal health records and related entities that are not covered by the 

Health Insurance Portability and Accountability Act (HIPAA) to notify individuals, the 

FTC, and, in some cases, the media of a breach of unsecured personally identifiable 

health data.2

CHI is the leading advocate for digital health policy and law advancements, 

representing a broad consensus of stakeholders across the healthcare and technology 

sectors. Our mission is to support the responsible and secure use of connected health 

innovations throughout the continuum of care to improve patients’ and consumers’ 

experiences and health outcomes. CHI is a long-time active advocate for the increased 

use of innovative technology in the delivery of healthcare and engages with a broad and 

diverse cross-section of industry stakeholders focused on advancing clinically validated 

digital medicine solutions.

CHI shares your commitment to advancing responsible health data stewardship and 

privacy throughout the continuum of care and recognizes that no data is more personal 

to Americans than their health data. CHI members acknowledge that significant threats

to Americans’ most sensitive data continue to evolve and put extensive resources into

ensuring the security and privacy of health data to earn the trust of consumers, hospital

systems, and providers. Breach notification requirements generally serve important 

functions. They not only notify the individual when their information has been 

1 http://www.connectedhi.com/. 

2 https://www.ftc.gov/news-events/press-releases/2020/05/ftc-seeks-comment-part-review-health-breachnotification-rule. 
2

compromised, but they also provide insight into security issues that organizations may 

be facing. 

However, digital health innovators do struggle to navigate the complex environment with 

respect to cybersecurity and privacy as they contend with HIPAA requirements at times 

and relevant FTC requirements at others, on top of state-specific requirements that can 

vary significantly.

As the FTC notes, it only lists two breaches of 500 or more individuals since this 

rule was put into place 10 years ago.3 The FTC also notes that it never enforced its 

health data breach rules because “as the PHR [personal health record] market has 

developed over the past decade, most PHR vendors, related entities, and service 

providers have been HIPAA-covered entities or ‘business associates’ subject to HHS’s 

rule.”

4 This data indicates that most PHRs are subject to HIPAA with FTC health data 

breach rules governing the relatively few that are not.

Ultimately, CHI supports (and is currently leading efforts related to) the development of 

a new cross-sectoral privacy framework by Congress in the form of a general privacy bill

that is intended to result in general privacy legislation. As part of such a solution, we 

support the proposition that any such general privacy bill treat health data as a subclass 

of “sensitive” personal information subject to heightened regulatory requirements, 

including with respect to breach notification requirements.

Until that time, innovators in the digital healthcare ecosystem will have to carefully 

navigate the different scopes and contexts of federal sector-specific laws and 

regulations. They will further have to continue to dedicate resources to tracking and 

complying with the range of state data breach laws and regulations, some of which 

conflict or overlap with FTC health data breach notification rules.

Building on the above, CHI offers the following views in response to various questions 

posed by FTC:

• We support Section 318.1 of the rule’s providing that FTC health breach 

notification rules do not apply to HIPAA-covered entities or to any other entity to 

the extent that it engages in activities as a business associate of a HIPAAcovered entity. We believe this bright line is critical and should be maintained to 

provide legal certainty to digital healthcare innovators. 

3 Health Breach Notification, 85 FR 31085 (May 22, 2020) (HBR RFI).

4

Id. CHI also notes that thousands of breaches of HIPAA-covered impacting 500 or more patients have 

been reported over the years. See https://ocrportal.hhs.gov/ocr/breach/breach_report.jsf.
3

• CHI does agree that, “as consumers turn towards direct-to-consumer 

technologies for health information and services (such as mobile health 

applications, virtual assistants, and platforms’ health tools), more companies may 

be covered by the FTC’s Rule.”5 Developers of technology already subject to the 

FTC’s general consumer protection authority are, and will continue, inventing

third-party apps that utilize consumer health information and will likely meet the 

definition of a PHR provider.

• CHI supports FTC evolving the requirements of notification in Section 318.5 of 

the rule. As the FTC notes, in-app messaging, text messages, and platform 

messaging are tools available today that are used widely and should be allowed 

to be utilized to more effectively communicate with consumers that consent to it. 

It is common sense that consumers should be able to consent to receiving 

communications under the rule via these modalities as well as email.

• FTC can reduce costs and burdens on small businesses by developing 

explanatory resources clearly explaining the purpose and requirements of the 

health data breach notification rule and offering guidance on compliance with it. 

We note that CHI has collaborated closely with the Department of Health and 

Human Services’ Office of Civil Rights on the development of its HIPAA portal for 

developers.6 CHI offers to partner with FTC in the creation of such a resource, 

which would ease compliance burdens and reduce costs. 

5 HBR RFI at 31086.

6 https://hipaaqsportal.hhs.gov/. 
4

CHI thanks you in advance for your time and consideration of the input above.

Sincerely,

Brian Scarpelli

Senior Global Policy Counsel

Connected Health Initiative

1401 K St NW (Ste 501)

Washington, DC 20005

The Connected Health Initiative (CHI), an initiative of ACT | The App Association, is the 

leading multistakeholder spanning the connected health ecosystem seeking to effect 

policy changes that encourage the responsible use of digital health innovations 

throughout the continuum of care, supporting an environment in which patients and 

consumers can see improvements in their health. CHI is driven by the its Steering 

Committee, which consists of the American Medical Association, Apple, Bose 

Corporation, Boston Children’s Hospital, Cambia Health Solutions, Dogtown Media, 

George Washington University Hospital, HIMSS, Intel Corporation, Kaia Health, 

Microsoft, Novo Nordisk, The Omega Concern, Otsuka Pharmaceutical, Podimetrics, 

Rimidi, Roche, United Health Group, the University of California-Davis, the University of 

Mississippi Medical Center (UMMC) Center for Telehealth, the University of New 

Orleans, and the University of Virginia Center for Telehealth.

For more information, see www.connectedhi.com. 
December 11, 2019

Federal Trade Commission, Office of the Secretary

Constitution Center, 400 7th Ave, SW, 5th Floor, Suite 5610 (Annex B)

Washington, District of Columbia 20024

Re: Comments of ACT | The App Association regarding the Federal Trade 

Commission’s Implementation of the Children’s Online Privacy Protection Act 

(COPPA) Rule Review, 16 CFR part 312, Project No. P195404. 

Dear Acting Secretary Tabor, 

ACT | The App Association (App Association) respectfully submits its views to the 

Federal Trade Commission (FTC) on its request for public comment in the abovecaptioned proceeding.1 The App Association appreciates the Commission’s evaluation 

of its existing regulations pertaining to the Children’s Online Privacy Protection Act 

(COPPA) Rule and its consideration to modify, retain, or eliminate parts of the Rule 

deemed ineffective for the constantly changing technology marketplace. 

I. Introduction and Statement of Interest 

The App Association represents approximately 5,000 small business software 

application development companies and technology firms globally that create the 

technologies driving internet of things (IoT) use cases across consumer and enterprise 

contexts. Today, the App Association represents an ecosystem valued at approximately 

$1.7 trillion and is responsible for 5.9 million American jobs. Our members create 

innovative solutions that drive the world’s rapid embrace of mobile technology. Their 

products power consumer and enterprise markets across modalities and segments of 

the economy. Since COPPA’s inception, the App Association has taken an active role in

making sure that the small business community is aware of their responsibilities under 

the COPPA Rule. For example, the App Association created a checklist for apps that 

are made for children to ensure that there is a free accessible resource for small 

businesses to use as a guide to comply with the COPPA Rule.2 Furthermore, our 

organization frequently participates in public forums on the issue of protecting children 

with respect to technology and mobile apps. We testified before the House Energy and 

Commerce Committee on “Protecting Children’s Privacy in an Electronic World”3; 

1 Federal Trade Commission, Request for Public Comment on the Implementation of Children’s Online 

Privacy Protection Rule (COPPA), 84 Fed. Reg. 35842 (July 25, 2019). 

2 Checklist for apps that are made for children, ACT | THE APP ASSOCATION, https://actonline.org/familyapp-privacy/, (last visited December 11, 2019).

3 U.S. House Energy & Commerce Committee, Hearing, Protecting Children's Privacy in an Electronic 

World (Oct. 5, 2011).
2

participated in the FTC’s “The Future of the COPPA Rule” workshop4; and most recently 

spoke at the Family Online Safety Institute’s (FOSI) 2019 Annual Conference.5 While 

the App Association supports protecting children’s privacy, over time, the current 

COPPA Rule disproportionally eliminates small developers out of the market for apps 

and software programs specifically designed with children in mind. We encourage the 

FTC to implement changes to the current rule that set reasonable and effective 

requirements for small software and app developers to become compliant with the 

COPPA Rule, while still providing new and novel technology for the next generation. 

II. The Current State of Children’s Online Usage and Parent Engagement 

Impacting Businesses’ Compliance with COPPA

According to the App Association’s research, 85 percent of parents have concerns

about their children’s digital privacy.6 PricewaterhouseCoopers (PwC) says that children 

12 to 15 years old consume 20 hours of screen time each week,

7 with other data 

suggesting that kids 8 to 18 years old consume seven hours of screen time per day.8

Given these statistics and parents’ growing concern about their children’s privacy, it is 

important that parents take steps to actively monitor their children’s time online. These 

steps include enabling parental control settings on their children’s devices to make sure 

they do not have access to inappropriate information and reading privacy policies that 

the child likely does not understand due to their age. However, research shows that 

fewer than one in three parents use parental settings on their children’s devices9 and 

the Pew Research Center also says that 81 percent of parents knowingly let their 

children use General Audience (GA) YouTube without parental restrictions.10

4 The Federal Trade Commission, The Future of COPPA Rule Workshop: Morgan Reed, President, ACT | 

The App Association, Developers and COPPA: Their Real-World Experience, (Oct. 7, 2019), 

https://www.ftc.gov/news-events/events-calendar/future-coppa-rule-ftc-workshop. 

5 Family Online Safety institute (FOSI), 2020 Vision: The Future of Online Safety, (November 21, 2019) 

https://www.fosi.org/events/2019-annual-conference/. 

6 Morgan Reed, Developers and COPPA: Their Real-World Experience, F.T.C. COPPA WORKSHOP, 

https://www.ftc.gov/system/files/documents/public_events/1535372/slides-coppa-workshop-10-7-19.pdf

(October 7, 2019) (F.T.C. COPPA Workshop Slides). 

7 Kids Digital Media Report 2019, PRICEWATERHOUSECOOPERS, 4, 

https://cdn2.hubspot.net/hubfs/5009836/PwC%202019/Kids%20Digital%20Media%20Report%202019%2

0.pdf? (May 2019). 

8 New tools, old rules: limit screen-based recreational media at home, AMERICAN HEART ASSOCIATION 

SCIENTIFIC ADVISORY, https://newsroom.heart.org/news/new-tools-old-rules-limit-screen-basedrecreational-media-at-home (Aug. 6, 2018). 

9 F.T.C. COPPA Workshop Slides. 

10 Aaron Smith, et. al, Many Turn to YouTube for Children’s Content, News, How-To Lessons, PEW 

RESEARCH CENTER, https://www.pewresearch.org/internet/2018/11/07/many-turn-to-youtube-for-childrenscontent-news-how-to-lessons/ (Nov. 7, 2018). 
3

These research results from a variety of sources demonstrate that while parents often 

say they care deeply about their children’s privacy, their actions display a lesser degree 

of concern. They may also feel that they should not be the ones responsible for 

implementing parental controls to protect their child’s online privacy. Instead some 

parents expect that app developers should provide free educational or child friendly

applications that automatically include the necessary parental settings to protect their 

children’s privacy. This expectation places an enormous financial burden on child app 

and software developers because they have to provide their products for a small or no 

fee; pay COPPA Rule compliance costs; and still continue to compete in a market that 

includes General Audience (GA) developers that have children using their products, but 

do not bear the financial implications of COPPA Rule compliance. 

The COPPA Rule’s burdensome compliance costs have resulted in many childrendirected app and software developers closing down their businesses or deciding to 

target a general audience. Furthermore, others children-directed app and software 

developers will now only sell their products to schools that operate under Family 

Education Rights and Privacy Act (FERPA) because they are unable to keep up with 

the substantial costs of COPPA compliance. These examples demonstrate that the 

current COPPA Rule it is not being used in an effective manner to protect children’s 

online privacy. Therefore, it is imperative that the FTC find a new and balanced 

approach between the importance of children’s privacy and a reasonable cost of 

compliance with its current Rule. 

III. The COPPA Definition of Personal Information Should Not Include a Child’s 

Unidentifiable Biomarkers (Voice, Face, Fingerprints)

Under the current COPPA Rule, personal information is “individually identifiable 

information about an individual collected online, including: ... (8) a photograph, video, or 

audio file where such fie contains a child’s image or voice.”11 In today’s world across a 

variety of modalities, children are accessing (and contributing) online content at younger 

and younger ages for a variety of reasons. Many children have a video game console in 

their home, such as Microsoft’s Xbox or Sony’s PlayStation 4®, which allows the device 

to detect the child’s voice to enable them to talk with other online users online.

Additionally, many households use Apple’s Siri ®, Amazon’s Alexa ®, and Google’s 

Google HomeTM, and it is inevitable that the device or an application on the device may 

pick up a child’s voice, often times without knowing due to its inability to detect the 

difference. These devices while likely being intended for a general audience (GA) may 

now be subject to COPPA due to potentially having “actual knowledge” of children 

(under the age of 13) using their products. Furthermore, there are other applications

that may be subject to COPPA that are made for individuals with learning or physical 

disabilities. For instance, autistic children may use an app to help them with their 

speech, which would require the collection of the child’s voice in order to make their 

statement clearer; or a child who is blind may also speak to the virtual assistant 

software in their phone in order to use the phone’s basic functions.

11 16 C.F.R. § 312.2 Definitions (2013). 
4

Many new apps may collect biomarkers such as voice, facial features, and fingerprints 

in some form, and the App Association urges the FTC to consider how these latest 

technologies can fit into a law created nearly 20 years ago. We urge the FTC to 

recognize the extraordinary burdens associated with COPPA compliance, particularly 

for small business developers of such technology. For example, developing additional 

technology to identify the difference between an adult and child voice remains a need, 

and its implementation may be prohibitively expensive while providing no additional 

protections for the child if the biomarker is deidentified. While the App Association fully 

supports privacy protections for children, such protections will stifle inovation if we 

continue to disincentivize the development of child focused tech through potentially 

unfeasibly regulatory requirements. Therefore, the App Association strongly urges the 

FTC to consider modifying the definition of personal information to either exclude 

“biomarkers” or to only require that a business comply with COPPA when identifying, or 

reasonably identifying, the “biomarker” and specifically associating it with the child as 

opposed to the child’s voice only being generally wrapped up in a data collection by an 

app. 

IV. Incentivize Platforms to Provide Procedural Mechanisms for App Developers 

to Obtain Verifiable Parental Consent

A number of practical COPPA compliance challenges arise from the fact that many 

apps integrate into and operate through mobile communications platforms maintained 

by a different operator. As a result, certain information—such as the user's IP address, 

device ID, username, or screen name—sometimes shares automatically between the 

app developer and the platform provider when a user runs the application. This limited 

information sharing supports (and is often necessary for) the technical and operational 

functioning of the app. 

The App Association urges the FTC to permit more efficient and practical solutions for 

COPPA Rule compliance that takes advantage of the latest pro-consumer 

developments in technology. As we mentioned in our testimony earlier this year, there 

has been a significant decline in the numer of app and software developers that create 

products spefically designed for children under the age of thirteen.12 This is due to the 

often times insurmountable hurdle of COPPA Rule compliance for small businesses in 

the child app and software space. While the enactment of the COPPA Rule had the well 

intentioned goal of promoting children’s online privacy, in its current state the Rule has 

instead eliminated an important set of child app developers from the marketplace due to 

the costs of compliance. 

In order to change this result, we strongly encourage the FTC to consider providing 

incentives for platforms that supply procedural verifiable parental consent (VPC) 

12 Morgan Reed, Developers and COPPA: Their Real-World Experience, F.T.C. COPPA WORKSHOP, 

https://www.ftc.gov/system/files/documents/public_events/1535372/slides-coppa-workshop-10-7-19.pdf

(October 7, 2019). 
5

mechanisms to app developers that fall under the COPPA Rule. By providing these 

incentives the FTC would allow some of the costly expenses of designing a child app to 

be reduced for those small developers whose primary goal is to impact children with 

age appropriate content and resources. 

The App Association envisions VPC in three separate but distinct categories with 

platforms supplying innovative procedural solutions for verifying and notifying 

consenting adults. 

1. Verifying that the person who will be providing consent is an adult. 

The App Association encourages the FTC to allow platforms to provide procedural 

mechanisms for child app developers to utilize when verifying a person’s age and ability 

to consent to an app’s privacy policy before the child’s use. For example, the platform 

could require a platform user to provide their age as an initial step of creating an 

account when becoming a part of the platform’s community. In turn, the child app 

developers that fall under COPPA’s authority could then use this verification as a part of 

their VPC process to ensure a person is of the correct age to consent to the app’s 

privacy policy. Furthermore, we encourage the FTC to allow the specific platform to 

determine the best procedural mechanisms for verification on their individual platform. 

2. Notifying the consenting adult of the intended collection, use, and disclosure of 

the child's personal information by the app developer, consistent with the 

disclosures made in the privacy notice. 

Additionally, we would support the FTC allowing platforms to provide notifications to the 

platform verified consenting adult/parent/guardian about the intended collection, use, or 

disclosure of the child’s personal information. This could potentially be accomplished 

through the child-app developer using the platform’s procedural mechanisms to explain 

their collection, use, or disclosure of the child’s personal information. After providing this 

information to the platform, the platform could provide a notification to the consenting 

adult/parent/guardian when the app is opened to ensure that the consenting adult is 

aware of the privacy policy for the specific app. 

3. Obtaining consent from the adult before the app is permitted to collect, use, or 

disclose a child’s (under the age of 13) personal information provided in the 

notice. 

Upon the platform’s collaboration with the child app developer in categories one and 

two, we believe that in the final step of VPC, the child app developer must ensure that it 

properly obtained VPC before collecting, using, or disclosing any child’s personal 

information. A platform may choose to assist a child app developer by providing an

implementation VPC framework to the child app developer for ways in which the app 

developer may obtain VPC from the parent. However, the child app developer must 

ensure that their VPC method is compliant with the COPPA Rule. 
6

Depending on the size of the company, the FTC could also encourage platforms to 

share their “age gate/screen” data with small child app developers—if requested—so 

that they can more easily identify children attempting to use their apps and ensure that 

each developer has obtained the proper VPC, in compliance with the COPPA Rule. 

While the App Association would not require that the FTC mandate platforms to take 

this additional step, it could provide platforms with additional incentives to provide this 

information to encourage start ups and small businesses to participate in the child-app 

development market. 

By allowing platforms and child-app developers to conduct collaborative efforts to obtain 

VPC, parents can make informed decisions about the apps their children use in an 

exponentially streamlined and transparent fashion.

The App Association notes that some platforms already implement similar procedures to 

those proposed above. Some platforms offer family sign up plans that allow children to 

use a platform, but also provide parents optional settings for their children such as 

“asking to buy,” rejecting or approving a purchase, monitoring content, or placing limits 

on screen time from the parent’s device.13 This allows a parent a simplified process to 

see what their kids are doing on their devices and decide what limits they want to set for 

their children. 

This approach ensures that parents have meaningful notice of, and control over, how an 

app collects, uses, and discloses their children's personal information without imposing 

unnecessary burdens and costs on app developers. 

V. Conclusion 

The App Association’s members work hard to positively change children’s lives through 

smart device applications that help them learn, explore, and communicate. Our 

members include countless parents who are developers and they understand the need 

to protect children in the mobile and internet environment. There is no stronger group of 

people with the knowledge and the frontline experience to understand that privacy and 

innovation can coexist. What can create conflict is well-meaning regulation that errs on 

the side of proscribing innovation in the name of protecting privacy. 

Currently, the COPPA Rule disincentivizes small businesses from educational or childdirected entertainment app development by requiring exorbitant amounts of time and 

energy interpreting unclear regulations. The Rule also eliminates the ability to collect 

non-personal information to assist in furthering the educational goals of apps and 

exposes many new parties to unexpected COPPA liability. The FTC should focus on 

creating flexible, simple to implement regulations that protect children, allow parents to 

13 Keep Your Child’s Screen Time Healthy and Happy, QUSTODIO, qustodio.com/en/family/how-it-works/

(last visited December 11, 2019) (explaining how Qustodio’s program helps parents manage and 

supervise their children’s devices); Family Privacy Disclosure for Children, APPLE, 

https://www.apple.com/legal/privacy/en-ww/parent-disclosure/ (last visited December 11, 2019). 
7

monitor and give parental consent, and allow operators to understand clearly their 

obligations under COPPA. 

We thank the Commission for the opportunity to comment and hope the information we 

provided helps to further improve and simplify the regulations surrounding COPPA. 

Sincerely, 

Brian Scarpelli 

Senior Policy Counsel 

Alexandra McLeod 

Associate Policy Counsel 

ACT | The App Association 

1401 K St NW (Ste 501) 

Washington, DC 20005 
February 17, 2021

The Honorable Frank Pallone The Honorable Cathy McMorris Rodgers

Chairman Republican Leader

Committee on Energy and Commerce Committee on Energy and Commerce

United States House of Representatives United States House of Representatives

Washington, District of Columbia 20515 Washington, District of Columbia 20515

Dear Chairman Pallone and Leader McMorris Rodgers,

We deeply appreciate your leadership as the House Committee on Energy and Commerce plots a 

course for the 117th Congress to address the COVID-19 pandemic and to get our economy back 

on track. As part of these efforts, we ask that you continue the bipartisan work of crafting a single 

set of rules governing the privacy practices of entities that generally fall under the Federal Trade 

Commission’s (FTC’s) jurisdiction. Recent events and the forced shift of daily and essential 

activities—especially core healthcare services—to the digital space underscore the need to act 

decisively on this issue.

ACT | The App Association (the App Association) is a trade group representing about 5,000 mobile 

software and connected device makers in the app economy. Our industry is a $1.7 trillion 

ecosystem led by U.S. companies and supporting about 5.9 million American jobs, including in 

New Jersey and Washington. Consumer trust is fundamental for competitors in the app economy, 

especially for smaller firms that may not have substantial name recognition. Strong privacy 

protections that meet evolving consumer expectations are a key component of developing 

consumer trust in tech-driven products and services. The App Association helps shape and 

promote adherence to privacy laws and best practices in a variety of contexts, including for apps 

directed to children and digital health tools.

The productive use of healthcare data no longer only occurs with healthcare providers and other 

entities under the jurisdiction of the Health Insurance Portability and Accountability Act (HIPAA). 

The creation and flow of healthcare data outside the HIPAA umbrella has accelerated, and 

although the FTC takes an active role in enforcing the prohibition on unfair or deceptive acts or 

practices (UDAP), it should have tools that adapt better to the risks healthcare data presents. From 

our perspective, the answer is not to extend HIPAA to cover healthcare tools and services not 

currently subject to HIPAA. HIPAA’s overarching purpose is to ensure the portability of health data 

between covered entities and business associates, and it was not primarily designed to give 

consumers better control over their own healthcare. Instead of expanding this approach, we urge 

you to establish a set of federal requirements that puts in place baseline consumer rights and 

curbs data processing activities that exposes consumers to undue privacy risks. The Committee’s 

bipartisan staff draft legislation circulated last Congress was a positive start representing 

substantial agreement on aspects of privacy that previously struggled for consensus. We urge you 

to continue the work on this effort, and we stand ready to support negotiations and oversight 

activities around it.

The recent settlement between the FTC and fertility and period tracking app Flo is emblematic of 

the FTC’s limitations, as well as the health-related privacy risks future legislation should address. 

The FTC’s complaint alleges that Flo shared the “health information of users with outside data 
analytics providers after promising that such information would be kept private.”1 The mischief here 

is reminiscent of previous activities the FTC punished. Not only did Flo mislead consumers about 

its data sharing practices, but it also allowed third parties to use the data it shared for their own 

purposes.2 In some cases, this occurred in violation of the terms of service of those third parties, 

the data having been shared via software development kits (SDKs) they provided to Flo.3 These 

privacy missteps are especially concerning given the sensitive nature of the health information at 

issue. A federal law more intentionally focused on curbing privacy harms should empower 

consumers to exert more control over their sensitive personal information, including the rights to 

access, correction, and deletion of such information. Sensitive personal information should also be 

subject to some flexible limits on processing activities that pose too great a risk to consumers.

Although Flo’s core deceptive statements in this case enabled the FTC to enjoin further harmful 

conduct, the recurrence of these privacy harms involving health information highlight the need for 

risk-based privacy regulation at the federal level. Each and every headline detailing the deceptive 

conduct of firms using healthcare data outside the HIPAA umbrella threatens to further erode 

consumer trust, which is a key necessity for our member companies. The healthcare innovations 

our member companies produce—from heart health and chronic condition monitoring to simply 

managing digital health information across health systems—are far too important for us to let them 

fall victim to foundering consumer trust in digital health earned by bad actors. In this case, 

unlocking the innovative potential for life-saving technologies involves the establishment of a single 

set of strong, national privacy requirements. We look forward to working with you toward this goal 

in the 117th Congress.

Sincerely,

Morgan Reed

President

ACT | The App Association 

1 Press release, “Developer of Popular Women’s Fertility-Tracking App Settles FTC Allegations that It Misled 

Consumers About the Disclosure of their Health Data,” Fed. Trade Comm’n (Jan. 13, 2021), available at 

https://www.ftc.gov/news-events/press-releases/2021/01/developer-popular-womens-fertility-tracking-appsettles-ftc. 2 Fed. Trade Comm’n, Flo Health, Inc., complaint (published Jan. 13, 2021), available at 

https://www.ftc.gov/system/files/documents/cases/flo_health_complaint.pdf. 3 Id.
1

From: Brian Scarpelli < >

Sent: Wednesday, June 30, 2021 11:54 AM

To: JulyPublicComments

Subject: July 1 Open Meeting Written Comments - Brian Scarpelli, ACT | The App Association

Attachments: ACT Written Statement re FTC July 2021 Open Meeting (w attachments) 063021.pdf

Please find attached my written comments for the July 1 FTC open meeting. I am emailing them because they would

exceed the character limit on the FTC’s public comment submission form.

Best regards,

Brian Scarpelli

Senior Global Policy Counsel

|

ACT | The App Association

Washington, DC 20005
June 30, 2021

The Honorable Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Honorable Noah Joshua Phillips

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Honorable Rohit Chopra

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Rebecca Kelly Slaughter

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

The Christine S. Wilson

Commissioner

Federal Trade Commission

600 Pennsylvania Ave NW

Washington, DC 20580

Dear Chair Khan, Commissioners Chopra, Phillips, Slaughter, and Wilson:

ACT | The App Association appreciates the opportunity to provide its views as 

part of the Federal Trade Commission’s (FTC) July 1, 2021 open meeting.1 The FTC’s

approach to competition and consumer protection policies and approach to enforcement

directly affects each of the App Association’s members and the consumers who use 

their products/services.

ACT | The App Association is a not-for-profit trade association representing 

thousands of small business software application development companies and 

technology firms located across every state. Alongside the rapid adoption of mobile 

technologies, our members compete by developing innovative applications and 

connected products that improve countless consumer and enterprise systems and 

experiences that are increasingly leveraging the Internet of Things effect. Today, the 

app ecosystem is worth more than $1.7 trillion annual, is responsible for 5.9 million 

American jobs, and serves as a key driver of the $8 trillion IoT revolution. Notably, Our 

members provide the consumer-facing or most-downloaded apps in the Apple App 

Store and Google Play store as well as connected IoT technologies, which is a small 

1 https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting. 
2

fraction of the app economy. Our members also build software and connected 

technologies for other companies across countless use cases that are not consumerfacing, such as software management systems for internal use by a hospital, 

manufacturer, or brewery.

In light of the agenda items being addressed during the July 2021 open meeting, 

the App Association discusses below the need for FTC action to protect competition and 

innovation in the context of standard essential patent (SEP) abuse. We further offer

views on a range of issue areas and developments related to agenda items, particularly 

those related to Unfair Methods of Competition under Section 5 of the FTC Act as well 

as enforcement investigations, in appended testimony and positions.

The FTC and Standard Essential Patent Abuse

Open and consensus standards will drive the development of the internet of 

things, and a successful standards system is essential to creating new products and 

services that further allow small businesses to innovate and compete. App Association 

members actively participate in the development of technical standards; additionally, 

App Association members create (sometimes through contributions that contain 

patented technologies), use, and sell products that implement those standards. The 

small business innovator community that we represent, more than any other, needs to 

be able to effectively utilize technical standards in order to build new products and 

innovate. Therefore, it is extremely important to make reasonable access to SEPs in 

standards a priority of the FTC. To this end, countless small business innovators rely on 

SEP holders’ voluntary promises to license access to their SEPs on fair, reasonable, 

and non-discriminatory (FRAND) terms for certainty in the research and development

phases and other business planning. Our members need to know they can count on 

reasonable access to standards without risk of expensive and lengthy litigation that 

easily drive them out of business.

FTC action is absolutely necessary to end the effects of the anticompetitive 

behavior demonstrated to be in violation of U.S. competition law and to set a precedent 

our members need to continue to thrive. A continuation of abusive practices in the SEP 

context will harm the ability of countless small businesses to make necessary planning 

decisions, receive venture capital funding, and grow in markets often dominated by the 

biggest players. For example, our members have faced, and continue to face, refusals 

to license and other abusive practices in the SEP licensing context. Years of unchecked 

abusive patent licensing practices are emboldening further abusive patent licensing 

behavior and are stripping small businesses of vital capital, and will continue to do so 

should they be permitted to persist.

In the aftermath of the FTC v. Qualcomm decision in the Ninth Circuit Court of 

Appeals, it is more important than ever that the FTC continue to protect and advance 

the public interest through supporting the use of standards and the ability to use patents 

essential to those standards subject to the FRAND commitment. We call on the FTC to

take action to give much-needed certainty to the entire SEP licensing stakeholder 
3

community (particularly the small business community), and to provide FTC leadership 

in defending established, bipartisan policy approaches consistent with guidance to date 

from the U.S. courts. 

We support the FTC’s leadership in protecting consumers and advancing 

competition in the United States and urge your careful consideration of our views above

and attached.

Sincerely,

Brian Scarpelli

Senior Global Policy Counsel
February 17, 2021

The Honorable Frank Pallone The Honorable Cathy McMorris Rodgers

Chairman Republican Leader

Committee on Energy and Commerce Committee on Energy and Commerce

United States House of Representatives United States House of Representatives

Washington, District of Columbia 20515 Washington, District of Columbia 20515

Dear Chairman Pallone and Leader McMorris Rodgers,

We deeply appreciate your leadership as the House Committee on Energy and Commerce plots a 

course for the 117th Congress to address the COVID-19 pandemic and to get our economy back 

on track. As part of these efforts, we ask that you continue the bipartisan work of crafting a single 

set of rules governing the privacy practices of entities that generally fall under the Federal Trade 

Commission’s (FTC’s) jurisdiction. Recent events and the forced shift of daily and essential 

activities—especially core healthcare services—to the digital space underscore the need to act 

decisively on this issue.

ACT | The App Association (the App Association) is a trade group representing about 5,000 mobile 

software and connected device makers in the app economy. Our industry is a $1.7 trillion 

ecosystem led by U.S. companies and supporting about 5.9 million American jobs, including in 

New Jersey and Washington. Consumer trust is fundamental for competitors in the app economy, 

especially for smaller firms that may not have substantial name recognition. Strong privacy 

protections that meet evolving consumer expectations are a key component of developing 

consumer trust in tech-driven products and services. The App Association helps shape and 

promote adherence to privacy laws and best practices in a variety of contexts, including for apps 

directed to children and digital health tools.

The productive use of healthcare data no longer only occurs with healthcare providers and other 

entities under the jurisdiction of the Health Insurance Portability and Accountability Act (HIPAA). 

The creation and flow of healthcare data outside the HIPAA umbrella has accelerated, and 

although the FTC takes an active role in enforcing the prohibition on unfair or deceptive acts or 

practices (UDAP), it should have tools that adapt better to the risks healthcare data presents. From 

our perspective, the answer is not to extend HIPAA to cover healthcare tools and services not 

currently subject to HIPAA. HIPAA’s overarching purpose is to ensure the portability of health data 

between covered entities and business associates, and it was not primarily designed to give 

consumers better control over their own healthcare. Instead of expanding this approach, we urge 

you to establish a set of federal requirements that puts in place baseline consumer rights and 

curbs data processing activities that exposes consumers to undue privacy risks. The Committee’s 

bipartisan staff draft legislation circulated last Congress was a positive start representing 

substantial agreement on aspects of privacy that previously struggled for consensus. We urge you 

to continue the work on this effort, and we stand ready to support negotiations and oversight 

activities around it.

The recent settlement between the FTC and fertility and period tracking app Flo is emblematic of 

the FTC’s limitations, as well as the health-related privacy risks future legislation should address. 

The FTC’s complaint alleges that Flo shared the “health information of users with outside data 
analytics providers after promising that such information would be kept private.”1 The mischief here 

is reminiscent of previous activities the FTC punished. Not only did Flo mislead consumers about 

its data sharing practices, but it also allowed third parties to use the data it shared for their own 

purposes.2 In some cases, this occurred in violation of the terms of service of those third parties, 

the data having been shared via software development kits (SDKs) they provided to Flo.3 These 

privacy missteps are especially concerning given the sensitive nature of the health information at 

issue. A federal law more intentionally focused on curbing privacy harms should empower 

consumers to exert more control over their sensitive personal information, including the rights to 

access, correction, and deletion of such information. Sensitive personal information should also be 

subject to some flexible limits on processing activities that pose too great a risk to consumers.

Although Flo’s core deceptive statements in this case enabled the FTC to enjoin further harmful 

conduct, the recurrence of these privacy harms involving health information highlight the need for 

risk-based privacy regulation at the federal level. Each and every headline detailing the deceptive 

conduct of firms using healthcare data outside the HIPAA umbrella threatens to further erode 

consumer trust, which is a key necessity for our member companies. The healthcare innovations 

our member companies produce—from heart health and chronic condition monitoring to simply 

managing digital health information across health systems—are far too important for us to let them 

fall victim to foundering consumer trust in digital health earned by bad actors. In this case, 

unlocking the innovative potential for life-saving technologies involves the establishment of a single 

set of strong, national privacy requirements. We look forward to working with you toward this goal 

in the 117th Congress.

Sincerely,

Morgan Reed

President

ACT | The App Association 

1 Press release, “Developer of Popular Women’s Fertility-Tracking App Settles FTC Allegations that It Misled 

Consumers About the Disclosure of their Health Data,” Fed. Trade Comm’n (Jan. 13, 2021), available at 

https://www.ftc.gov/news-events/press-releases/2021/01/developer-popular-womens-fertility-tracking-appsettles-ftc. 2 Fed. Trade Comm’n, Flo Health, Inc., complaint (published Jan. 13, 2021), available at 

https://www.ftc.gov/system/files/documents/cases/flo_health_complaint.pdf. 3 Id.
April 20, 2021

The Honorable Amy Klobuchar The Honorable Mike Lee

Chairwoman Ranking Member

Senate Committee on the Judiciary Senate Committee on the Judiciary

Subcommittee on Competition Policy, Subcommittee on Competition Policy,

Antitrust, and Consumer Rights Antitrust, and Consumer Rights

Washington, District of Columbia 20510 Washington, District of Columbia 20510

Antitrust Applied: Examining Competition in the App Stores 

Dear Chairwoman Klobuchar, Ranking Member Lee, and Members of the Subcommittee,

We applaud this Subcommittee for its examination of the competitive dynamics of tech-driven 

markets, including app stores, with tomorrow's hearing, "Antitrust Applied: Examining Competition 

in App Stores." ACT | The App Association (the App Association) is the leading trade group 

representing small mobile software and connected device companies in the app economy, a $1.7 

trillion ecosystem led by U.S. companies and employing 108,260 in Minnesota and 65,520 in Utah 

alone.

1 Our member companies create the software that brings your smart devices to life. They 

also make the connected devices that are revolutionizing healthcare, education, public safety, and 

virtually all industry verticals. They propel the data-driven evolution of these industries and compete 

with each other and larger firms in a variety of ways, including on privacy and security protections.

The witnesses in this hearing underscore highly publicized conflicts between large companies and 

software platforms (the app store / operating system combinations that facilitate app companyconsumer transactions). However, while our member companies are always pushing software 

platforms to provide more value for the amounts they pay for developer services, they are 

concerned about how government intervention to solve disputes between well-resourced firms and 

software platforms will affect them. We appreciate that showcasing the breadth of views on app 

store competition presents challenges. However, the cross-section of issues these witnesses 

highlight provides only a narrow sliver of how competition is working in app store markets. To the 

extent that advocates are using perceived unfair treatment of multibillion-dollar firms like Spotify as 

evidence to support an expansion of antitrust law to protect non-platforms, our member 

companies have concerns and urge you to consider the impacts of such intervention on their 

businesses, the value they get from developer services, and their clients and consumers.

 

I. Competition is Alive and Well in the Markets Relevant to App Stores 

 

The consumer-facing side of the market. Some commenters have argued that the major app 

stores do not compete with each other for consumers.

2 According to the proposed logic, the App 

Store does not compete with the Google Play store because an Apple customer cannot 

immediately access the Google Play store and vice versa.3 However, dynamics like this do not 

insulate market actors like app stores from competition. For example, consider local markets for 

discount retail clubs or other services that require memberships. Costco members cannot 

1 ACT | THE APP ASSOCIATION, STATE OF THE U.S. APP ECONOMY: 2020 (7th Ed.), available at

https://actonline.org/wp-content/uploads/2020-App-economy-Report.pdf. 2 See id. at 95. 3 Id.
immediately access Sam's Club and vice versa (unless a consumer is a member of both 

simultaneously). A membership is generally required before you can begin using the services of 

either store, so there are some time and resource commitments that need to be made before you 

can switch. Similarly, an Apple iPhone owner must spend the time and resources to trade in their 

device for another smartphone that runs on Android instead, in order to access the Google Play 

store. These are properly viewed as switching costs—which are prevalent in markets where 

network effects are present—but these costs alone hardly justify a conclusion that the competitors 

in that market “do not compete against one another.”4 Critics cite logistical difficulties in switching,

but in reality, switching is straightforward and assisted by the app store operators themselves.5 In 

fact, a recent report indicates that it generally costs just $16 to switch from an iPhone to a 

Samsung device and $40 to switch from a Samsung device to an iPhone, including opportunity 

cost of time spent on switching.6 Not only that, but it is also fairly common for someone to have a 

tablet that runs on Android and a smartphone that runs on iOS, or vice versa. Ultimately, these 

consumers are likely making their choices based on a combination of the app store offerings, 

operating systems, device features, and default apps on smart devices. That there are switching 

costs involved with leaving one app marketplace for another is simply not evidence that they do 

not compete with each other for consumers.

The developer services side of the market. The Google Play store and the App Store compete 

vigorously in the other side of the market, for developers and developer services. Google benefits a 

great deal from attracting the next great app and so does Apple7 and the investments these 

platforms make to attract developers reflect this.8 Moreover, Google and Apple have a history of 

trying to outdo one another with respect to the offerings they provide for developers. As 

“shopper’s guides” to the two main app stores describe, the App Store and Google Play store 

respond to each other’s offerings, vying to be the platform that provides better toolkits, APIs, and,

of course, quicker (yet rigorous) app review processes.9 In fact, over their respective lifespans, the 

4 See, e.g., Wing Man Wynne Lam, “Switching Costs in Two-Sided Markets,” TOULOUSE SCHOOL OF ECON., 

Working Paper (Aug. 2014), available at http://publications.ut-capitole.fr/16551/1/wp_tse_517.pdf

(examining the characteristics of competition between app stores for consumers, including the impacts on 

competition and consumer benefits when app stores adjust their various offerings). 

5 Avery Hartmans, “Here’s the best and easiest way to switch from an Android device to an iPhone,” 

Business Insider, (May 21, 2019), available at https://www.businessinsider.com/switching-from-android-toiphone-how-to-2018-5#step-1-back-up-all-your-data-1. 6 ELLIOTT LONG, WHY USERS AREN’T LOCKED INTO THEIR SMARTPHONE BRAND, PROGRESSIVE POLICY INSTITUTE

(Apr. 8, 2021), available at https://eadn-wc05-3904069.nxedge.io/cdn/wp-content/uploads/2021/04/WhyUsers-Arent-Locked-Into-Their-Smartphone-Brand4.8.21.pdf. 7 Ohio et al. v. Am. Express et al., 585 U.S. __ (2018) ("Unlike traditional markets, two-sided platforms exhibit 

"indirect network effects," which exist where the value of the platform to one group depends on how many 

members of another group participate."). 8 Opposition brief of Apple Inc., Epic Games, Inc. v. Apple Inc., Case No. 4:20-cv-05640-YGR, at 5 (N.D. 

Cal. 2020), available at 

https://www.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.73.0.pdf (“In 

the interest of stoking more creativity, and to bring more apps to its users, Apple supports developers in a 

variety of ways, investing billions in tools that simplify the development process, across Apple’s iOS.”). 9 See Yana Poluliakh and Victor Osadchiy, “What to expect from the App Store and the Google Play Store 

When you Launch Your First App,” YALANTIS, available at https://yalantis.com/blog/apple-app-store-andgoogle-play-store/; Nikita, “Apple App Store vs. Google Play Store: A Comparison,” 21 TWELVE INTERACTIVE, 

Blog (Sept. 20, 2019), available at https://www.21twelveinteractive.com/apple-app-store-vs-google-playstore-a-comparison/; Priya Viswanathan, “iOS App Store vs. Google Play Store,” LIFEWIRE (Mar. 9, 2020), 

available at https://www.lifewire.com/ios-app-store-vs-google-play-store-for-app-developers-2373130. 
major app stores have demonstrated a clear track record of competing with each other for 

developers, as our recent report details.10 Lastly, the analysis of the relevant developer-facing side 

of the market does not end with whether there is competition between those two app stores, as 

there are other software distribution options that can serve as alternatives: smart TV app stores, 

gaming console app stores, and even video conferencing platforms11 (a development accelerated 

by the pandemic). The open internet can also be a workable alternative for developers and 

consumers to the two major app stores (especially for larger developers with an established 

customer base or market share).12 And for consumers who favor less data-intensive apps (for 

example, because they have limited data plans) or want to access certain apps across devices and 

browsers, progressive web apps13 are a means of accessing mobile content and services outside 

the major app stores. As described above, however, there is plenty of evidence that the generalpurpose app stores do compete with each other both for consumers and for developers. And if 

they are competing, that means the app stores are a) driving better services and offerings for 

developers, while b) pushing each other to provide the most attractive, diverse, and safe 

marketplace for consumers. And consumers currently benefit from differentiated products, as the 

App Store provides a more "premium" offering with tighter privacy and security controls, while the 

Google Play store boasts a greater variety.

Platforms have helped create or expand markets like digital health services. Just as ridesharing 

fundamentally changed how we get around, developers and platforms also revolutionized how we 

access healthcare. Digital health capabilities are maturing at a critical time when the pandemic has 

forced American patients to rely on virtual visits and remote monitoring. Secure smart devices and 

the software platforms that animate them are foundational elements to our current ability to 

manage healthcare wherever we happen to be. But this would not be possible if not for software 

platforms performing a gating function and securing operating systems and app stores from 

fraudulent apps and other threats to healthcare data. Those functions make smart devices worthy 

of the trust we must place in them to keep sensitive health data or conduct virtual physician visits 

on them. 

There is reason to believe digital health will continue to play a central role in care delivery in the 

United states. A current shortage of about 30,000 physicians in the United States—projected to 

increase to up to 90,000 in the next five years14—contributed to the need for caregivers and 

10 ACT | The App Association, A Brief History of Time: The App Stores (Apr. 7, 2021), available at 

https://actonline.org/wp-content/uploads/A-Brief-History-of-Time-The-App-Stores.pdf. 11 See Vishal Mathur, “Apple’s Response Proves App Store Isn’t Any More a Monopoly Than the Google Play 

Store,” NEWS18 (May 30, 2019), available at https://www.news18.com/news/tech/apples-response-provesapp-store-isnt-any-more-a-monopoly-than-the-google-play-store-2164875.html; David Pierce, “Zoom has a 

plan to dominate the virtual events industry,” PROTOCOL (Oct. 14, 2020), available at

https://www.protocol.com/onzoom-virtual-events (describing Zoom’s new Zapps app store). 12 Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship, hearing before the House 

Judiciary Committee, Subcommittee on Antitrust, Commercial, and Administrative Law (statement of Morgan 

Reed, President, ACT | The App Association) 7 (Jul. 17, 2019), available at https://actonline.org/wpcontent/uploads/Online-Platforms-and-Market-Power-Part-2-Innovation-and-Entrepreneurship-1.pdf. 13 Sam Richard and Pete LePage, “What are Progressive Web Apps?” WEB.DEV (Feb. 24, 2020), available at 

https://web.dev/what-are-pwas/. 14 See Connected Health Initiative, “Testimony of Morgan Reed, Executive Director, The Connected Health 

Initiative, Before the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) 

Subcommittee on Primary Health and Retirement Security,” (Sept. 25, 2018), available at 

https://actonline.org/wp-content/uploads/CHI-Testimony-Health-Care-in-Rural-America.pdf.
patients to find new ways of communicating. Compounding the caregiver shortage, 133 million 

Americans currently live with chronic conditions—most of them residing in rural areas with long 

drives to their nearest provider.15 Devices, sensors, and software are now capable of gathering and 

analyzing physiological data like movement, heart rate, electrocardiogram, or pulse oximetry so 

that physicians can better monitor their patients at home and address potential problems before 

they occur or worsen.16 Studies show that preventive care regimes that use connected health tools 

are especially useful for patients with chronic conditions like diabetes and heart failure, which tend 

to affect underserved and rural communities in particular.

17 But how do these capabilities reach 

patients and consumers, specifically those who need them most? Most Americans already interact 

with platforms, through a variety of devices. We know that smartphone adoption rates are 

increasing among underserved populations in the United States and that for many, their handheld 

device is their only means of accessing the internet.18 Here again, developers are leveraging the 

ubiquity and trusted framework of platforms to produce healthcare innovations that address a 

variety of health conditions. Moreover, in this case, the platform-developer dynamic helps 

caregivers reach patients in rural and underserved areas.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 See Id.

16 Id.

17 See, e.g., Clinical Outcomes, Care innovations, at 2, available at http://www.connectwithcare.org/wpcontent/uploads/2017/06/2016_Outcomes_Clinical-1.pdf (showing the results of a study by Care 

innovations and University of Mississippi Medical Center, indicating that the first 100 patients with diabetes 

enrolled in a program with a remote monitoring component saved the state $336,184 in Medicaid dollars 

over six months); Testimony of Michael P. Adcock, Exec. Dir., University of Mississippi Med. Ctr., Hearing on 

“Telemedicine in the VA: Leveraging Technology to Increase Access, Improve Health Outcomes & Lower 

Costs,” (May 4, 2017), available at https://www.appropriations.senate.gov/imo/media/doc/050417-AdcockTestimony.pdf (“The Mississippi Division of Medicaid extrapolated this data to show potential savings of over 

$180 million per year if 20 percent of the diabetics on Mississippi Medicaid participated in this program”).

18 Charkarra Anderson-Lewis, MPH, PhD, et al, “mHealth Technology Use and Implications in Historically 

Underserved and Minority Populations in the United States: Systematic Literature Review,” (Jun. 18, 2018), 

available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6028762/.
II. Developers are Pushing for More from the Platforms 

 

Software platforms have historically responded to the needs of developers and consumer 

demands as those forces have evolved. Right now, app companies are pushing for several things 

from software platforms that government intervention would likely undermine. Specifically, app 

companies are seeking:

1. Expedient removal of scam apps, fake reviews, and fraudulent actors. Scam and fraud apps 

have slipped through the review and removal cracks,19 and our member companies are concerned 

about these incidents. We strongly disagree, however, with suggestions that software platforms 

should give up on the exclusive app store model. The fact that app stores have such a high volume 

of apps to review, posing security review difficulties, is cited as a reason for steamrolling Apple's 

closed App Store system with a government prohibition on app store exclusivity. If our member 

companies choose to distribute through the App Store, they expect tough security reviews and 

fast removal of bad actors. A complete removal of the gatekeeping function would accomplish the 

exact opposite.

2. Better security. App companies depend on software platforms to provide a trusted marketplace. 

Software platforms ensure security by both reviewing proposed apps and by pushing out security 

updates for a device operating systems. These functions are exceptionally important for a trusted 

marketplace, and investment should reflect this importance.

3. Better privacy. App companies compete on privacy. They are working hard to produce techdriven privacy features that address evolving consumer expectations and technical realities, and 

some of them provide products and services focused solely on privacy protections.20 The privacy 

functions of software platforms, however, are also critical to foster a trusted ecosystem in which to 

operate. 

4. More investment in developer relations. Software platforms have significantly lowered barriers to 

entry for software sellers. But the app stores can seem vast and impersonal for the smallest app 

companies, and rejections or other adverse decisions can seem impossible to surmount without 

proper explanations or personal interactions with software platform staff. A lack of personal 

attention can lead to dissatisfaction and resentment, so it is in software platforms' best interests to 

help developers find success on the platform. Conversely, individual attention for the smallest app 

companies helps nurture the truly robust app marketplace where the best ideas flourish from the 

most surprising corners—and that is what consumers, software platforms, and app companies 

alike want most.

Subjecting software platforms to substantially heightened antitrust liability for managing app stores 

to better protect privacy, security, remove fraudulent actors, and provide individual services would 

undermine everything our member companies are asking for from software platforms. Similarly, 

creating nondiscrimination or other regulatory regimes specifically for current incumbents would 

inadvertently create a regulatory moat around them, protecting each from known competitive 

19 Statement of Morgan Reed, president, ACT | The App Association (Feb. 11, 2021), available at 

https://actonline.org/statements/. 20 See, e.g., “The Rise of Privacy Tech Helps Privacy Tech Founders Solve Their Biggest Pain Points,” 

TROPT (Jun. 5, 2020), available at https://www.riseofprivacytech.com/tropt-helps-privacy-tech-founderssolve-pain-points/.
pressures and from potentially unforeseen entrants providing increasingly analogous services like 

Square. Such protection removes their incentives to respond to developer demands, supplanting it 

with bureaucracy and lobbying battles.

 

II. Antitrust Intervention to Limit Software Platform Functions Would Harm Small App Companies 

In the software platform context, policymakers are considering a variety of structural or quasistructural remedies from a Glass-Steagall-like separation of lines of business to prohibitions on 

specific kinds of exclusivity. Mostly, concerns about the economic health of these markets animate 

legislative interest, but policymakers are also examining possible political motives behind app store 

decisions. Some of those inquiries are already leading to broad ideas of exposing software 

platforms to additional liability related to speech or other causes of action for trial attorneys.21

Although lawmakers are raising these concerns against a backdrop of concentrated markets, 

expanding antitrust law is not the optimal path to address perceived political externalities arising 

from app store rejections. We agree that departing from the consumer welfare standard could 

"cripple our economy at a time when millions are already struggling . . . and . . . undermine one of 

the foundational principles of our republic."22 The last thing our member companies want is for app 

store functions to get bogged down in decade-long antitrust litigation over what are essentially 

political disagreements. 

Aside from these concerns, there is a fair amount of interest in examining the ability and "incentive 

to impede competition in lines of business dependent on" platforms.23 This is a worthy line of 

inquiry with a framework that should respect the fact-driven analysis involved with identifying and 

stopping harms to competition and consumers. Accordingly, an important step in this process is to 

examine the benefits for smaller software competitors of ongoing and recent activities by software 

platforms that have drawn antitrust scrutiny in light of proposals to separate them from adjacent 

markets or restrict their functions as platforms. Those in favor of structural separation and other 

competition remedies in software markets seem to target two areas of perceived "gatekeeper" 

power: 1) control over the kinds of software that can be downloaded onto a device's operating 

system; and 2) control over the kinds of software that can be offered via an app store. These are 

important functions for our member companies, which caution against weakening them too much 

to benefit other competitors.

Prohibitions on exclusivity. Several state legislatures have considered or are actively considering 

proposals that would impose a quasi-structural restriction at the operating system level by 

prohibiting software platforms from acting as gatekeeper for software installed on a device.24

Among other things, the bills bar operating systems from accepting software unless it is distributed 

exclusively through a certain app store marketplace and prohibit "retaliation" against software 

developers that circumvent approval through that distribution channel.25 Although this may sound 

21 Republican Leader McMorris Rodgers, Big Tech Accountability Platform, House Committee on Energy and 

Commerce, Memorandum (Apr. 15, 2021), available at https://republicans-energycommerce.house.gov/wpcontent/uploads/2021/01/Big-Tech-Accountability-Platform-Memo.pdf. 22 Press Release, "Sen. Lee Sets Senate Republican Antitrust Agenda for 117th Congress," Sen. Mike Lee 

(Feb. 6, 2021), available at https://www.lee.senate.gov/public/index.cfm/2021/2/sen-lee-sets-senaterepublican-antitrust-agenda-for-117th-congress. 23 ACAL Report at 35 (citing report accompanying Antitrust Reform Act of 1992). 24 See, e.g., SB 2333, 67th North Dakota General Assembly (2021), available at

https://www.legis.nd.gov/assembly/67-2021/documents/21-1044-01000.pdf. 25 Id.
like it lowers a barrier to entry by weakening the platforms' gatekeeper capabilities, it does the 

exact opposite and removes a steppingstone to the market. Moreover, the proposals' supporters 

are some of the largest companies on the app stores that openly seek to avoid their obligations to 

pay at all for the software platforms' developer service bundles.26 The bundles include a wide 

variety of services for developers and, contrary to how some are characterizing them, are not just a 

"payment processing fee."27 Specifically, those services include:

- Immediate distribution to hundreds of millions of consumers across the globe;

- Marketing through the platform;

- Accessibility features;

- Platform level privacy controls;

- Assistance with intellectual property (IP) protection;

- Security features built into the platform;

- Developer tools;

- Access to hundreds of thousands of application programming interfaces, or APIs; and

- Payment processing.

From these services, small app companies obtain easy access to a global market, the ability to 

offload overhead (like managing payment options and preventing piracy), but most importantly, 

they can leverage consumer trust. Consumer trust is fundamental for competitors in the app 

economy, especially for smaller firms that may not have substantial name recognition. Larger firms, 

meanwhile, may have the resources to put together the bundle of services and generate consumer 

trust in a known brand name all on their own. Therefore, they might think of the software platform 

bundle as less valuable to them than it is to smaller companies, which may help explain their calls 

for government intervention to diminish those services. They simply have less to lose and more to 

gain from such intervention than do App Association members and consumers.

The state bills reflect a view that takes for granted the platform functions necessary to fuel a trusted

ecosystem that lives on our smart devices now. Consumers now depend on mobile devices to 

store their most important information, and the ability to protect that data is vital. Banning software 

platforms' gatekeeping function puts users' most vital data at risk. App Association member 

companies—much more so than the large companies selling software on the app stores—depend 

on strong privacy, security, and IP protections at the platform level. Therefore, proposals to require 

platforms to allow circumvention of these protections would harm consumers and app economy 

competitors alike. Platforms currently work to keep apps that violate user trust out of their stores. 

In one example, some bad actors market their device-monitoring apps designed to track children’s 

mobile device use as a way to track anyone, including adults, without their knowledge or 

permission. These “stalker apps” operate outside the bounds of what is allowable in app stores or 

mobile operating systems by accessing troves of personal data including location, messaging, and 

26 Order Granting in Part and Denying in Part Motion for Preliminary Injunction, Epic Games v. Apple Inc., 

Case No. 4:20-cv-05640-YGR (N.D. Cal. Oct. 9, 2020) (“Epic Games moves this Court to allow it to access 

Apple’s platform for free while it makes money on each purchase made on the same platform. While the 

Court anticipates experts will opine that Apple’s 30 percent take is anti-competitive, the Court doubts that an 

expert would suggest a zero percent alternative. Not even Epic Games gives away its products for free.”). 27 The full set of developer services software platforms provide includes immediate distribution to tens of 

millions of consumers globally; marketing through the platform; platform level privacy controls; assistance 

with intellectual property protection; security features built into the platform; developer tools; access to 

hundreds of thousands of application programming interfaces, or APIs; and payment processing.
calls. In 2019, the Federal Trade Commission (FTC) pointed to the important function software 

platforms perform in its first ever action against a purveyor of stalker apps, Rentina-X. The FTC 

stated in its enforcement action that “the purchasers were required to bypass mobile device 

manufacturer restrictions, which the FTC alleges exposed the devices to security vulnerabilities and 

likely invalidated manufacturer warranties.”28 Similarly, as the FTC has investigated and enforced 

against consumer protection harms on the app stores, the contemplated—and actual—remedies 

required the platform to act as gatekeeper.29 Consumer protection efforts encounter difficulty in 

these marketplaces unless a platform is able to enforce the requirements it imposes on apps, 

including platform-level controls that prevent videogame companies from taking advantage of 

children's tendencies toward in-app purchasing if left unchecked.

Limitations on exclusionary conduct. To ameliorate perceived issues with self-preferencing on 

software platforms, policymakers are considering amendments to antitrust law that fall somewhat 

short of a set of nondiscrimination rules but expand liability for categories of exclusionary conduct. 

Again, pointing to the "incentive and ability to abuse"30 their dominant position against third parties, 

policymakers are considering an "abuse of dominance" standard applied to software platforms 

(and generally). 

Setting aside the particulars of existing proposals, we urge this Subcommittee to consider a couple 

of factors when contemplating such an expansion of liability. First, many of the actions of software 

platforms that have drawn antitrust criticism also have countervailing benefits. For example, 

Apple's decision to require opt-in consent for ad tracking between apps caught attention in the 

antitrust space but has a powerful justification in privacy protection. In a stark example of privacy 

versus antitrust interests, the French Competition Authority recently rejected a competition 

complaint to enjoin Apple's opt-in framework, noting that it is part of "Apple's long-standing 

strategy to protect the privacy of iOS users."31 Second, self-preferencing activities on software 

platforms that appear to harm some competitors often benefit others and consumers. For 

example, the installation of pre-loaded apps on smart devices can greatly benefit developers by 

enabling them to rely on a single default functionality like a camera app while making the device 

itself more attractive to the consumers App Association members wish to reach. Said Parag Shah 

of App Association member company Vee̅mos in a recent antitrust panel discussion, consumers 

"want to be able to buy [a smart device] from a store, they want to be able to turn it on, and they 

want it to work on the basic levels of 'I can text someone, I can call someone, I can open up a web 

browser . . . I want some basic functionality.'" In this case, although the pre-installation of apps 

plainly advantages a software platform's own offerings over alternative camera, messaging, or 

browser apps, the benefits to consumers and other competitors of doing so are equally evident. 

The considerations here weigh against tilting liability for exclusionary conduct too far such that 

28 Press Release, Fed. Trade Comm'n, FTC Brings First Case Against Developers of “Stalking” Apps (Oct. 

22, 2019), available at https://www.ftc.gov/news-events/press-releases/2019/10/ftc-brings-first-caseagainst-developers-stalking-apps. 29 Press Release, “Apple Inc. Will Provide Full Consumer Refunds of At Least $32.5 Million to Settle FTC 

Complaint It Charged for Kids’ In-App Purchases Without Parental Consent,” Fed. Trade Comm’n (Jan. 15, 

2014), available at https://www.ftc.gov/news-events/press-releases/2014/01/apple-inc-will-provide-fullconsumer-refunds-least-325-million. 30 ACAL Report. 31 Press Release, “Targeted advertising / Apple's implementation of the ATT framework. The Autorité does 

not issue urgent interim measures against Apple but continues to investigate into the merits of the case,” 

Autorité de la concurrence (Mar. 17, 2021), available at https://www.autoritedelaconcurrence.fr/en/pressrelease/targeted-advertising-apples-implementation-att-framework-autorite-does-not-issue.
conduct that appears to harm a certain class or classes of competitors is foreclosed or strongly 

discouraged, even though it is ultimately better for App Association members, competition, and 

consumers.

III. More Resources and Enforcement in Standards-Setting 

We support recommendations to "[i]ncreas[e] the budgets of the Federal Trade Commission and 

the Antitrust Division."32 Antitrust cases are a highly resource-intensive undertaking, and federal 

enforcers are underequipped to carry out their important task.

One area we urge the Subcommittee to focus on in particular, and where the federal enforcement 

agencies must bring those resources to bear, is the applicability of antitrust law to standardessential patent (SEP) abuse. In your respective states and districts, the ability for innovators to 

create jobs and produce cutting-edge products and services in an increasingly broad set of 

industry verticals depends on strong technical standards like USB, Wi-Fi, 4G, and 5G. However, in 

order to safeguard the continued growth and success of these key industries and to protect the 

consumers of their end products and services, Congress must ensure that antitrust law effectively 

prevents SEP licensing abuses. Incorporating a patent declared as essential into a standard 

typically confers market power on a SEP owner, so SEP owners make voluntary commitments 

pursuant to those declarations to license those SEPs on fair, reasonable, and nondiscriminatory 

(FRAND) terms.33 These commitments balance the market power SEP owners obtain with the 

need for innovators to license the patented inventions essential to use the standard. When kept, 

FRAND commitments prevent anticompetitive licensing behavior by curtailing, in most cases, the 

ability of an SEP licensor to leverage its market power through exclusionary relief; by rewarding an 

SEP owner with damages for infringement of a valid patent that are commensurate with the scope 

of its patented invention; and by ensuring that an SEP licensor cannot discriminate between firms 

in the manufacturing supply chain when licensing its SEPs. The SEP context is distinct from 

situations where companies own unencumbered patents or are competing with each other to 

provide the best vertically integrated product or service. Through standards-setting, stakeholders 

supplant part of the competitive process with a mechanism for interoperability, necessitating closer 

antitrust involvement. Unfortunately, some SEP owners break their FRAND promises and engage in 

activities that harm competition and consumers by increasing prices, reducing the quality and 

variety of products and services, and diminishing innovation.

34 Breaking these promises implicates 

antitrust law, in addition to other sources of law.

Conclusion 

As this Subcommittee continues its work on antitrust in tech-driven markets, we hope the 

perspective of small mobile software and connected device companies that leverage software 

platforms helps guide your work. Antitrust is rightfully a fact-intensive inquiry that must assure the 

competitive process serves consumers as well as possible. To that end, we support providing 

more resources for the two federal agencies tasked with enforcing antitrust law—they are woefully 

32 ACAL Report, at 403. 33 See Brian T. Yeh, “Availability of Injunctive Relief for Standard-Essential Patent Holders,” CONG. 

RESEARCH SERV. Summary (Sept. 7, 2012), available at 

https://www.everycrsreport.com/files/20120907_R42705_9c71ac36b1c0030af0d1bd97b53e8b7ba6fd3e73

.pdf. 34 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 318 (3d Cir. 2007), available at 

https://caselaw.findlaw.com/us-3rd-circuit/1069408.html. 
under-resourced to carry out the important and extremely costly task of stopping antitrust harms.

In general, our member companies are worried that large, well-resourced companies may 

successfully create for themselves a new avenue for bending the market in their favor by 

reorienting antitrust law so that it protects certain (large, well-resourced) competitors to the 

detriment of smaller companies and consumers. We appreciate this opportunity to weigh in on 

your important inquiry and look forward to further engagement with you throughout the 117th 

Congress and beyond.

Sincerely,

Morgan W. Reed

President

ACT | The App Association
January 24, 2020

 

Comments of ACT | The App Association

House Committee on Energy and Commerce

Draft Framework of Online Privacy Act of 2019

ACT | The App Association appreciates your leadership on consumer privacy. The touchstone of 

privacy is trust. Members of your Committee noted repeatedly that individuals are beginning to 

mistrust technology, and any legislation Congress considers should help restore this consumer

trust. The specific privacy lapses the Energy and Commerce Committee examines generally involve 

larger companies with business models that depend on complex data processing activities. To the 

extent Congress intends legislation to address these observed privacy issues, it should also 

proceed carefully so as to preserve competitive forces where they tend to improve privacy 

outcomes for consumers. Small companies, like our members, lead the way in developing 

competition-driven privacy tools to give consumers more control and mitigate privacy risks. 

The App Association is a trade group representing about 5,000 small to mid-sized software and 

connected device companies across the globe. In the United States, our member companies are 

part of a $1.3 trillion industry, supporting about 5.7 million jobs. We regularly work to keep our 

member companies up to speed on the latest policy and legal developments and to translate those 

into practical and useable guidance to ease the burden of compliance.1 Further, we commit to 

promoting proactive approaches to ensuring end-user privacy and participate frequently in the 

privacy debate at the federal level, including by serving on panels in Federal Trade Commission 

(FTC or Commission) workshops and filing comments with congressional committees.

2

Commercial privacy is not a static concept, and yet products and services should, and are 

expected to, respect user privacy as part of their design. Often an ongoing dialogue with users that 

accounts for changing contexts and expectations is the only way to accomplish this. Our member 

companies compete with each other and larger companies to create better, more efficient privacy 

protection measures. They work hard to comply with privacy laws, best practices, and regulations. 

But they also know that their clients, customers, and users usually have a choice, and the kinds of 

privacy practices they employ inform that choice. This is a foundational concept that Congress 

must consider as it proceeds with negotiations over a federal privacy framework. It forms the core 

of our privacy philosophy and guides our policy recommendations, laid out in more detail in these 

comments.

I. Rulemakings 

Numerous sections of the draft bill would require the FTC to promulgate rules using Administrative 

Procedure Act (APA) processes. In many of these instances, these provisions could be sharper to 

 1 See, e.g., ACT | The App Association, General Data Protection Regulation Guide (May 2018), available at 

https://actonline.org/wp-content/uploads/ACT_GDPR-Guide_interactive.pdf. 2 See, e.g., https://www.ntia.doc.gov/files/ntia/publications/2018-11-09_-_ntia_-_privacy_filing_-_final.pdf; 

http://actonline.org/wp-content/uploads/2018-04-10-FTR-ACT-the-App-Association-Facebook-PrivacyFINAL.pdf; https://www.ftc.gov/news-events/events-calendar/future-coppa-rule-ftc-workshop; Statement for 

the Record from ACT | The App Association to Senate Committee on Commerce, Science, and 

Transportation, hearing, “Small Business Perspectives on a Federal Data Privacy Framework,” (Apr. 5, 2019). 
2

more narrowly authorize the Commission to “clarify” the rest of the section. For example, Section 3 

includes a detailed list of items covered entities must include in privacy policies and further requires 

the FTC to conduct a potentially open-ended rulemaking imposing the requirements that appear in 

statute. It may be a bit redundant to require the FTC to issue rules that impose the same 

requirements that appear in statute, unless their purpose is simply to clarify those statutory 

provisions. As reflected in our redline, we recommend specifically stating that the purpose of the 

rules is to “clarify” the requirements that appear in the legislative or statutory provision. Otherwise, 

various constituencies may push and eventually convince the Commission to broadly read these

rulemakings to give it more flexible authority to interpret the sections than the drafters intend.

II. Small Business Treatment 

The App Association generally does not ask for carveouts for small companies when it comes to 

privacy. The typical App Association member competes with much larger companies for clients, 

often in highly regulated industries such as finance or healthcare. For some of our members, in 

order to remain competitive, they must show that they effectively comply with the major privacy 

laws like the General Data Protection Regulation (GDPR)—or have some sort of certification of 

compliance with private sector developed guidelines or best practices—so there is no perception 

of being less protective than their competitors. And if they win contracts with large clients (which 

may have an international or Californian customer base), they find themselves under contractual 

provisions that require them to meet GDPR and other compliance mandates that do not otherwise 

directly affect them.

Nonetheless, the provisions in Section 5, requiring covered entities to respond to requests to 

access and delete information about themselves, are complex and would require substantial 

resources to implement. The ability for small businesses to delete covered information in lieu of 

complying with the correction requirements of the draft is a positive step. However, you should 

also consider applying all of the requirements only to covered entities that generated $25,000,000 

in the previous year. Whether one of our member companies would need to verify a consumer 

request to edit or delete that consumer’s data, the virtual infrastructure would need to be in place 

to adequately verify the identity of the requesting consumer. Substantial resource costs would be 

incurred whether the request is to delete or to correct inaccurate information, so the allowance the 

staff draft provides does not save small companies all that much in compliance costs.

It is one thing that many of our member companies are now “complying by proxy” with GDPR’s 

consumer rights provisions, and thus, answerable to contract damages or at least disciplined by 

competition. It is another thing, however, to subject the typical App Association member—which 

averages roughly between one and 10 employees—to these complicated requirements and, by 

extension, to the up to $43,000 per-individual-violation civil penalty if they get it wrong. Additionally, 

applying consumer rights only to larger companies would not lessen the “complying by proxy” 

effect we see now among smaller companies like App Association members—more likely, the 

competitive pressure would only increase. If you ultimately decide to maintain the Section 5(a)(4)(B) 

alternative option for small businesses to delete in lieu of correcting information (instead of a 

broader small business carve-out), a preemption provision becomes even more important for small 

businesses to avoid possibly conflicting differences in how they must honor consumer rights.

Finally, you should consider providing more time for small businesses under the statute to become 

compliant with the deletion and access requirements. This would allow small businesses to plan for 

compliance over time as opposed to allocating essential capital to the cost of immediate 

compliance.
3

a. The Approved Compliance Guidelines Program 

The approved compliance program in Section 13 of the draft bill may help alleviate some of the 

concerns described above. The App Association members who opt for the safe harbor may be 

slightly less terrified of business-ending civil penalties if the FTC must first show that they strayed 

from the compliance program that certified them. That buffer would provide a level of comfort and 

probably would result in more robust economic activity without its presence. However, the similar 

Safe Harbor Program under the Children’s Online Privacy Protection Act (COPPA) was largely a 

failed experiment, so we should carefully avoid the pitfalls experienced in that exercise. 

There are reasons to believe that the compliance guidelines program in your draft bill would not fail 

for the same reasons as COPPA’s. First, no COPPA safe harbor program could avoid the 

insurmountable difficulty for regulated companies of requiring parents to provide “verifiable parental 

consent” (VPC). The requirements in your draft do not appear to require such onerous tasks of 

consumers themselves. Second, experience shows that companies are so loath to deal with VPC 

that they alter their products and services completely to appeal to general audiences, avoiding (or 

trying to avoid)3 COPPA altogether. The scope of your draft bill is (rightly) so comprehensive that 

companies are not likely able to slip away from its requirements and find themselves under less 

onerous regulations. Ultimately, however, even if the approved compliance program successfully 

serves its purposes, the entire array of requirements in the draft bill (with a few exceptions) applies 

to the smallest and largest companies in equal measure. An approved compliance program must 

include almost every requirement, from providing a right to access and delete information to 

creating a comprehensive data security program with the eight main features described in Section 

9. Realistically, an approved compliance program would not lighten the draft’s substantial 

regulatory burden by much, but we support its inclusion as a meaningful incentive for small 

companies to compete and comply by providing limited protection from steep penalties.

III. Limitations on Processing Covered Information 

The draft’s treatment of consent as implied “to the extent the processing is consistent with the 

reasonable consumer expectations within the context of the interaction” is an appropriate and 

flexible standard. Although the Commission may have some trouble applying the standard in 

complex circumstances, such is the nature of privacy harms—and the examples of appropriate 

processing activities that are likely consistent with reasonable consumer expectations are helpful.

We urge the Committee to include internal data analytics for the purposes of “product 

development and improvement” (the bracketed text) as an example of the kinds of processing 

activities that may be consistent within the context of a covered entity’s interaction with 

consumers. Our app developer members use their clients’ or customers’ in-app activities (which 

may be covered information) to analyze how people with certain attributes use parts of their 

products and services and under which circumstances. Understanding user behavior is key not 

just to developing better versions of what they’ve already made, but also to developing new 

products, systems, and services. The last thing we want is to discourage app developers from 

using personal data to make better products and services.

 3 See, e.g., https://www.ftc.gov/enforcement/cases-proceedings/172-3083/google-llc-youtube-llc. 
4

IV. Prohibition on Discriminatory Use of Data 

 

We agree that covered entities should not have permission to use personal information to 

discriminate against consumers on the basis of race, gender, sexual orientation, or other protected 

attributes. It may be more efficient, however, to require the FTC to enter a memorandum of 

understanding (MOU) with the agencies that enforce antidiscrimination laws. The draft appears to 

impose a separate prohibition on discriminatory activities and conscripts the FTC to act as a civil 

rights enforcement agency. The emerging issues we observed where companies are using 

personal data as part of a scheme to discriminate against consumers are mainly new ways of 

violating old laws that fall outside the Energy and Commerce Committee’s jurisdiction. The problem 

Section 11 should set out to solve, then, is a problem of evidence rather than the creation of a new 

prohibition on discrimination. The FTC is better situated to understand and collect the evidence, 

while the respective enforcement agencies have more experience and a better shot at success in 

court. 

V. Covered Information 

The draft’s definition of covered information includes information “linked or reasonably linkable to a 

specific . . . consumer device.” We urge the Committee not to include consumer devices in the 

definition of covered information because doing so would discourage the use of certain privacy 

protective measures from which App Association members benefit. For example, some consumer 

device makers, including smartphone makers, use rotating, ephemeral, unique device identifiers 

(UDIDs) to pinpoint precise location. Smartphone owners know that devices have gotten better 

over time at locating their precise location. This improvement is thanks in part to the ability for 

device makers to continuously add device locations to an encrypted database. In this process, the

precise location is associated with a given device for a transient period of time, using a randomly 

generated UDID. The UDID is then deleted, and the location data becomes part of the dataset, 

where it is no longer associated with a specific device.

App Association members never have to use this dataset, and yet it is enormously valuable 

because it makes any application on your device that depends on your location more accurate. 

Even more importantly, the dataset accomplishes this without identifying the device or the person 

to whom it belongs. And yet, because the data must link to a device for a brief period of time, it 

could be considered covered data under the draft’s definition. The inclusion of consumer devices 

in the definition of covered information, therefore, would discourage the more privacy-protective 

measure of ephemerally linking key data to a person’s device. With transient UDIDs included in 

covered information, businesses would likely abandon those resource-intensive measures and 

simply leave data associated with devices and consumers, subjecting themselves to the provisions 

of the draft. If you ultimately decide to keep consumer devices in the definition of covered 

information, an alternative way of dealing with this issue could be to clarify that ephemeral UDIDs, 

which are disposed of when the associated data is stored, are an example of deidentified 

information in the bill. We believe this would be consistent with the current deidentified information 

provision, which excludes information “for which an entity takes reasonable measures to . . . 

ensure that identifying information has been removed.”

VI. Preemption and Private Right of Action 

The prospect that congressional action on privacy alone might establish a single national standard 

is not a guarantee. Therefore, we recommend that any privacy legislation Congress drafts include a 
5

provision explicitly preempting state laws and rules dealing with privacy within the framework of the 

legislation. We acknowledge that some Members of Congress want to avoid a discussion of 

preemption until after other provisions have been addressed. From a small business standpoint, 

however, preemption is one of the most important elements of a federal privacy framework. If 

legislation does include a preemptive provision, we agree with many advocates that state attorneys 

general should be authorized to enforce the provisions of the law. Similar laws like COPPA have 

benefited from empowering state attorneys general to police for prohibited conduct. Moreover, we 

believe that Congress should authorize additional funds for the FTC to police privacy practices 

under a new federal privacy framework.

If negotiators agree on a private right of action, we urge you to ensure there are a few protections 

in place to guard against abusive litigation. First, remedies should be limited. In this case, if a 

private right of action applies generally to most or all provisions of the bill, the drafters should avoid 

creating a honey pot like liquidated or statutory damages for plaintiffs’ attorneys. Making 

injunctions available would empower individuals to stop prohibited behavior or compel required 

actions. Whether a company is large or small, its employees want to focus on the company’s 

customers and clients instead of litigation. The availability of an injunction gives substantial leverage 

to individual consumers to bring companies of all sizes to the table. Second, a private right of 

action should require the plaintiff to show some level of scienter. We would encourage drafters to 

require private litigants to show that a putative defendant knowingly violated the provision of the 

draft at issue. The wide variety of requirements in any comprehensive privacy bill are simply too 

numerous not to become a game of “gotcha” by trial attorneys absent a requirement to show 

scienter. Third, covered entities (especially smaller companies) should be afforded a period of time 

to correct alleged violations before a court will consider a claim. Under such a provision, the court 

would likely stay the complaint pending the “correction” period. If the plaintiff believes the 

defendant failed to cure the alleged violation, the court could then consider the evidence of the 

violation itself along with the evidence that it had been remedied within the allotted time period. 

Fourth, the provision could require a court to impose sanctions on an attorney that is found to have 

violated Rule 11(b) of the Federal Rules of Civil Procedure. This provision could help deter lawsuits 

that are baseless or filed primarily to harass the putative defendant. These are some basic 

safeguards that could ameliorate the potential litigation burden and prevent abusive lawsuits from 

clogging the courts (potentially locking out legitimate claims).

VII. Conclusion 

We appreciate this opportunity to comment on your proposed legislation. We look forward to 

keeping in contact as you work toward potential introduction and take further steps.
May 29, 2021

Rebecca Kelly Slaughter 

Acting Chair

Federal Trade Commission

600 Pennsylvania Avenue NW

Suite CC-5610 (Annex B)

Washington, D.C. 20580

Re: Comments of ACT | The App Association re the Federal Trade Commission’s

Request for Comment Regarding Topics to be Discussed at Dark Patterns 

Workshop

Dear Acting Chair Slaughter, 

ACT | The App Association (App Association) respectfully submits its views to the Federal 

Trade Commission (FTC) on its request for public comment in relation to its “Bringing 

Dark Patterns to Light” workshop. The App Association appreciates the Commission’s 

interest in this important topic and urges the Commission to focus on outright deceptive 

design decisions as the Commission seeks to establish greater oversight of dark patterns

going forward.

I. Introduction and Statement of Interest 

The App Association represents approximately 5,000 small business software application 

development companies and technology firms globally that create the technologies 

driving internet of things (IoT) use cases across consumer and enterprise contexts. 

Today, the App Association represents an ecosystem valued at approximately $1.7 trillion 

and is responsible for 5.9 million American jobs. Our members create innovative solutions

that drive the world’s rapid embrace of mobile technology. Their products power 

consumer and enterprise markets across modalities and segments of the economy.

The App Association serves as a leading resource in the privacy space for thought 

leadership and education for the global small business technology developer community.

1

We regularly work to keep our members up to speed on the latest policy and legal 

developments and to translate those into practical and useable guidance to ease the 

burden of compliance.2 Furthermore, through our Innovators Network Foundation Privacy 

Fellowship, we support thought-leadership that covers a wide range of privacy issues, 

1 See e.g., ACT | The App Association, What is the California Consumer Privacy Act (January 2020), 

available at: https://actonline.org/wp-content/uploads/What-is-CCPA.pdf

2 See e.g., ACT | The App Association, General Data Protection Regulation Guide (May 2018), available 

at: https://actonline.org/wp-content/uploads/ACT_GDPR-Guide_interactive.pdf;
including dark patterns.

3 Relevant output from current fellows that touches on dark 

patterns include Lourdes Turrecha’s work exposing the deceptive design choices that 

undermine user privacy within the Clubhouse app,

4 as well as Lorrie Cranor’s research 

into the design choices that make it difficult for consumers to exercise their privacy 

choices on many websites.

5

II. Introduction and Statement of Interest 

Generally, the App Association agrees with conceptual framework posed in Harry 

Brignull's oft-cited definition of dark patterns, though we advocate for a more expansive 

scope. Brignull writes that, “Dark Patterns are tricks used in websites and apps that make 

you buy or sign up for things that you didn't mean to.”6 He further refines his definition 

through a taxonomy of 12 different types of dark pattern, including "roach motel" and 

"confirmshaming", which helpfully elucidate the breadth and depth of the manipulation 

and deception under question.

7 Yet while these categorizations are a useful starting point,

"dark patterns" remains a frustratingly elusive concept to define and arguably includes a 

far greater range of players than currently recognized. 

Dark patterns are by no means a design tactic relegated exclusively to the domain of

cutting-edge startups or mobile applications. Cranor’s research found inconsistent and

at-times misleading user opt-out controls for email communications within a sample of 

150 websites drawn from Alexa’s ranking of global top 10,000 websites. The list includes 

websites from industries as diverse as finance, health, media, sports, and of varying 

sophistication and user design prowess.

8

It is also important to recognize that dark patterns are extensions of tactics used in the 

physical world. Brignull's "roach motel" category includes design choices that require 

users to take exhaustive steps to effectuate a preference that may conflict with the 

business' preference. As an example, when examining the email opt-out procedure at the

New York Times Cranor and Habib found that, “deleting the data they’d gathered on us 

required completing 38 different actions, including finding and reading the privacy policy, 

following a link to the data deletion request form, selecting a request type, selecting up to 

22 checkboxes, filling in eight form fields, selecting four additional confirmation boxes, 

3 ACT | The App Association, Innovators Network Foundation Announces 2020-21 Privacy Fellows 

(December 2020), available at: https://actonline.org/2020/12/08/innovators-network-foundationannounces-2020-21-privacy-fellows/

4 Lourdes Turrecha, “When FOMO Trumps Privacy: The Clubhouse Edition”, February 19, 2021. 

https://medium.com/privacy-technology/when-fomo-trumps-privacy-the-clubhouse-edition-82526c6cd702

5 Hannah Habib and Lorrie Cranor, “An Empirical Analysis of Data Deletion and Opt-Out Choices on 150 

Websites”, Soups 2019, August 2019. 

https://www.usenix.org/system/files/soups2019-habib.pdf

6 Harry Brignull, “What are Dark Patterns.” https://www.darkpatterns.org/

7 Harry Brignull, “Types of Dark Patterns.” https://www.darkpatterns.org/types-of-dark-pattern

8 Lorrie Cranor and Hannah Habib, “An Empirical Analysis of Data Deletion and Opt-Out Choices on 150 

Websites”, Soups 2019, August 2019. 

https://www.usenix.org/system/files/soups2019-habib.pdf
and completing an “I am not a robot” test.”

9 Of course, the roach motel model was 

pioneered and perfected for years outside of the website and app context. Casino

designers, for example, are notorious for constructing floor plans that intentionally 

disguise exits with the goal of manipulating guests into spending extra time within the

facility. Few would call that a dark pattern because it occurs within the physical world, yet

it seems equally manipulative to the opt-out practices at the New York Times. 

It might also be more useful to think of dark patterns as design choices in any type of 

business-to-user interaction that cause the consumer to purchase or sign up for things 

they didn’t mean to. For example, the use of dark patterns in political advertising and 

fundraising, often conducted over email rather than through a website or app, is extremely

well-documented. Examining a corpus of over 100,000 emails sent during the 2020 U.S.

election cycle, researchers found manipulative tactics in 43 percent of communications, 

with 99 percent of campaigns using such tactics at least occasionally.

10 Insofar as the 

FTC seeks to bolster its monitoring of the marketplace for examples of dark patterns, it 

should remain aware that the practice is widespread, cross-cutting between industries, 

and endemic to many types of communication technologies.

Clearly, part of the issue in defining dark patterns stems from an ongoing migration of 

markets from analogue to digital spaces, across industries. Some dark patterns, such as

"confirmshaming", are clearly holdovers from longstanding face-to-face sales tactics in 

which salespeople employ behavioral nudges in order to close a sale or upsell a service.

As with such sales tactics, confirmshaming should be understood to encompass a wide 

range of activities that run from innocuous to outright deceptive, the latter of which should 

be the main source of attention from regulators. Confirmshaming, as currently 

understood, could include a prompt as simple as "are you sure you wish to opt-out", a 

necessary piece of developer due diligence that could be construed as guilting a 

customer. While certainly starker when presented plainly on a website or app than when 

spoken aloud in a sales context, such a prompt hardly seems out of place in the broader 

marketplace and surely does not constitute an unfair or deceptive trade practice. The App 

Association would urge the FTC to focus its attention on examples of dark patterns that 

clearly deceive and bring harm to a user.

III. Conclusion

The App Association urges the commission to carefully consider a definition of dark 

patterns. While there is a great opportunity to clarify and rid the market of harmful 

practices, an ambiguous or overinclusive definition may harm app developers simply 

seeking to do the right thing. The most prudent path may be to define dark patterns as

9 Lorrie Cranor and Hannah Habib, “It’s shockingly difficult to escape the web’s most pervasive dark 

patterns”, Fast Company, November 4, 2019. https://www.fastcompany.com/90425350/its-shockinglydifficult-to-escape-the-webs-most-pervasive-dark-patterns

10 Hamin et al., “Manipulative Tactics are the Norm in Political Emails”, Princeton University Center for 

Information Technology Policy, October 5, 2020. https://electionemails2020.org/assets/manipulativepolitical-emails-working-paper.pdf
technology-agnostic communication practices that outright deceive users into purchasing 

services the user did not intend to. We thank the Commission for the opportunity to 

comment and hope the information we provided assists its thinking on this important 

issue.

Sincerely, 

Brian Scarpelli 

Senior Policy Counsel 

Matt Schwartz

Privacy Fellowship Coordinator

ACT | The App Association 

1401 K St NW (Ste 501) 

Washington, DC 20005 
1401 K Street NW Suite 501

Washington, DC 20005

202.331.2130 @ACTonline

www. ACTonline.org /ACTonline.org

C ompetition in Digital Technology Mar kets:

Examining Self-Preferencing by Digital Platforms

Testimony of 

Morgan Reed

President

ACT | The App Association

Before the

U.S. Senate Judiciary Committee,

Subcommittee on Antitrust, Competition Policy and 

Consumer Rights
1

I . I n t r o d u c t i o n

We thank the Senate Judiciary Subcommittee on Antitrust, Competition Policy and 

Consumer Rights for holding this hearing on the effect large, technology-driven platform 

companies have on competition. This hearing provides an important venue for the 

debate around how certain public policy concepts, including competition law, apply in a 

variety of markets characterized by the presence of large companies with global reach. 

ACT | The App Association is the voice of small business tech entrepreneurs, and we 

appreciate the Subcommittee welcoming the views of our members on how best to 

safeguard innovative market activity and job creation in tech-driven industries.

The App Association is a trade group representing about 5,000 small to mid-sized 

software and connected device companies across the globe. In the United States, our 

member companies are part of a $1.7 trillion industry, supporting about 5.9 million jobs. 

If these seem like surprisingly high figures, it could be because there is a tendency to 

look only at the consumer-facing or most-downloaded apps in the Apple App Store or 

Google Play when referencing the market for apps. But these are a small fraction of the 

app economy. Most of our member companies make white label software—that is, they 

build software and provide services for other companies. If a member company makes 

an app for another firm, it’s usually the client’s logo that goes on the app. And the app 

itself may not be consumer-facing at all, it may be a management program for internal 

use by a brewery, hospital, or manufacturer. What virtually all of them have in common, 

though, is that they leverage software platforms to reach their clients and customers. 

We urge the Subcommittee to look beyond sales to consumers when thinking about the 

App Association’s members and the app economy in general.

We actively facilitate engagement between app developers, investors, and platforms in 

fora across the country.1 For example, just last month, we concluded a series of 12

events across the nation (Developed | The App Economy Tour) highlighting local 

success stories from the app ecosystem. Our destinations included Minneapolis,

Charleston, and St. Louis. Our panelists ranged from founders of fledgling small mobile 

software companies to venture capitalists to legal experts discussing subjects like 

federal and state privacy legislation, access to funding, and workforce development.

2

The constituents of members of this Subcommittee drive competition in the app 

ecosystem, and with these events, we showcased the innovation happening 

everywhere in the United States. We urge this Subcommittee to carefully consider how 

any potential changes to relevant federal law would affect your constituents. As the App 

Economy Tour highlighted, competition is alive, well, and thriving in the states you 

represent. The tour itself, which featured small startups and innovators taking on major 

challenges, is a testament to how software platforms have helped democratize 

entrepreneurship, seeding thriving app ecosystems in every state across the nation.

1 See, e.g., ACT | The App Association, “Queen City Mobile Summit highlights Cincinnati as mobile tech 

hub,” (Feb. 23, 2016), available at https://actonline.org/2016/02/23/queen-city-mobile-summit-highlightscincinnati-as-mobile-tech-hub/.

2 See ACT | THE APP ASSOCIATION, DEVELOPED | THE APP ECONOMY TOUR, https://actonline.org/developed/

(last visited Mar. 9, 2020).
2

In this hearing, the Subcommittee is examining the characteristics of competition 

between larger companies that act as both platforms and competitors in adjacent 

markets. Our testimony focuses not on social media or retail platforms, but on software 

platforms. Software platforms are the app stores—which in some cases come with 

operating systems and smart devices—on which developers sell their apps and from 

which our member companies buy developer services. It is through this root system that 

the app economy has permeated and redefined the economy as a whole, rendering 

notions of a separate “tech industry” outdated. Software platforms and developers—

leveraging ubiquitous connectivity and access to cloud computing—are superimposing

a tech-driven element to virtually all industries across the economy from agriculture to 

healthcare. As a result, competition has new and dynamic characteristics not just in 

tech, but everywhere. App Association member companies are at the center of these 

market changes, and their continued ability to create jobs in your states depends on 

robust enforcement of antitrust laws where appropriate and allowing competition to take 

place where intervention is inappropriate.

We urge the Subcommittee to take a few important considerations into account in this 

inquiry. First, software platforms have reduced barriers to entry for tech entrepreneurs 

and enhanced choices for consumers. Second, software platforms help innovators enter 

and even create new markets. Third, the antitrust concerns that focus on software 

platforms are often overstated and should be weighed against other policy 

considerations. Fourth, software platforms are not perfect. Developers want more 

transparency and continued improvements to security and safety. Our member 

companies want platforms to compete for their business, and they want to ensure 

competition is robust.

II. P l a t f o r m s H a v e R e d u c e d C o s t s f o r D e v e l o p e r s 

and E n h a n c e d C o m p e t i t i o n a n d C h o i c e s f o r 

C o n s u m e r s 

Consumers and developers experienced significant changes since the introduction of 

various mobile software platforms. In addition to having more choices, consumers also 

benefit from lower prices for software and even access to new markets that did not 

previously exist. Similarly, developers benefit from lower overhead costs, built-in 

customer trust, and wider distribution and market access.

Choices proliferated because entry into the software market is much easier now than it 

was before platforms.3 Before platforms, the nature of the marketplace forced software 

developers to take on tasks that were well beyond their core competencies—from 

marketing to protecting their intellectual property and negotiating with a variety of 

different types of companies to distribute their products. The transaction costs of taking 

3 Daniel Ershov, The Effects of Consumer Search Costs on Entry and Quality in the Mobile App Market, 

TOULOUSE SCHOOL OF ECON. (Apr. 18, 2018), available at 

https://www.cemfi.es/ftp/pdf/papers/wshop/DErshov_MobileAppCompetition_Jan2018.pdf.
3

on all these extra tasks were significant, and platforms have eliminated many of them.

The resulting environment is one in which small companies like App Association 

members can retain their size, stay where they were founded, and thrive. Our member 

companies experience a wide variety of growth trajectories, meaning growth to the size 

of companies like Facebook or Uber is not the only measure of success. To fully 

appreciate the depth of the app economy and its potential, one must look well beyond 

the “Top 10” apps in the major app stores or the eye-catching headlines covering the 

initial public offerings of unicorn companies.

Before the ubiquity of mobile platforms, the software ecosystem ran on personal 

computers. This forced early app companies, often with teams of just one or two 

developers, to wear many hats to develop, market, and manage their products. App 

companies were not only required to write code for their products, but they were also 

responsible for: 1) managing their public websites, 2) hiring third parties to handle 

financial transactions, 3) employing legal teams to protect their intellectual property, and 

4) contracting with distributors to promote and secure consumer trust in their product. 

App developers, trained in software coding and project management, were not wellequipped to carry out these tasks, and the additional steps cost them valuable time and 

money, with little tangible benefit.

Without platforms, developers had to take all of these additional steps, creating friction 

at each point, which meant that the only software titles that were available to the public 

were those that made the complicated journey from development to publishers to 

retailers like CompUSA or Best Buy. In 2003, CompUSA rolled out an early concept of a 

software platform consisting of a kiosk that burned made-to-order CDs containing 

software applications. With this system, the retailer could offer more software programs 

than it could fit on its shelves (which is how software was sold at that time), providing 

1,200 titles from 200 different publishers.4 Now, there are more than 317,673 

companies active in the mobile app market in the United States5 and more than 2 million 

apps available on the major app platforms. The kiosks are now in our smartphones—

there are more than 5.28 billion mobile broadband subscriptions worldwide as of 

20186—which are attached to smartphones in the pockets of over 80 percent of 

Americans,

7 saving them the trip to Best Buy to purchase the box software.8

In the internet economy, immediate consumer trust is almost impossible without a 

substantial online reputation, and not attaining that trust spells death for any app 

company. However, what does “trust” mean? In this context, trust refers to an 

4 Brian Osborne, “CompUSA offers software vending machines,” GEEK.COM (Dec. 12, 2003), available at 

https://www.geek.com/news/compusa-offers-software-vending-machines-551706/.

5 DELOITTE, THE APP ECONOMY IN THE UNITED STATES (Aug. 17, 2018), available at http://actonline.org/wpcontent/uploads/Deloitte-The-App-Economy-in-US.pdf.

6 Mike Murphy, “Cellphones now outnumber the world’s population, QUARTZ (Apr. 29, 2019), available at 

https://qz.com/1608103/there-are-now-more-cellphones-than-people-in-the-world/.

7 Adam Lella, U.S. Smartphone Penetration Surpassed 80 Percent in 2016, COMSCORE (Feb. 3, 2017) 

Available at: http://bit.ly/2pT04qo.

8 See, Ashley Durkin-Rixey, “Out of the Box: How Platforms Changed Software Distribution,” (Sept. 28, 

2018), available at https://actonline.org/2018/09/28/out-of-the-box-how-platforms-changed-softwaredistribution/. 
4

established relationship between the app company and customer where the customer

has the confidence to install the app and disclose otherwise personal information to an 

app company. Prior to platforms, software developers often handed over their products 

to companies with a significant reputation to break through the trust barrier. 

At first, developers were reluctant to join platforms, worried that the model might not 

accommodate their ability to “launch fast and iterate”9their apps. But successful 

platforms changed the app ecosystem by providing app developers with ubiquitous 

access to a broader swath of consumers. Platforms provide a centralized framework for 

app developers to engage and secure visibility with the 3.4 billion app users10

worldwide. With lower costs and barriers to entry, both fledgling and established app 

developers can find success. For example, educational app company L’Escapadou 

secured 1.3 million downloads and earned more than $1.5 million from app sales 

between 2010 and 2014,11 a success attributed to the centralized nature of platforms. 

Founder Pierre Abel specialized the language, content, and pricing of each of his apps 

based on consumer and market needs and marketed them on different platforms to 

reach a variety of consumers around the world.

I I I . T h e r e ’ s a P l a t f o r m f o r T h a t

As successful as the past 12 years have been for the app economy, the next decade 

could be even better. In just the third quarter of 2019, the two major app stores 

generated $21.9 billion in revenue—a robust 23 percent year-over-year increase from 

the third quarter of 2018.12 This growth suggests the developer-platform model is still 

succeeding. Moreover, app economy growth is likely to endure because developers are 

continuing to create new products, services, and markets that did not exist prior to 

platforms. Perhaps the most notable of these is the market for ridesharing. Connecting 

a driver—using his or her own car—to a potential passenger in real-time for an ondemand ride to a destination selected by the passenger was impossible before 

developers could use the GPS capabilities and data connections of smartphones. 

Ridesharing is an important example of how app developer ingenuity meets the 

capabilities, built-in trust, and developer services of platforms to create new options for 

consumers. 

Just as ridesharing fundamentally changed how we get around, developers and 

platforms also revolutionized how we access healthcare. A current shortage of about 

30,000 physicians in the United States—projected to increase to up to 90,000 in the 

9 To launch fast and iterate is often used to describe a software developer’s business plan, where 

software developers like to launch products as soon as they are finished and like to update newer 

iterations of their product actively. Paul Graham, “Apple’s Mistake,” PAULGRAHAM.COM (Nov. 2009), 

available at http://www.paulgraham.com/apple.html.

10 Simon Kemp, “The global state of the internet in April 2017,” TNW (Apr. 11, 2017), available at

https://thenextweb.com/contributors/2017/04/11/current-global-state-internet/.

11 Steve Young, “Making $1.5 Million with Educational Apps with Pierre Abel,” APP MASTERS (Apr. 30, 

2015), available at http://bit.ly/2hgDzZH.

12 Craig Chapple, “Global App Revenue Grew 23% Year-Over-Year Last Quarter to $21.9 Billion,” Sensor 

Tower Blog (Oct. 23, 2019), available at https://sensortower.com/blog/app-revenue-and-downloads-q3-

2019.
5

next six years

13—contributed to the need for caregivers and patients to find new ways of 

communicating. Compounding the caregiver shortage, 133 million Americans currently 

live with chronic conditions—most of them residing in rural areas with long drives to 

their nearest provider.14 Devices, sensors, and software are now capable of gathering 

and analyzing physiological data like movement, heart rate, or blood oximetry so that 

physicians can better monitor their patients at home and address potential problems 

before they occur or worsen.15 Studies show that preventive care regimes that use 

connected health tools are especially useful for patients with chronic conditions like 

diabetes and heart failure, which tend to affect underserved and rural communities 

especially.16 But how do these capabilities reach patients and consumers, specifically 

those who need them most? Most Americans already interact with platforms, through a 

variety of devices. We know that smartphone adoption rates are increasing among 

underserved populations in the United States and that for many, their handheld device 

is their only means of accessing the internet.17 Here again, developers are leveraging 

the ubiquity and trusted framework of platforms to produce healthcare innovations that 

address a variety of health conditions. Moreover, in this case, the platform-developer 

dynamic helps caregivers reach patients in rural and underserved areas. 

One of the central markets at issue is the market for developer services, where a 

developer pays a platform for assorted services including distribution, marketing, etc. 

This market also experiences vigorous competition. There is a tendency to include only 

two platform companies, Apple and Google, in this category of competitors. But for 

developers, the market is much wider. A game developer can choose platforms like 

Epic or Steam, and enterprise developers can look to hundreds of proprietary, custom 

platforms or could create their own. For example, companies like App47 create app 

platforms for everything from “bulldozers to ultrasound devices.”18 Moreover, for 

developers looking to reach a general audience, using the web is an alternative, 

especially for companies that are looking for different kinds of distribution or search 

services than those available on platforms. Additionally, software developers could 

choose to advertise on Facebook or distribute their products through Amazon, or one of 

13 See Connected Health Initiative, “Testimony of Morgan Reed, Executive Director, The Connected 

Health Initiative, Before the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) 

Subcommittee on Primary Health and Retirement Security,” (Sept. 25, 2018), available at 

https://actonline.org/wp-content/uploads/CHI-Testimony-Health-Care-in-Rural-America.pdf.

14 See Id.

15 Id.

16 See, e.g., Clinical Outcomes, Care innovations, at 2, available at http://www.connectwithcare.org/wpcontent/uploads/2017/06/2016_Outcomes_Clinical-1.pdf (showing the results of a study by Care 

innovations and University of Mississippi Medical Center, indicating that the first 100 patients with 

diabetes enrolled in a program with a remote monitoring component saved the state $336,184 in Medicaid 

dollars over six months); Testimony of Michael P. Adcock, Exec. Dir., University of Mississippi Med. Ctr., 

Hearing on “Telemedicine in the VA: Leveraging Technology to Increase Access, Improve Health 

Outcomes & Lower Costs,” (May 4, 2017), available at 

https://www.appropriations.senate.gov/imo/media/doc/050417-Adcock-Testimony.pdf (“The Mississippi 

Division of Medicaid extrapolated this data to show potential savings of over $180 million per year if 20 

percent of the diabetics on Mississippi Medicaid participated in this program”).

17 Charkarra Anderson-Lewis, MPH, PhD, et al, “mHealth Technology Use and Implications in Historically 

Underserved and Minority Populations in the United States: Systematic Literature Review,” (Jun. 18, 

2018), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6028762/.

18 APP47, available at https://app47.com/.
6

the giant Chinese platforms. It is worth noting, however, that there are some important 

distinctions between software platforms—like the App Store or Google Play which 

provide a marketplace for software apps—and social media platforms or “aggregators”

that connect people with information and run on data.19 Aggregators like Facebook and 

Twitter, for example, connect people with information and other people (and generate

valuable data in the process), while the Google Play store and the App Store provide a 

marketplace for consumers and app developers to transact directly. These differences 

illustrate the diversity in the market for distribution methods, as developers may prefer 

one model over another.

Perhaps most importantly, the universe of platforms is continuing to evolve and expand 

as diverse kinds of hardware connect to the network. New platforms are cropping up for 

wearables made by companies like Garmin. Connected home devices and cars drive

cross-platform interoperability so that Alexa can communicate with your Samsung 

appliances or your Ford Fusion—further weighing against conceptions of platform 

markets where a single player wields market power. These characteristics tend to show 

that developer services will continue to improve and evolve along with demand. Federal 

intervention may be necessary where market power exists and raises prices 

undisciplined by competition or maintain a monopoly position in order to reduce quality 

or decrease output. But when those factors are not present and competition drives the 

market, as it does in developer services, intervention is unlikely to help and may harm 

competition or consumer welfare.

I V .A n t i t r u s t C o n c e r n s S p e c i f i c t o S o f t w a r e 

P l a t f o r m s a r e O f t e n E x a gg e r a t e d a n d S h o u l d b e 

W e i g h e d A g a i n s t O t h e r P o l i c y C o n s i d e r a t i o n s 

Platforms play an important role not just in tech-driven markets but also across a variety 

of economic sectors. They exist to bundle together a set of services for sellers and 

connect those sellers with specific categories of buyers, thus “disintermediating” the 

market. Under a typical antitrust analysis, self-preferencing by platforms is in most 

cases procompetitive because it is an example of vertical integration.

20 Where vertical 

integration or self-preferencing lead to greater efficiency, better quality, or lower costs 

for consumers, there is no antitrust issue, and there is also no reason to consider 

extending antitrust law to bar such pro-consumer activity. For example, requiring Apple 

or Google to uninstall software supporting the cameras on smartphones would probably 

not be a pro-consumer development—the vertical integration of that feature into the 

platform is on balance a good thing for smartphone users. But make no mistake, vertical 

integration does not get a free pass. Antitrust authorities should analyze instances of 

self-preferencing and vertical integration generally and they have brought enforcement 

19 See, e.g., Ben Thompson, “Tech’s Two Philosophies,” STRATECHERY (May 9, 2018).

20 See Maurits Dolmans and Tobias Pesch, “Should We Disrupt Antitrust Law?” Cleary Gottlieb Steen & 

Hamilton LLP (Jul. 18, 2019), available at https://www.clearygottlieb.com/-/media/files/should-we-disruptantitrust-law-pdf.pdf.
7

actions against companies that apply the antitrust laws on the books, establishing

important precedent that bars harmful vertical integration. Nonetheless, with 

smartphones serving as music players, cameras, and multimodal communications 

devices, a skeptical view of the integration of those features into the devices is 

incongruous with the way consumers experience them. Moreover, we can expect 

competition to discipline examples where self-preferencing is bad for consumers 

because they can leave the platform. Just like other categories of market activity, an 

antitrust inquiry into self-preferencing is generally only appropriate where the company 

at issue has market power (in other words, a lack of adequate competition) and where it 

is using that market power to harm competition and consumers. Unfortunately, the 

European Union (EU) has proposed flipping the burden to platforms to show that selfpreferencing has “no long-run exclusionary effects” and “either the absence of adverse 

effects on competition or an overriding efficiency rationale.”21 We would discourage

such a proposal in the United States because it would chill market activity that is likely 

to benefit consumers.22 Although it would appear to help some of our member 

companies in the short run to target self-preferencing, the long-term effects of making 

procompetitive activity more difficult or illegal would tend to harm the economy and 

ultimately our member companies as well.

Some competitors are asking for an increase in the scope of antitrust law, but they tend 

to overstate the problems they identify. For example, advocates for legislative 

intervention point to the cost of the services software platforms provide to developers as 

evidence that Congress should expand antitrust law.

23 To show that paying for 

developer services is unfair, they compare the cost of software distribution to the cost of 

payment processing.24 This is kind of like comparing the cost of a set of tires to the cost 

of a car. Yes, the tires are a part of the car, but nobody thinks a car is only a set of tires 

or that tires should always cost the same as a car. Similarly, payment processing is just 

one element of the array of services you get on a software platform, which include: 

immediate availability through hundreds of millions of people’s devices; payment 

processing; marketing through the app store; privacy features embedded in the 

platform; assistance with intellectual property protection; and security features built into 

the platform. The stated problem, therefore, seems to be that software platform 

developer services are too expensive. But again, the problem is overstated because this 

cost is being compared to the cost of a much less substantial service. Therefore, it does 

not appear to be a compelling reason to expand antitrust law or create a regulatory 

regime with a purpose of reducing the price of developer services.

21 HEIKE SCHWEITZER, JACQUES CRÉMER AND YVES-ALEXANDRE DE MONTJOYE, COMPETITION POLICY FOR THE 

DIGITAL ERA: FINAL REPORT 7 (2019) (the “EU Report”), available at

https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf. 

22 It is unclear how the EU would apply this concept and researchers point to a lack of direct caselaw on 

the theory of harm as it was raised in a case against Google. See Beata Mäihäniemi (LL.D.), “Lessons 

from the Recent Commission’s Decision on Google. To Favour Oneself or Not, That is the Question,” 

Working Paper, The Legal Tech Lab, Univ. of Helsinki 13 (“This new theory of harm . . . is however, 

difficult to apply . . . in practice, as one cannot find any direct case law on the issue in question.”).

23 Online Platforms and Market Power, Part 5: Competitors in the Digital Economy: Hearing Before the H. 

Judiciary Comm., Subcomm. on Antitrust, Commercial, and Admin. L., 116th Cong. 7 (2020) (statement 

of David Heinemeier Hansson, CTO & Cofounder, Basecamp) (“Most mobsters would not be so brazen 

as to ask for such an exorbitant cut . . ..”) (Basecamp Testimony).

24 Id. at 7.
8

The other evidence advocates offer to show harm to competition is that making software 

available on the open internet is free (it is not),

25 whereas software distribution on a 

platform generally costs money.26 As alluded to above, selling software on the open 

internet requires the seller to take on several tasks the software platform bundles 

together (including marketing, intellectual property policing, privacy controls, security 

features, and payment processing). And even taking it at face value, the premise has

the inconvenient characteristic of proving the opposite point—that is, selling software on 

the open internet can be a substitute for selling software on a platform. Not only that, 

detractors of software platforms say they have no choice but to submit to software 

platform demands and then in the next paragraph, admit that they need not submit to 

software platform demands because they sell their software on the open internet 

instead.27 It is hard to imagine that this internal inconsistency goes unnoticed, and 

observers likely cannot help but discern from this that software sellers have options.

Indeed, other developers have made the transition off platforms without claims of 

anticompetitive conduct.28 Substitutes, even when they are not identical, are common in 

market economies and tend to signal healthy competition.

The other conclusion we can draw from these arguments is that policymakers should be 

wary of opportunistic behavior by well-resourced competitors disguised as antitrust 

concern. Those who are most vocal often imply they are speaking for the app economy 

as a whole,29 but in reality, they tend to be larger companies seeking to use antitrust law 

or other policy levers to undermine competitors. Right now, the largest software 

platforms charge the same (as a percentage of revenue) for developer services 

regardless of the company’s size or political clout. Smaller developers have the 

advantage in this arrangement because they do not have the leverage to negotiate 

better terms on their own, as larger companies do. Overtures to have Congress involve 

itself in developer-platform relations, therefore, may benefit the largest software 

companies on the platforms but may actually make small developers like App 

Association members worse off. If large software companies are able to convince 

Congress to require software platforms to give them a better deal, App Association 

members and their clients and customers are forced to subsidize the resulting discount

for these larger companies. Adding insult to injury, many of our member companies 

25 If a software company opts to reach its customers through the open internet instead of a software 

platform, the company still needs to invest in overhead costs the platform would otherwise handle, 

including marketing, intellectual property management, privacy and security features, and payment 

processing.

26 Id.

27 See, e.g., Basecamp Testimony at 7.

28 See, e.g., Nick Statt, “Fortnite for Android will ditch Google Play Store for Epic’s website,” THE VERGE

(Aug. 3, 2018), available at https://www.theverge.com/2018/8/3/17645982/epic-games-fortnite-androidversion-bypass-google-play-store (“CEO Tim Sweeney says the primary motivation here is twofold. Epic 

wants to maintain its direct relationship with consumers.”); Chris Welch, “Netflix stops offering in-app 

subscriptions for new and returning customers on iOS,” THE VERGE (Dec. 28, 2018), available at 

https://www.theverge.com/2018/12/28/18159373/netflix-in-app-subscriptions-iphone-ipad-ios-apple.

29 Daniel Ek, Founder and CEO, Spotify, “Consumers and Innovators Win on a Level Playing Field,” 

Spotify (Mar. 13, 2019), available at https://newsroom.spotify.com/2019-03-13/consumers-andinnovators-win-on-a-level-playing-field/ (“So, let me be clear that this is not a Spotify-versus-Apple issue. 

We want the same fair rules for companies young and old, large and small.”).
9

compete with these larger firms, so the advantage handed to the larger companies 

could directly disadvantage App Association members. 

Even as the antitrust concerns expressed in this area are often overstated, a 

competition analysis of these dynamics is not always the final say, and antitrust 

concerns may conflict with countervailing policy priorities. For example, policymakers 

raised alarms over measures software platforms use to protect consumer privacy. In 

one instance, a software platform faced antitrust concerns after a decision to curtail 

apps’ ability to track a consumer’s location even when the app is not running unless the 

consumer clearly consents. Advocates exert a steady stream of pressure on software 

companies and platforms to improve their privacy practices, especially with respect to 

location data.30 They often point to the opaque or even misleading manner in which 

companies collect such sensitive personal information. As one advocate argues, 

“[p]rivacy is often framed as a matter of personal responsibility, but a huge portion of the 

data in circulation isn’t shared willingly—it’s collected surreptitiously and with 

impunity.”31 Privacy controls at the platform level help ameliorate this perceived problem 

by making it easier to set collection rules for all or specific apps. 

Policymakers at all levels have made it clear that companies should embed privacy into 

the design of their products and services.32 Accordingly, the purpose of a privacy 

prompt from the platform’s operating system should not be to confuse a consumer into 

selecting an option that gives away more data than they intended. It follows that 

requiring platforms to make it easier to provide location data (even when an app is not 

running) than it is to protect that data runs headlong into the policy imperative of privacy 

by design. Looking at the issue solely from a competition lens is, therefore, an 

incomplete view. Moreover, the more privacy protective approach of one software 

platform differentiates it competitively from other platforms that arguably make it easier 

for developers to collect sensitive data. In resolving these policy tangles, the focus 

should be on what works best for consumers. Antitrust law by itself rightfully addresses 

consumer welfare—it does not seek to benefit competitors. So, if a platform has an 

offering that a consumer prefers over the offering of an independent developer, 

policymakers should ask whether the complaints of powerful competitors necessitate 

legislating away that choice. 

App Association members are selective about the markets they enter, but they compete 

aggressively. And the presence of a powerful and well-resourced competitor is not 

always enough to totally discourage entry. For example, our Minneapolis-based 

member company Vemos provides a dashboard for nightlife and event venues to 

manage the growth of their businesses.33 The presence of incumbents like Eventbrite 

30 See, e.g., EPIC.ORG, LOCATIONAL PRIVACY, available at https://epic.org/privacy/location/.

31 “EFF Report Exposes, Explains Big Tech’s Personal Data Trackers Lurking on Social Media, Websites, 

and Apps,” Press Release (Dec. 2, 2019), available at https://www.eff.org/press/releases/eff-reportexposes-explains-big-techs-personal-data-trackers-lurk-social-media (quoting Bennett Cyphers, EFF staff 

technologist and report author).

32 See, e.g., “FTC Issues Final Commission Report on Protecting Consumer Privacy,” Press Release, 

FED. TRADE COMM’N (Mar. 26, 2012), available at https://www.ftc.gov/news-events/pressreleases/2012/03/ftc-issues-final-commission-report-protecting-consumer-privacy.

33 VEMOS, https://www.vemos.io/ (last visited Mar. 9, 2020).
10

was not a deterrent because Vemos differentiates itself from incumbents by compiling 

data from and interoperating with a variety of event management tools and analyzing 

the data to provide insights into how clients can improve their events and businesses.

Having a lot of resources is an undeniable advantage as a competitor (whether it is a 

platform or not), but our member companies exist because they fill a niche with a 

differentiated product, they can compete on price, or they can simply outmaneuver the 

larger competitors. The continued existence and success of camera apps on the two 

largest app stores are an example of companies competing directly with a platform. 

Camera+ was an early app that exceeded the software capabilities of Apple’s early 

camera app, pressing Apple to produce better camera software. Now, Camera+, 

ProCamera, Halide, and several other camera apps are all popular downloads and offer 

iPhone users a variety of options aside from the native app.34 But that is not to say a 

company with a competing offering should never be purchased by a larger company. 

There are three main definitions of success for a small company: passing the company 

along to the next generation; being purchased by a larger company; or (much less 

often) an initial public offering (IPO). Being purchased is often the best of these three 

options for the business owner and consumers—after all, IPOs are expensive and 

fraught with risk.

35 A purchase that helps produce better products or services for 

consumers is both a natural and beneficial end for some companies and healthy from a 

competition perspective.

V . P l a t f o r m s A r e n ’ t P e r f e c t

Although developers can choose from multiple platforms, there is no such thing as a 

perfect platform. Our member companies pay a fee to platforms for developer services, 

and they expect those services to meet their needs. Just as online companies must 

clearly communicate their data practices to consumers, so must platforms clearly define 

the requirements and details of their terms of service to developers. For example, when 

platforms change their developer guidelines, they must communicate clearly and ensure 

developers understand what the changes mean for them and their customer 

relationships. Occasionally, we hear from a member company that an ill-defined change 

significantly impacted their business. For example, a software platform recently put a 

member company that provides a call blocking app on notice for temporary removal 

unless it made changes to how it obtained permission for gathering incoming call data.36

The platform did not clearly explain how its policies changed or why they would 

necessitate action on the app’s part, but it was the first removal notice of its kind in the 

34 See Tara Schatz, “10 best camera apps for iPhone that beat the iOS camera,” MACPAW (Dec. 24, 

2018, updated Feb. 13, 2019), available at https://macpaw.com/how-to/best-iphone-camera-apps.

35 See Will Rinehart, “Welcome to the Kill Zone? A closer look at merger and start-up data suggests it’s a 

cultivation zone,” THE BENCHMARK (Feb. 27, 2020), available at https://medium.com/cgobenchmark/welcome-to-the-kill-zone-852339601fbb (“For startups, going public isn’t a sure path to 

success. Companies typically sign away 4 to 7 percent of their gross proceeds to an investment bank to 

sell shares of the stock. They also tend to incur an additional $4.2 million in costs to go through the 

process of getting listed. On top of this, a company will have to fork over another $1 to $2 million for 

federal compliance every year. Most IPOs perform worse than the overall market.”).

36 Graham Dufault and Madeline Zick, “What’s More Control with Fewer Options?” ACT | THE APP 

ASSOCIATION (May 21, 2019), available at https://actonline.org/2019/05/21/whats-more-control-with-feweroptions/.
11

app’s nine years on the platform. Ultimately, the platform did not remove the app, but 

the process for remaining on the store was opaque and difficult enough to navigate that 

the company looked to us, their trade association, for help. Relevantly, this occurred 

amid a major update to California’s privacy laws, so it may be an example of the 

unintended consequences of government intervention.

Especially for enterprise app developers, a software platform’s safety and security are 

essential elements of developer services. Software platforms’ security features 

improved markedly over the course of their existence. Whereas unlocking a device used 

to require a four-digit passcode, devices are now capable of biometric-based 

authentication, and software platforms make these authentication measures available to 

developers as well so that they can also benefit from these heightened security 

measures. But the game of cat-and-mouse between cybersecurity professionals and 

hackers will never end, and security must continue to evolve to meet and beat the 

threats. Although some platforms do not control device security, developers want the 

platform’s security features to work seamlessly with any relevant hardware and that they 

account for all attack vectors. Software platforms should continue to improve their threat 

sharing and gathering capabilities to ensure they protect developers across the 

platform, regardless of where threats originate. Moreover, they should approve and 

deploy software updates with important security updates rapidly to protect consumers 

as well as developers and their clients and users. The same is true when it comes to 

privacy controls. App developers strongly desire platform-level privacy controls they can 

adapt for their products and services. The types and nature of these controls vary 

among platforms and this variation should result in continuously improving options that 

iterate with end user expectations and privacy risks. 

Similarly, software platforms play a significant role in helping small developers enforce 

their intellectual property (IP) rights. Our member companies’ IP helps eliminate the 

inherent disadvantages of being a small, innovative company by enabling them to 

protect the fruits of their ingenuity from larger firms that might want to take it. 

Unfortunately, some of our member companies fall victim to IP thieves that succeed in 

selling the pirated content or using it to steal ad revenue on platforms. Ad networks can 

and do help mitigate the pirated ad revenue problem,37 but platforms must also 

vigorously police their app stores for stolen content. With vast online stores, it is difficult 

for a platform to verify legitimate requests to remove allegedly pirated content. But a 

single app developer should not need the help of a legal team or trade association to 

resolve the issue. In one instance, an App Association member company, Busy Bee 

Studios, approached us when it was unable to convince the platform to investigate an 

app that appeared to have been stolen from Busy Bee. With our assistance, the 

platform investigated the issue and found that the infringing app was in fact stolen 

content.38 But the time and resources it took our member company—which only has a 

few employees—to resolve the issue were significant and could have gone toward the 

development of their next app. Since this issue arose, IP resolution processes improved 

37 See, e.g., Trustworthy Accountability Group, available at https://www.tagtoday.net/.

38 See Alex Cooke, “Member Monday: How One Small Developer Fought a Rogue App,” (Nov. 26, 2018), 

available at https://actonline.org/2018/11/26/member-monday-how-one-small-developer-fought-a-rogueapp/.
12

across the board, but the story is a reminder that they are important and in-demand

developer services that platforms should improve in order to compete for developers.

V I . C o n g r e s s Ca n H e l p M a i n t a i n a L e v e l P l a y i n g 

F i e l d

Our members’ ability to create jobs and develop innovative software depends on strong 

IP protections, a stable standards-setting system, and access to talent. In order to 

ensure the growth of the app economy, small, innovative companies must be able to 

pursue IP claims affordably and challenge claims that should not have been granted in 

the first place. For instance, we applaud the House of Representatives’ recent passage 

of the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2019 (S. 1273), 

which would establish a voluntary small claims board at the Copyright Office, a lessexpensive alternative for companies with important infringement claims but fewer 

resources. Similarly, when it comes to patents our members support the current process 

for inter partes review (IPR) because IPR proceedings cost on average in the low sixfigure range versus up to $5 million for a typical patent in federal court. While the low 

six-figures is still out of reach financially for many small businesses, an IPR provides

much-needed leverage to companies faced with the possibility of litigation in federal 

court.

Another IP-related issue important to our members is their ability to rely on technical 

standards like WiFi, 4G, and 5G. In the United States, the private sector leads 

standards setting, with the participation of government actors. For example, IEEE 

recently finalized the WiFi 6 (or IEEE 802.11ax) standard.39 Like many technical 

standards, WiFi 6 consists of technologies, many of which are patented, volunteered by 

companies who seek to make their IP “essential” to the standard. In other words, in 

order to manufacture a device that interconnects to WiFi 6, the manufacturer must 

obtain a patent license from each of the companies with patents essential to WiFi 6. As 

a corollary, the companies that own these standard-essential patents (SEPs) must 

agree to license their SEPs to any willing licensee on terms that are fair, reasonable, 

and non-discriminatory (FRAND).40 When SEP owners go back on these promises and 

instead refuse to license to manufacturers, and then seek exorbitant license fees from 

downstream companies, antitrust concerns are raised. This is an area where antitrust 

law certainly plays a role and should be appropriately enforced by regulators. The 

Federal Trade Commission (FTC) recently brought such an antitrust complaint against 

Qualcomm, and the App Association filed an amicus brief supporting the FTC’s 

claims.41 The case is on appeal with the 9th Circuit. If Qualcomm successfully overturns 

39 Robert Saracco, “WiFi 6 is Rolling,” IEEE BLOG (Nov. 8, 2019), available at 

https://cmte.ieee.org/futuredirections/2019/11/08/wifi-6-is-rolling/.

40 DEPT. OF JUSTICE, NAT’L INSTITUTE FOR STANDARDS AND TECH., AND UNITED STATES PATENT AND 

TRADEMARK OFFC., POLICY STATEMENT ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT TO 

VOLUNTARY F/RAND COMMITMENTS (Dec. 19, 2019), available at 

https://www.justice.gov/atr/page/file/1228016/download.

41 Brief of Amicus Curiae ACT | The App Association in opposition to Qualcomm’s Motion for Partial Stay 

Pending Appeal, Fed. Trade Comm’n v. Qualcomm Inc., 9th Cir. No. 19-16122 (filed Jul. 19, 2019).
13

the ruling against it at the district court level, it could have dire consequences—not just 

for the smartphone ecosystem but for automakers and the IoT ecosystem generally42—

as SEP owners adopt the licensing practices at issue in that case. We urge this 

Subcommittee to ensure antitrust law is enforced vigorously where SEP abuse harms 

competition and consumers.

V I I . C o n c l u s i o n

We appreciate this opportunity to provide testimony in this important hearing. Our 

member companies have a strong interest in maintaining a competitive app economy 

that enables them to compete with larger firms worldwide through innovative products 

and services for their customers and clients. The entry of platforms created novel 

opportunities for consumers and developers. But while platforms provide some of the 

infrastructure, developers bring smart devices to life. Without apps, a smartphone is just 

a phone. The symbiotic relationship between apps and platforms is not perfect, but it 

has created a powerful ecosystem that continues to benefit consumers. We look 

forward to discussing the pro-competitive effects and public policy concerns platforms 

have generated and welcome the discussion around how large, tech-driven firms affect 

smaller counterparts.

42 “FTC v. Qualcomm – The Big Tech Case Nobody’s Talking about,” ACT | THE APP ASSOCIATION (Feb. 7, 

2020), available at https://actonline.org/2020/02/07/ftc-v-qualcomm-the-big-tech-antitrust-case-nobodystalking-about/.
14

Appendix: App Economy Innovators in Your

Districts 

Majority 

Chairman Michael Lee (UT) 

Company: 1564B 

Located in Salt Lake City, 1564B is a one-man management consulting group that 

provides advice on marketing and content development as it relates to technical 

markets, like the internet of things (IoT). Founded in 2014, 1564B’s clients range from 

startups and growing companies to global corporations. 

Senator Chuck Grassley (IA) 

Company: Higher Learning Technologies 

Higher Learning Technologies (HLT) works to empower learners through easy-to-use 

textbook and test prep platforms spanning a variety of disciplines such as medical, 

dental, and business, as well as preparatory tests for college and military entrance 

exams. Located in Coralville, Iowa, and founded in 2012, HLT offers services on the 

App Store, Google Play store, and through web browsers. 

Senator Mike Crapo (ID) 

Company: TaxAct 

Founded in 1998, TaxAct is a leading provider of affordable digital and downloadable 

tax preparation solutions for individuals, business owners, and tax professionals. Their 

flagship product promises users the highest degree of accuracy and was designed by 

their own in-house programmers and tax accountants. All available forms are IRS and 

state approved, and they introduced a mobile application in 2018. 

Senator Joshua Hawley (MO) 

Company: Topik 

In 2015, two friends co-founded Topik, a mobile blogging application that makes it easy 

for anybody to create and share blog posts on an easy to use mobile platform. Based in 

St. Louis, Missouri, Topik is completely self-funded and, with only two employees, is set 

to launch their first mobile app later this year. 

Senator Marsha Blackburn (TN) 

Company: Quiet Spark 

Established in 2011 in LaVergne, Tennessee, a wife and husband team founded Quiet 

Spark after noticing their son’s issues with spelling. Their first app was SuperSpeller, 

an iOS app that makes learning spelling fun for children through learning games and 

reward features. They have also created other apps that help users keep track of their 

lives through categories like exercise, reading time, scheduling, homework, and more. 
15

Minority

Ranking Member Amy Klobuchar (MN)

Company: VEMOS.io

Located in the Twin Cities and founded in 2013, Vemos is a platform solution for bars, 

restaurants, and other venues as a one-stop-shop for the digital tools needed to 

manage and grow their businesses. Operating with only eight full-time employees, 

Vemos found a way to harness and present a venue’s data in a humanized way, which 

helps venues understand who their customers are and how to market to them 

effectively.

Senator Patrick Leahy (VT)

Company: Aprexis Health Solutions

Aprexis Health Solutions is a cloud-based software that helps patients with personalized 

services for Medication Therapy Management and includes more than 1,000 

participating pharmacies and more than 1 million patients. Founded in 2009, Aprexis 

works with health plans, pharmacy networks, corporate employers, and providers to 

deliver improved, patient-centric health outcomes.

Senator Cory Booker (NJ)

Company: Micro Integration Services, Inc.

Founded in 1985, Micro Integration Services is a father and son team who transitioned 

from selling and maintaining hardware to an entirely software-based consulting 

business. MIS is focused on solving problems and helping their clients develop software 

for mobile and web turnkey business solutions. Although they have maintained their 

two-man team, Micro Integration Services works with major corporations like Kraft and 

the Philadelphia Eagles.

Senator Richard Blumenthal (CT)

Company: Pixellet

Located in Stamford, Connecticut, Pixellet is a full-service web and mobile development 

and design firm with dozens of offered services, including digital marketing and ecommerce. Founded in 2014, Pixellet only has one employee and has served a variety 

of industries including real estate, health care, financial services, and education, among 

others. 
August 20, 2020

Federal Trade Commission

Office of the Secretary

600 Pennsylvania Avenue NW

Suite CC-5610 (Annex B)

Washington, District of Columbia 20580

RE: Federal Trade Commission Review of Health Breach Notification Rule

ACT | The App Association’s Connected Health Initiative (CHI)1 appreciates the 

opportunity to provide input to the Federal Trade Commission (FTC) on whether 

changes should be made to a the Health Breach Notification Rule, which requires 

vendors of personal health records and related entities that are not covered by the 

Health Insurance Portability and Accountability Act (HIPAA) to notify individuals, the 

FTC, and, in some cases, the media of a breach of unsecured personally identifiable 

health data.2

CHI is the leading advocate for digital health policy and law advancements, 

representing a broad consensus of stakeholders across the healthcare and technology 

sectors. Our mission is to support the responsible and secure use of connected health 

innovations throughout the continuum of care to improve patients’ and consumers’ 

experiences and health outcomes. CHI is a long-time active advocate for the increased 

use of innovative technology in the delivery of healthcare and engages with a broad and 

diverse cross-section of industry stakeholders focused on advancing clinically validated 

digital medicine solutions.

CHI shares your commitment to advancing responsible health data stewardship and 

privacy throughout the continuum of care and recognizes that no data is more personal 

to Americans than their health data. CHI members acknowledge that significant threats

to Americans’ most sensitive data continue to evolve and put extensive resources into

ensuring the security and privacy of health data to earn the trust of consumers, hospital

systems, and providers. Breach notification requirements generally serve important 

functions. They not only notify the individual when their information has been 

1 http://www.connectedhi.com/. 

2 https://www.ftc.gov/news-events/press-releases/2020/05/ftc-seeks-comment-part-review-health-breachnotification-rule. 
2

compromised, but they also provide insight into security issues that organizations may 

be facing. 

However, digital health innovators do struggle to navigate the complex environment with 

respect to cybersecurity and privacy as they contend with HIPAA requirements at times 

and relevant FTC requirements at others, on top of state-specific requirements that can 

vary significantly.

As the FTC notes, it only lists two breaches of 500 or more individuals since this 

rule was put into place 10 years ago.3 The FTC also notes that it never enforced its 

health data breach rules because “as the PHR [personal health record] market has 

developed over the past decade, most PHR vendors, related entities, and service 

providers have been HIPAA-covered entities or ‘business associates’ subject to HHS’s 

rule.”

4 This data indicates that most PHRs are subject to HIPAA with FTC health data 

breach rules governing the relatively few that are not.

Ultimately, CHI supports (and is currently leading efforts related to) the development of 

a new cross-sectoral privacy framework by Congress in the form of a general privacy bill

that is intended to result in general privacy legislation. As part of such a solution, we 

support the proposition that any such general privacy bill treat health data as a subclass 

of “sensitive” personal information subject to heightened regulatory requirements, 

including with respect to breach notification requirements.

Until that time, innovators in the digital healthcare ecosystem will have to carefully 

navigate the different scopes and contexts of federal sector-specific laws and 

regulations. They will further have to continue to dedicate resources to tracking and 

complying with the range of state data breach laws and regulations, some of which 

conflict or overlap with FTC health data breach notification rules.

Building on the above, CHI offers the following views in response to various questions 

posed by FTC:

• We support Section 318.1 of the rule’s providing that FTC health breach 

notification rules do not apply to HIPAA-covered entities or to any other entity to 

the extent that it engages in activities as a business associate of a HIPAAcovered entity. We believe this bright line is critical and should be maintained to 

provide legal certainty to digital healthcare innovators. 

3 Health Breach Notification, 85 FR 31085 (May 22, 2020) (HBR RFI).

4

Id. CHI also notes that thousands of breaches of HIPAA-covered impacting 500 or more patients have 

been reported over the years. See https://ocrportal.hhs.gov/ocr/breach/breach_report.jsf.
3

• CHI does agree that, “as consumers turn towards direct-to-consumer 

technologies for health information and services (such as mobile health 

applications, virtual assistants, and platforms’ health tools), more companies may 

be covered by the FTC’s Rule.”5 Developers of technology already subject to the 

FTC’s general consumer protection authority are, and will continue, inventing

third-party apps that utilize consumer health information and will likely meet the 

definition of a PHR provider.

• CHI supports FTC evolving the requirements of notification in Section 318.5 of 

the rule. As the FTC notes, in-app messaging, text messages, and platform 

messaging are tools available today that are used widely and should be allowed 

to be utilized to more effectively communicate with consumers that consent to it. 

It is common sense that consumers should be able to consent to receiving 

communications under the rule via these modalities as well as email.

• FTC can reduce costs and burdens on small businesses by developing 

explanatory resources clearly explaining the purpose and requirements of the 

health data breach notification rule and offering guidance on compliance with it. 

We note that CHI has collaborated closely with the Department of Health and 

Human Services’ Office of Civil Rights on the development of its HIPAA portal for 

developers.6 CHI offers to partner with FTC in the creation of such a resource, 

which would ease compliance burdens and reduce costs. 

5 HBR RFI at 31086.

6 https://hipaaqsportal.hhs.gov/. 
4

CHI thanks you in advance for your time and consideration of the input above.

Sincerely,

Brian Scarpelli

Senior Global Policy Counsel

Connected Health Initiative

1401 K St NW (Ste 501)

Washington, DC 20005

The Connected Health Initiative (CHI), an initiative of ACT | The App Association, is the 

leading multistakeholder spanning the connected health ecosystem seeking to effect 

policy changes that encourage the responsible use of digital health innovations 

throughout the continuum of care, supporting an environment in which patients and 

consumers can see improvements in their health. CHI is driven by the its Steering 

Committee, which consists of the American Medical Association, Apple, Bose 

Corporation, Boston Children’s Hospital, Cambia Health Solutions, Dogtown Media, 

George Washington University Hospital, HIMSS, Intel Corporation, Kaia Health, 

Microsoft, Novo Nordisk, The Omega Concern, Otsuka Pharmaceutical, Podimetrics, 

Rimidi, Roche, United Health Group, the University of California-Davis, the University of 

Mississippi Medical Center (UMMC) Center for Telehealth, the University of New 

Orleans, and the University of Virginia Center for Telehealth.

For more information, see www.connectedhi.com. 
December 11, 2019

Federal Trade Commission, Office of the Secretary

Constitution Center, 400 7th Ave, SW, 5th Floor, Suite 5610 (Annex B)

Washington, District of Columbia 20024

Re: Comments of ACT | The App Association regarding the Federal Trade 

Commission’s Implementation of the Children’s Online Privacy Protection Act 

(COPPA) Rule Review, 16 CFR part 312, Project No. P195404. 

Dear Acting Secretary Tabor, 

ACT | The App Association (App Association) respectfully submits its views to the 

Federal Trade Commission (FTC) on its request for public comment in the abovecaptioned proceeding.1 The App Association appreciates the Commission’s evaluation 

of its existing regulations pertaining to the Children’s Online Privacy Protection Act 

(COPPA) Rule and its consideration to modify, retain, or eliminate parts of the Rule 

deemed ineffective for the constantly changing technology marketplace. 

I. Introduction and Statement of Interest 

The App Association represents approximately 5,000 small business software 

application development companies and technology firms globally that create the 

technologies driving internet of things (IoT) use cases across consumer and enterprise 

contexts. Today, the App Association represents an ecosystem valued at approximately 

$1.7 trillion and is responsible for 5.9 million American jobs. Our members create 

innovative solutions that drive the world’s rapid embrace of mobile technology. Their 

products power consumer and enterprise markets across modalities and segments of 

the economy. Since COPPA’s inception, the App Association has taken an active role in

making sure that the small business community is aware of their responsibilities under 

the COPPA Rule. For example, the App Association created a checklist for apps that 

are made for children to ensure that there is a free accessible resource for small 

businesses to use as a guide to comply with the COPPA Rule.2 Furthermore, our 

organization frequently participates in public forums on the issue of protecting children 

with respect to technology and mobile apps. We testified before the House Energy and 

Commerce Committee on “Protecting Children’s Privacy in an Electronic World”3; 

1 Federal Trade Commission, Request for Public Comment on the Implementation of Children’s Online 

Privacy Protection Rule (COPPA), 84 Fed. Reg. 35842 (July 25, 2019). 

2 Checklist for apps that are made for children, ACT | THE APP ASSOCATION, https://actonline.org/familyapp-privacy/, (last visited December 11, 2019).

3 U.S. House Energy & Commerce Committee, Hearing, Protecting Children's Privacy in an Electronic 

World (Oct. 5, 2011).
2

participated in the FTC’s “The Future of the COPPA Rule” workshop4; and most recently 

spoke at the Family Online Safety Institute’s (FOSI) 2019 Annual Conference.5 While 

the App Association supports protecting children’s privacy, over time, the current 

COPPA Rule disproportionally eliminates small developers out of the market for apps 

and software programs specifically designed with children in mind. We encourage the 

FTC to implement changes to the current rule that set reasonable and effective 

requirements for small software and app developers to become compliant with the 

COPPA Rule, while still providing new and novel technology for the next generation. 

II. The Current State of Children’s Online Usage and Parent Engagement 

Impacting Businesses’ Compliance with COPPA

According to the App Association’s research, 85 percent of parents have concerns

about their children’s digital privacy.6 PricewaterhouseCoopers (PwC) says that children 

12 to 15 years old consume 20 hours of screen time each week,

7 with other data 

suggesting that kids 8 to 18 years old consume seven hours of screen time per day.8

Given these statistics and parents’ growing concern about their children’s privacy, it is 

important that parents take steps to actively monitor their children’s time online. These 

steps include enabling parental control settings on their children’s devices to make sure 

they do not have access to inappropriate information and reading privacy policies that 

the child likely does not understand due to their age. However, research shows that 

fewer than one in three parents use parental settings on their children’s devices9 and 

the Pew Research Center also says that 81 percent of parents knowingly let their 

children use General Audience (GA) YouTube without parental restrictions.10

4 The Federal Trade Commission, The Future of COPPA Rule Workshop: Morgan Reed, President, ACT | 

The App Association, Developers and COPPA: Their Real-World Experience, (Oct. 7, 2019), 

https://www.ftc.gov/news-events/events-calendar/future-coppa-rule-ftc-workshop. 

5 Family Online Safety institute (FOSI), 2020 Vision: The Future of Online Safety, (November 21, 2019) 

https://www.fosi.org/events/2019-annual-conference/. 

6 Morgan Reed, Developers and COPPA: Their Real-World Experience, F.T.C. COPPA WORKSHOP, 

https://www.ftc.gov/system/files/documents/public_events/1535372/slides-coppa-workshop-10-7-19.pdf

(October 7, 2019) (F.T.C. COPPA Workshop Slides). 

7 Kids Digital Media Report 2019, PRICEWATERHOUSECOOPERS, 4, 

https://cdn2.hubspot.net/hubfs/5009836/PwC%202019/Kids%20Digital%20Media%20Report%202019%2

0.pdf? (May 2019). 

8 New tools, old rules: limit screen-based recreational media at home, AMERICAN HEART ASSOCIATION 

SCIENTIFIC ADVISORY, https://newsroom.heart.org/news/new-tools-old-rules-limit-screen-basedrecreational-media-at-home (Aug. 6, 2018). 

9 F.T.C. COPPA Workshop Slides. 

10 Aaron Smith, et. al, Many Turn to YouTube for Children’s Content, News, How-To Lessons, PEW 

RESEARCH CENTER, https://www.pewresearch.org/internet/2018/11/07/many-turn-to-youtube-for-childrenscontent-news-how-to-lessons/ (Nov. 7, 2018). 
3

These research results from a variety of sources demonstrate that while parents often 

say they care deeply about their children’s privacy, their actions display a lesser degree 

of concern. They may also feel that they should not be the ones responsible for 

implementing parental controls to protect their child’s online privacy. Instead some 

parents expect that app developers should provide free educational or child friendly

applications that automatically include the necessary parental settings to protect their 

children’s privacy. This expectation places an enormous financial burden on child app 

and software developers because they have to provide their products for a small or no 

fee; pay COPPA Rule compliance costs; and still continue to compete in a market that 

includes General Audience (GA) developers that have children using their products, but 

do not bear the financial implications of COPPA Rule compliance. 

The COPPA Rule’s burdensome compliance costs have resulted in many childrendirected app and software developers closing down their businesses or deciding to 

target a general audience. Furthermore, others children-directed app and software 

developers will now only sell their products to schools that operate under Family 

Education Rights and Privacy Act (FERPA) because they are unable to keep up with 

the substantial costs of COPPA compliance. These examples demonstrate that the 

current COPPA Rule it is not being used in an effective manner to protect children’s 

online privacy. Therefore, it is imperative that the FTC find a new and balanced 

approach between the importance of children’s privacy and a reasonable cost of 

compliance with its current Rule. 

III. The COPPA Definition of Personal Information Should Not Include a Child’s 

Unidentifiable Biomarkers (Voice, Face, Fingerprints)

Under the current COPPA Rule, personal information is “individually identifiable 

information about an individual collected online, including: ... (8) a photograph, video, or 

audio file where such fie contains a child’s image or voice.”11 In today’s world across a 

variety of modalities, children are accessing (and contributing) online content at younger 

and younger ages for a variety of reasons. Many children have a video game console in 

their home, such as Microsoft’s Xbox or Sony’s PlayStation 4®, which allows the device 

to detect the child’s voice to enable them to talk with other online users online.

Additionally, many households use Apple’s Siri ®, Amazon’s Alexa ®, and Google’s 

Google HomeTM, and it is inevitable that the device or an application on the device may 

pick up a child’s voice, often times without knowing due to its inability to detect the 

difference. These devices while likely being intended for a general audience (GA) may 

now be subject to COPPA due to potentially having “actual knowledge” of children 

(under the age of 13) using their products. Furthermore, there are other applications

that may be subject to COPPA that are made for individuals with learning or physical 

disabilities. For instance, autistic children may use an app to help them with their 

speech, which would require the collection of the child’s voice in order to make their 

statement clearer; or a child who is blind may also speak to the virtual assistant 

software in their phone in order to use the phone’s basic functions.

11 16 C.F.R. § 312.2 Definitions (2013). 
4

Many new apps may collect biomarkers such as voice, facial features, and fingerprints 

in some form, and the App Association urges the FTC to consider how these latest 

technologies can fit into a law created nearly 20 years ago. We urge the FTC to 

recognize the extraordinary burdens associated with COPPA compliance, particularly 

for small business developers of such technology. For example, developing additional 

technology to identify the difference between an adult and child voice remains a need, 

and its implementation may be prohibitively expensive while providing no additional 

protections for the child if the biomarker is deidentified. While the App Association fully 

supports privacy protections for children, such protections will stifle inovation if we 

continue to disincentivize the development of child focused tech through potentially 

unfeasibly regulatory requirements. Therefore, the App Association strongly urges the 

FTC to consider modifying the definition of personal information to either exclude 

“biomarkers” or to only require that a business comply with COPPA when identifying, or 

reasonably identifying, the “biomarker” and specifically associating it with the child as 

opposed to the child’s voice only being generally wrapped up in a data collection by an 

app. 

IV. Incentivize Platforms to Provide Procedural Mechanisms for App Developers 

to Obtain Verifiable Parental Consent

A number of practical COPPA compliance challenges arise from the fact that many 

apps integrate into and operate through mobile communications platforms maintained 

by a different operator. As a result, certain information—such as the user's IP address, 

device ID, username, or screen name—sometimes shares automatically between the 

app developer and the platform provider when a user runs the application. This limited 

information sharing supports (and is often necessary for) the technical and operational 

functioning of the app. 

The App Association urges the FTC to permit more efficient and practical solutions for 

COPPA Rule compliance that takes advantage of the latest pro-consumer 

developments in technology. As we mentioned in our testimony earlier this year, there 

has been a significant decline in the numer of app and software developers that create 

products spefically designed for children under the age of thirteen.12 This is due to the 

often times insurmountable hurdle of COPPA Rule compliance for small businesses in 

the child app and software space. While the enactment of the COPPA Rule had the well 

intentioned goal of promoting children’s online privacy, in its current state the Rule has 

instead eliminated an important set of child app developers from the marketplace due to 

the costs of compliance. 

In order to change this result, we strongly encourage the FTC to consider providing 

incentives for platforms that supply procedural verifiable parental consent (VPC) 

12 Morgan Reed, Developers and COPPA: Their Real-World Experience, F.T.C. COPPA WORKSHOP, 

https://www.ftc.gov/system/files/documents/public_events/1535372/slides-coppa-workshop-10-7-19.pdf

(October 7, 2019). 
5

mechanisms to app developers that fall under the COPPA Rule. By providing these 

incentives the FTC would allow some of the costly expenses of designing a child app to 

be reduced for those small developers whose primary goal is to impact children with 

age appropriate content and resources. 

The App Association envisions VPC in three separate but distinct categories with 

platforms supplying innovative procedural solutions for verifying and notifying 

consenting adults. 

1. Verifying that the person who will be providing consent is an adult. 

The App Association encourages the FTC to allow platforms to provide procedural 

mechanisms for child app developers to utilize when verifying a person’s age and ability 

to consent to an app’s privacy policy before the child’s use. For example, the platform 

could require a platform user to provide their age as an initial step of creating an 

account when becoming a part of the platform’s community. In turn, the child app 

developers that fall under COPPA’s authority could then use this verification as a part of 

their VPC process to ensure a person is of the correct age to consent to the app’s 

privacy policy. Furthermore, we encourage the FTC to allow the specific platform to 

determine the best procedural mechanisms for verification on their individual platform. 

2. Notifying the consenting adult of the intended collection, use, and disclosure of 

the child's personal information by the app developer, consistent with the 

disclosures made in the privacy notice. 

Additionally, we would support the FTC allowing platforms to provide notifications to the 

platform verified consenting adult/parent/guardian about the intended collection, use, or 

disclosure of the child’s personal information. This could potentially be accomplished 

through the child-app developer using the platform’s procedural mechanisms to explain 

their collection, use, or disclosure of the child’s personal information. After providing this 

information to the platform, the platform could provide a notification to the consenting 

adult/parent/guardian when the app is opened to ensure that the consenting adult is 

aware of the privacy policy for the specific app. 

3. Obtaining consent from the adult before the app is permitted to collect, use, or 

disclose a child’s (under the age of 13) personal information provided in the 

notice. 

Upon the platform’s collaboration with the child app developer in categories one and 

two, we believe that in the final step of VPC, the child app developer must ensure that it 

properly obtained VPC before collecting, using, or disclosing any child’s personal 

information. A platform may choose to assist a child app developer by providing an

implementation VPC framework to the child app developer for ways in which the app 

developer may obtain VPC from the parent. However, the child app developer must 

ensure that their VPC method is compliant with the COPPA Rule. 
6

Depending on the size of the company, the FTC could also encourage platforms to 

share their “age gate/screen” data with small child app developers—if requested—so 

that they can more easily identify children attempting to use their apps and ensure that 

each developer has obtained the proper VPC, in compliance with the COPPA Rule. 

While the App Association would not require that the FTC mandate platforms to take 

this additional step, it could provide platforms with additional incentives to provide this 

information to encourage start ups and small businesses to participate in the child-app 

development market. 

By allowing platforms and child-app developers to conduct collaborative efforts to obtain 

VPC, parents can make informed decisions about the apps their children use in an 

exponentially streamlined and transparent fashion.

The App Association notes that some platforms already implement similar procedures to 

those proposed above. Some platforms offer family sign up plans that allow children to 

use a platform, but also provide parents optional settings for their children such as 

“asking to buy,” rejecting or approving a purchase, monitoring content, or placing limits 

on screen time from the parent’s device.13 This allows a parent a simplified process to 

see what their kids are doing on their devices and decide what limits they want to set for 

their children. 

This approach ensures that parents have meaningful notice of, and control over, how an 

app collects, uses, and discloses their children's personal information without imposing 

unnecessary burdens and costs on app developers. 

V. Conclusion 

The App Association’s members work hard to positively change children’s lives through 

smart device applications that help them learn, explore, and communicate. Our 

members include countless parents who are developers and they understand the need 

to protect children in the mobile and internet environment. There is no stronger group of 

people with the knowledge and the frontline experience to understand that privacy and 

innovation can coexist. What can create conflict is well-meaning regulation that errs on 

the side of proscribing innovation in the name of protecting privacy. 

Currently, the COPPA Rule disincentivizes small businesses from educational or childdirected entertainment app development by requiring exorbitant amounts of time and 

energy interpreting unclear regulations. The Rule also eliminates the ability to collect 

non-personal information to assist in furthering the educational goals of apps and 

exposes many new parties to unexpected COPPA liability. The FTC should focus on 

creating flexible, simple to implement regulations that protect children, allow parents to 

13 Keep Your Child’s Screen Time Healthy and Happy, QUSTODIO, qustodio.com/en/family/how-it-works/

(last visited December 11, 2019) (explaining how Qustodio’s program helps parents manage and 

supervise their children’s devices); Family Privacy Disclosure for Children, APPLE, 

https://www.apple.com/legal/privacy/en-ww/parent-disclosure/ (last visited December 11, 2019). 
7

monitor and give parental consent, and allow operators to understand clearly their 

obligations under COPPA. 

We thank the Commission for the opportunity to comment and hope the information we 

provided helps to further improve and simplify the regulations surrounding COPPA. 

Sincerely, 

Brian Scarpelli 

Senior Policy Counsel 

Alexandra McLeod 

Associate Policy Counsel 

ACT | The App Association 

1401 K St NW (Ste 501) 

Washington, DC 20005 
February 17, 2021

The Honorable Frank Pallone The Honorable Cathy McMorris Rodgers

Chairman Republican Leader

Committee on Energy and Commerce Committee on Energy and Commerce

United States House of Representatives United States House of Representatives

Washington, District of Columbia 20515 Washington, District of Columbia 20515

Dear Chairman Pallone and Leader McMorris Rodgers,

We deeply appreciate your leadership as the House Committee on Energy and Commerce plots a 

course for the 117th Congress to address the COVID-19 pandemic and to get our economy back 

on track. As part of these efforts, we ask that you continue the bipartisan work of crafting a single 

set of rules governing the privacy practices of entities that generally fall under the Federal Trade 

Commission’s (FTC’s) jurisdiction. Recent events and the forced shift of daily and essential 

activities—especially core healthcare services—to the digital space underscore the need to act 

decisively on this issue.

ACT | The App Association (the App Association) is a trade group representing about 5,000 mobile 

software and connected device makers in the app economy. Our industry is a $1.7 trillion 

ecosystem led by U.S. companies and supporting about 5.9 million American jobs, including in 

New Jersey and Washington. Consumer trust is fundamental for competitors in the app economy, 

especially for smaller firms that may not have substantial name recognition. Strong privacy 

protections that meet evolving consumer expectations are a key component of developing 

consumer trust in tech-driven products and services. The App Association helps shape and 

promote adherence to privacy laws and best practices in a variety of contexts, including for apps 

directed to children and digital health tools.

The productive use of healthcare data no longer only occurs with healthcare providers and other 

entities under the jurisdiction of the Health Insurance Portability and Accountability Act (HIPAA). 

The creation and flow of healthcare data outside the HIPAA umbrella has accelerated, and 

although the FTC takes an active role in enforcing the prohibition on unfair or deceptive acts or 

practices (UDAP), it should have tools that adapt better to the risks healthcare data presents. From 

our perspective, the answer is not to extend HIPAA to cover healthcare tools and services not 

currently subject to HIPAA. HIPAA’s overarching purpose is to ensure the portability of health data 

between covered entities and business associates, and it was not primarily designed to give 

consumers better control over their own healthcare. Instead of expanding this approach, we urge 

you to establish a set of federal requirements that puts in place baseline consumer rights and 

curbs data processing activities that exposes consumers to undue privacy risks. The Committee’s 

bipartisan staff draft legislation circulated last Congress was a positive start representing 

substantial agreement on aspects of privacy that previously struggled for consensus. We urge you 

to continue the work on this effort, and we stand ready to support negotiations and oversight 

activities around it.

The recent settlement between the FTC and fertility and period tracking app Flo is emblematic of 

the FTC’s limitations, as well as the health-related privacy risks future legislation should address. 

The FTC’s complaint alleges that Flo shared the “health information of users with outside data 
analytics providers after promising that such information would be kept private.”1 The mischief here 

is reminiscent of previous activities the FTC punished. Not only did Flo mislead consumers about 

its data sharing practices, but it also allowed third parties to use the data it shared for their own 

purposes.2 In some cases, this occurred in violation of the terms of service of those third parties, 

the data having been shared via software development kits (SDKs) they provided to Flo.3 These 

privacy missteps are especially concerning given the sensitive nature of the health information at 

issue. A federal law more intentionally focused on curbing privacy harms should empower 

consumers to exert more control over their sensitive personal information, including the rights to 

access, correction, and deletion of such information. Sensitive personal information should also be 

subject to some flexible limits on processing activities that pose too great a risk to consumers.

Although Flo’s core deceptive statements in this case enabled the FTC to enjoin further harmful 

conduct, the recurrence of these privacy harms involving health information highlight the need for 

risk-based privacy regulation at the federal level. Each and every headline detailing the deceptive 

conduct of firms using healthcare data outside the HIPAA umbrella threatens to further erode 

consumer trust, which is a key necessity for our member companies. The healthcare innovations 

our member companies produce—from heart health and chronic condition monitoring to simply 

managing digital health information across health systems—are far too important for us to let them 

fall victim to foundering consumer trust in digital health earned by bad actors. In this case, 

unlocking the innovative potential for life-saving technologies involves the establishment of a single 

set of strong, national privacy requirements. We look forward to working with you toward this goal 

in the 117th Congress.

Sincerely,

Morgan Reed

President

ACT | The App Association 

1 Press release, “Developer of Popular Women’s Fertility-Tracking App Settles FTC Allegations that It Misled 

Consumers About the Disclosure of their Health Data,” Fed. Trade Comm’n (Jan. 13, 2021), available at 

https://www.ftc.gov/news-events/press-releases/2021/01/developer-popular-womens-fertility-tracking-appsettles-ftc. 2 Fed. Trade Comm’n, Flo Health, Inc., complaint (published Jan. 13, 2021), available at 

https://www.ftc.gov/system/files/documents/cases/flo_health_complaint.pdf. 3 Id.
1

From: Sagar Golla < >

Sent: Thursday, July 8, 2021 10:05 AM

To: ANTITRUST; JulyPublicComments; Kryzak, Lindsay

Subject: Abuses in Google Assistant App Store

Attachments: Assistant App Store Abuse.pdf

Dear FTC,

My name is Sagar Golla, founder and CEO of Host Buddy. Host Buddy was in the top 5 in the

Google Assistant App Store, until Google released their own Food Ordering App. PFA for details,

here is the summary:

- As a platform provider, Google bestowed superior powers to Google's own app, routes every

invocation of Order Food from consumers to connect their Ad partners.

- Google Squatting Appstore with hundreds of apps to connect EVERY major food brand.

- As an end to end platform, Host Buddy, not only provides skills to connect consumers, but also

help restaurateurs to orchestrate all the incoming orders (including delivery orders) to a single

dashboard to improve operations. More details here: https://invited.hostbuddy.io

https://invited.hostbuddy.io/allorders/

- I have been struggling with these issues for the last 1.5 years. I will provide every detail

you need to investigate further.

I request your immediate attention & swift action.

Thank you,

--

Sagar Golla

Founder, CEO

Hostbuddy, Inc.

hostbuddy.io
Google Abuses in Assistant 

App Store & GMB 

From: Sagar Golla, Hostbuddy, Inc

https://invited.hostbuddy.io/
1. Every invocation of “Order Food”

is controlled by Google and routed 

to select partners.

Google’s OWN Food Ordering APP in Assistant
1.

Need Ad Manager Account to be Google Partner
❖ Hundreds of apps made by 

Google, have occupied 

Assistant App Market.

SQUATTING App Store with Hundreds of OWN Apps!

Google is misleading & obstructing startups with

Self-preferencing

❖ Google made apps to connect every 

major food brands from Assistant.

❖ These are web apps - 

https://www.youtube.com/watch

?v=hR93DYLaJww
❖ HostBuddy was in the Top 5 in Food 

Ordering category, until Google’s 

own.

❖ Google took my action down 6 

times, so that I go away!

❖ Google has limitless resources, exec 

used contractors to harass me, 

hospitalized once.

Developer Harassment

HOST Buddy Superior experience than Google: 

https://vimeo.com/487951068
❖ All Orders is HostBuddy skill, to view 

all the incoming orders, including 

from delivery partners to single 

display!!

❖ Enhance Restaurant operations.

❖ All Orders Details: 

https://invited.hostbuddy.io/allorders/

HOST BUDDY is an end to end - Optimized for 

Restaurant Operations

Google only cares about consumer side, since they can 

pocket referral fee. We built skill for staff too!!
❖ Star Trek like voice communicators 

are NOT coming because of Google.

❖ Imagine when we don’t have to 

worry about our data and interacted 

with voice or touch to enhance our 

lives.

Downfall of Surveillance Economy

Productivity Loss for consumers !!
❖ Google makes GMB page for EVERY 

restaurants & displays during search.

❖ Even when restaurant has their own 

online ordering, order will be routed 

through delivery partner like 

DoorDash.

❖ Restaurants has to pay 20 -30% 

commission, Google takes a cut 

through their ad partners.

Google My Business is a Backdoor for Ad Revenue

Restaurant CAN’T CHANGE “PICKUP” button!!
Restaurant Losses in NUMBERS

Even if Restaurant pays ONLY 1K /month in commissions for pickup orders.

Which is only 30$/day. (I know restaurants, which spend > 200$/day in commissions).

For 20M restaurants in North America it will be > 20M*1k = $2B in a month

$24B in just year! (could be more during pandemic)

- This doesn’t include developers like me who are not able 

to deliver our services because of Google’s 

anti-competitive policies, 2.5 years of Hostbuddy.
Save Restaurants & Innovation

Thank you!!

Sagar Golla

HostBuddy Inc.

https://invited.hostbuddy.io/
1

From: Todd Achilles < >

Sent: Wednesday, June 30, 2021 11:41 AM

To: JulyPublicComments

Cc: Todd Achilles

Subject: Open meeting statement

Attachments: Achilles_Evoca_Consumer Harm Memo 6-30-21_final.pdf

Dear FTC Staff,

I have submitted a video statement (link here) for tomorrow’s meeting.

Attached is the economic analysis we conducted of the consumer harm caused by anticompetitive practices in the media

sector.

I appreciate your help to make sure our analysis is attached to my video statement and written comments.

Best,

Todd

Todd Achilles

CEO

e: t | w: evoca.tv

m:
www.evoca.tv Page 1 of 4

CONSUMER HARM FROM ANTICOMPETITIVE TYING AND REFUSALS TO DEAL

IN THE MEDIA INDUSTRY

Todd Achilles, CEO, Evoca

Dual content suppliers – media networks that supply both broadcast channels and nonbroadcast content – are engaged in tying and refusals to deal. Both of these anticompetitive 

activities harm consumers. The dual content suppliers are pursuing these anticompetitive actions

to protect a revenue stream to which they have recently become accustomed.

Historically, dual content suppliers have enjoyed two primary revenue streams: (1) revenue 

from fees paid by advertisers on broadcast and non-broadcast channels;

1 and (2) revenue from fees 

paid by MVPDs to license non-broadcast content. In recent years, dual content suppliers have also 

enjoyed a third revenue stream: (3) revenue from fees MVPDs pay to retransmit broadcast 

channels.

2 Figure 1 illustrates these revenue streams. Figure 2 identifies the recent growth in this 

third revenue stream for dual content suppliers.

Today, Evoca’s innovative use of the FCC’s new ATSC 3.0 television broadcast 

technology has the potential to reduce the dual content suppliers’ third revenue stream. With ATSC 

3.0, TV broadcasters like Evoca are now able to deliver bundles of non-broadcast channels to 

consumers over-the-air using traditional TV licensed spectrum. Evoca seeks to employ its 

innovation to deliver desirable non-broadcast content at relatively low prices, thereby providing 

consumers with a lower priced, high quality alternative to cable and satellite service. The Evoca 

service complements the scores of TV broadcast channels that are freely available over-the-air.

Consumers in Evoca’s footprint that can receive broadcast channels over-the-air can do so at no 

charge to supplement the bundle of channels they purchase from Evoca.3

While consumers welcome Evoca’s new service,

4 dual content suppliers view this service

as a threat to their third revenue stream. If consumers choose Evoca’s service over the services 

they have traditionally purchased from cable and satellite operators, revenue from the 

retransmission fees paid by cable and satellite operators will decline. To limit this potential erosion 

of revenue from retransmission fees, dual content suppliers are preventing Evoca from securing

access to key non-broadcast content on reasonable terms and conditions. Some dual content 

suppliers are doing so by refusing to engage in any meaningful negotiations with Evoca about 

1 Revenue from advertisers initially served as the sole source of financing for over-the-air broadcasts.

2 Payments for retransmission of broadcast channels are made to the owner of the affiliate broadcast 

station. In cases where the station is not owned by the relevant dual content supplier, the station delivers 

a portion of the retransmission payments to the dual content supplier (in the form of reverse 

retransmission payments). See the Appendix for additional detail.

3 Consumers cannot be charged for broadcast channels received over the air.

4 Market research conducted by Evoca predicts that 22% of US homes – more than 30 million US 

households – will sign up for the Evoca service. Doing so will save the typical household that presently 

subscribes to cable or satellite service more than $50 per month. The corresponding aggregate annual 

US household savings could exceed $18 billion (= 30 million × $50/month × 12 months).
www.evoca.tv Page 2 of 4

licensing non-broadcast content. Other dual content suppliers are requiring Evoca to pay 

retransmission fees as a precondition for licensing non-broadcast content. This tying is being 

imposed even though Evoca will not retransmit broadcast channels and dual content suppliers are 

required to use their TV spectrum licenses in the public interest and provide free, over-the-air 

signals.

These anticompetitive actions limit Evoca’s ability to deliver highly valued, reasonably 

priced video service to consumers. When dual content suppliers refuse to license key nonbroadcast content to Evoca, Evoca is unable to deliver content that consumers are known to value 

highly. When dual content suppliers tie Evoca’s licensing of non-broadcast content to Evoca’s

payment of retransmission fees, the suppliers raise Evoca’s costs artificially. In doing so, the dual 

content suppliers harm current cable and satellite subscribers by limiting Evoca’s ability to deliver 

a high quality, reasonably priced alternative to the products of incumbent MVPDs.5

These anticompetitive actions by dual content suppliers also harm consumers who do not 

have ready access to cable and satellite services. Evoca has the potential to be an important new 

video “pipe” to the home in many geographic regions, particularly chronically underserved mid 

and small markets. If Evoca is not driven from the market by the anticompetitive actions of dual 

content suppliers, Evoca will be able to serve many households that lack access to cable or satellite

services in addition to competing head-to-head against cable and satellite operators.

6 Thus, the 

anticompetitive actions of dual content suppliers harm a broad range of consumers with varying 

levels of access to alternative suppliers of video services. 

Evoca is not requesting any unfair competitive advantage or special treatment. Evoca 

simply requests the right to license non-broadcast content on fair and reasonable terms, without 

this right being tied to the payment of retransmission fees.

If these requests are granted, Evoca will be able to bring the benefits of enhanced 

competition to current cable and satellite subscribers. Evoca will also be able to deliver highly 

valued, reasonably priced video services to consumers that presently are not served by cable or 

satellite operators. As history makes abundantly clear, consumers benefit greatly when the 

operation of new industry suppliers is not impeded by anticompetitive actions.

5 If Evoca is forced to pay for the right to retransmit broadcast channels even though it will not retransmit 

the channels, Evoca will be compelled to pass some of its increased costs on to its customers in the form 

of higher prices. Consequently, the anticompetitive tying will effectively force consumers who receive 

broadcast channels over the air to pay for viewing these channels, which is inconsistent with the 

prohibition on charging consumers for broadcasts received over the air.

6 If Evoca is not impeded by the anticompetitive actions of dual content suppliers, it will be able to deliver 

innovative new services like Evoca Learn in addition to delivering at relatively low prices the nonbroadcast content that consumers are known to value.
www.evoca.tv Page 3 of 4

Figure 1. Payments to Dual Content Suppliers

Figure 2. Growth of Retransmission Broadcast Fees.

 https://www.rbr.com/retransmission-consent-revenue-an-11-growth-engine/
www.evoca.tv Page 4 of 4

APPENDIX. THE DETAILS OF MEDIA INDUSTRY PAYMENTS

Historic Payments

Advertisers pay broadcast stations and dual content suppliers for carrying advertisements.

MVPDs pay dual content suppliers to license non-broadcast content.

Newer Payments

MVPDs pay retransmission fees to the owner of the relevant affiliate broadcast station. When this

station is owned and operated (O&O) by the dual content supplier, the retransmission payments 

are effectively made directly to the dual content supplier, as illustrated in the bottom portion of 

Figure A1.

When the relevant affiliate broadcast station is not owned and operated by the dual content 

supplier, a portion of the retransmission fees that an MVPD pays to the owner of the broadcast 

station is delivered to the dual content supplier in the form of reverse retransmission fees, as 

illustrated in the top portion of Figure A1.

Figure A1. Media Industry Payments to Dual Content Suppliers.
1

From: Najah Farley < >

Sent: Wednesday, June 30, 2021 11:56 AM

To: JulyPublicComments

Subject: July 1, Public Meeting Comments

Attachments: NELP FTC comments_6-30-21.pdf

To whom it may concern:

Please find attached NELP’s public comments re: Statement of Enforcement Principles Regarding ‘Unfair

Methods of Competition’ Under Section 5 of the FTC Act” (2015)

Thank you,

Najah Farley

Najah Farley

Senior Staff Attorney (pronouns: she/her)

National Employment Law Project

-

T

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www.nelp.org | raisetheminimumwage.com

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NELP
June 30, 2021

Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Avenue

Washington, D.C. 20580

Re: Statement of Enforcement Principles Regarding ‘Unfair Methods of 

Competition’ Under Section 5 of the FTC Act” (2015)

Dear Chairwoman Khan,

On behalf of the National Employment Law Project (NELP), I write in support of the Federal 

Trade Commission (FTC) rescinding its interpretation of unfair competitive practices and 

pursuing rulemaking in the area of non-compete clauses and agreements. NELP is a nonprofit, non-partisan research and advocacy organization specializing in employment policy. 

Founded over 50 years ago, NELP aims to ensure that all workers in the US, and all who 

aspire to work, can attain economic opportunity, security, and prosperity through their 

labor. We regularly partner with federal, state and local lawmakers on a wide range of 

issues to promote workers’ rights and labor standards enforcement. NELP has provided 

testimony and technical assistance on the issue of non-competes to various organizations 

and state legislatures and continues to advocate for limiting the usage of these clauses.

The area of non-compete law is an important intersection between traditional competition 

concerns and workers rights and thus ripe for FTC intervention. Non-competition agreements 

are imposed by employers on employees, often as a condition of getting a job, or receiving a 

promotion and bar an employee or independent contractor from going to a competing 

employer or related business for a period following the end of an employment relationship or 

contract. Sometimes they are bound by either industry or geography, but some are very broad, 

implicating entire regions of the United States. Some may even list rival specific competitor 

companies that employees may not join after leaving their previous employer. Research 

suggests that nearly 1 in 5 workers in the United States are currently bound by a noncompete.1 Employers’ stated reasons for using non-competes are typically to protect trade 

secrets, screen for employees that intend to stay with the company, and protect investment in 

employee trainings.2 However, although non-compete agreements are more common in highpaying jobs with access to trade secrets, 12% of workers without a college degree and earning 

less than $40,000 a year reported signing a non-compete.3 This indicates that companies are 

not only using non-competes to protect trade secrets. Also, 

1 Evan Starr, J.J Prescott,. and Norman Bishara, Noncompetes in the U.S. Labor Force (December 24, 2017),

https://ssrn.com/abstract=2625714.

2 U.S. Department of Treasury Office of Economic Policy, Non-compete Contracts: Economic Effects and 

Policy Implications (2016),

https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implicat

ions_MAR2016.pdf

3 Two studies have shown that 30-40% of workers received the non-compete after they have accepted the job 

offer. Starr, Evan, J.J. Prescott, and Norman Bishara, Noncompetes in the U.S. Labor Force, University of 

Michigan Law & Econ Research Paper No. 18-013, 2019 and Marx, Matt, The Firm Strikes Back: NonCompete Agreements and the Mobility of Technical Professionals, American Sociological Review, vol. 76, 

no. 5, 2011, pp. 695-712.
there are other methods to protect trade secrets or protect investments that do not impede workers’ mobility 

and reduce their bargaining power, such as non-disclosure agreements narrowly tailored to address those 

issues and using the civil actions available under the Defend Trade Secrets Act.

Non-compete provisions are usually presented by employers in a ‘take it or leave it’ fashion. Most employees 

and independent contractors do not have the power to change them or negotiate their implementation. 

Workers are forced to sign or forego the job opportunity contract or promotion. Studies have shown that 

workers rarely negotiate on the issue of non-competes, largely because many receive the non-compete as a 

condition of a job offer or after accepting the job offer and lack the power to do so.4 Of those who received 

the non-compete before the job offer, only 10 percent bargained over the non-compete.5

The proliferation of these agreements has had the practical effect of stopping workers from moving to new 

jobs in their chosen industry. For workers in low wage industries, this can have dire consequences, as 

moving from company to company is often how workers receive raises. Non-competes have been shown to 

depress wages by reducing competition.6 Thus, many employers, by requiring workers to sit out of the labor 

market for a year to 18 months are depriving them of receiving the higher wages and benefits that they 

would receive through taking a job with a new company, often without any additional compensation for the 

time away from the workforce.

7 Recent research on a partial non-compete ban in Oregon found that banning 

non-competes for hourly workers contributed to higher hourly wages.8 Also, research has shown that in 

addition to lowering wages overall, the enforcement of non-competes may exacerbate the wage gap that

workers of color face.9

While some states have been moving toward partially banning or restricting non-competes, state laws 

governing non-competes are a patchwork of provisions and approaches that do not go far enough in 

regulating the use of these coercive practices.

10 In the wake of the Covid-19 pandemic, the FTC can contribute 

to a more just recovery. The FTC should not hesitate to weigh in on the legality of non-compete agreements. 

Such a step would change the national landscape for job mobility and provide relief and opportunity for 

millions of workers.

11

Respectfully submitted,

Najah A. Farley

Najah A. Farley

Senior Staff Attorney

4 Two studies have shown that 30-40% of workers received the non-compete after they have accepted the job offer. Starr, Evan, 

J.J. Prescott, and Norman Bishara, Noncompetes in the U.S. Labor Force, University of Michigan Law & Econ Research Paper 

No. 18-013, 2019 and Marx, Matt, The Firm Strikes Back: Non-Compete Agreements and the Mobility of Technical 

Professionals, American Sociological Review, vol. 76, no. 5, 2011, pp. 695-712.

5 Evan Starr, J.J Prescott,. and Norman Bishara, Noncompetes in the U.S. Labor Force (December 24, 2017),

https://ssrn.com/abstract=2625714.

6 Marshall Steinbaum, How widespread is Labor Monopsony? Some New Results Suggest its Pervasive, ROOSEVELT

INSTITUTE, December 18, 2017; Greg Robb, Wage growth is soft due to declining worker bargaining power, former Obama 

economist says, MARKETWATCH, August 24, 2018.

7 The requirement to pay the employee for the time of the restriction required by the non-compete has been included in the 2018 

Massachusetts non-compete law, MGL c.149, § 24L (2018) Massachusetts Noncompetition Agreement Act. 

8 Michael Lipsitz and Evan Starr, Low-wage workers and the enforceability of non-compete agreements, Academy of 

Management, July 29, 2020, https://journals.aom.org/doi/epdf/10.5465/AMBPP.2020.50.

9 Matthew S. Johnson, Kurt Lavetti, Michael Lipsitz, The Labor Market Effects of Legal Restrictions on Worker Mobility, 

February 17, 2021, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455381.

10 Beck Reed Riden, “New Map of Recent Changes to State Non-compete Laws,” Fair Competition Law, June 8, 2021, 

https://faircompetitionlaw.com/2021/06/08/new-map-of-recent-changes-to-state-noncompete-laws/.

11 Economic Policy Institute estimates that 36-60 million private sector workers are covered by non-competes. Alexander J.S. 

Colvin and Heidi Shierholz, Noncompete Agreements, December 10, 2019, https://www.epi.org/publication/noncompeteagreements/.
1

From: Ashley Baker < >

Sent: Wednesday, June 30, 2021 11:49 AM

To: JulyPublicComments

Subject: Public Comment Submission Form for July 1, 2021 Open Commission Meeting

Attachments: FTC July Meeting_Joint Comments.pdf

To whom it may concern,

I would like to submit the attached written comments to be placed on the public record of the Commission for the July

open meeting.

Please let me know if you have any questions.

Thank you,

Ashley Baker

Ashley Baker

Director of Public Policy

The Committee for Justice

Website | www.committeeforjustice.org

Twitter | @andashleysays | @CmteForJustice

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1

Submitted: June 30, 2021 

Lina Khan

Chair, Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

COMMENTS TO THE FEDERAL TRADE COMMISSION 

CONCERNING THE JULY 1, 2021 OPEN MEETING AGENDA

In Re: Rescission of 2015 Statement of Enforcement Principles On Unfair 

Methods of Competition Under FTC Act § 5

Dear Chair Khan and Commissioners Phillips, Chopra, Slaughter, and Wilson:

We, the undersigned, appreciate this opportunity to provide comments regarding the possible 

rescission of the Commission’s 2015 Statement of Enforcement Principles Regarding Unfair 

Methods of Competition (UMC) Under Federal Trade Commission Act § 5 (2015 statement). 

While we applaud the Commission’s broader goal of bringing transparency through a series of 

monthly open meetings, allowing only six days for public comment on significant agenda items 

that will drastically affect enforcement policy decisions is a deterrent to substantive public 

input.1 As Commissioner Noah Phillips stated, “a mere week’s notice on matters requiring 

serious deliberation, and a number of the policies themselves, undermine that very goal” of 

transparency.2 To allow for both transparency and substantive public participating in these 

proceedings, the Commission should allow for a standard of 30 days of public input. 

More troubling still is the fact that the Commission will be considering a significant shift in 

enforcement policy as the open meeting agenda will include this sudden push to revoke the 2015 

statement. This policy statement provides a bipartisan framework that lays out widely agreed 

upon core principles regarding antitrust law and the Commission’s Section 5 enforcement.

Among these principles is “the promotion of consumer welfare” and focusing enforcement on 

acts or practices that “must cause, or be likely to cause, harm to competition or the competitive 

process.” 

1 See “FTC Announces Agenda for July 1 Open Commission Meeting.” The Federal Trade Commission. (June 24, 

2021), available at: https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting.

2 Commissioner Noah J. Phillips. @FTC Phillips, Twitter. (June 25, 2021), available at:

https://twitter.com/FTCPhillips/status/1408459407134973955.
2

As the Commission explained when issuing its 2015 statement: “In describing the principles and 

overarching analytical framework that guide the Commission’s application of Section 5, our 

statement affirms that Section 5 is aligned with the other antitrust laws, which have evolved over 

time and are guided by the goal of promoting consumer welfare and informed by economic 

analysis.”3

The rescission of the 2015 statement would untether the Commission’s enforcement decisions 

from concerns over harms to consumers and to the competitive process. Consumer welfare is 

appropriately prioritized in the 2015 statement and remains the goal of antitrust as recognized 

and reaffirmed in existing case law. 

Additionally, the Commission’s recent Notice of the open meeting did not even state an 

objective justification for the quick removal of the 2015 policy, nor did it indicate whether it 

would be replaced by new guidance. 

Abandoning the 2015 statement’s framework would remove important guardrails that established 

predictability and guidance in enforcement actions. The lack of predictability resulting from the 

FTC’s re-expanded discretion in invoking broad Section 5 authority on a case-by-case basis 

would create uncertainty for businesses of all sizes and across all industries. The Commission’s 

misandventure into UMC expansionism would generate unwarranted confusion, and eventually

courts would have to grapple with questions of interpreting the outer boundaries of Section 5 

authority that were previously cabined by the 2015 statement. 

Above all, we are concerned that the Commission’s sudden rush to revoke the 2015 statement 

foreshadows a broader agenda to radically change antitrust law by greatly expanding the 

Commission’s enforcement discretion. 

These concerns have been echoed by others such as Senator Mike Lee (R-UT), who stated that 

“[s]hould the FTC rescind the statement, it will replace clarity with ambiguity in the midst of a 

fragile economic recovery. Rescinding the statement would also signal that the Commission 

rejects the idea that there are any limits to its power or regulatory reach, and that it intends to use 

Section 5 to address non-economic harms outside the agency’s purview or expertise.”4

Proposals to change well-functioning policies deserve serious deliberation and an opportunity for 

meaningful input from the public and from all stakeholders. We encourage the Commission to 

adopt a more open process and transparent approach that allows for proper notice and 

3 “Statement of the Federal Trade Commission On the Issuance of Enforcement Principles Regarding ‘Unfair 

Methods of Competition’ Under Section 5 of the FTC Act.” The Federal Trade Commission. (August 13, 2015), 

available at: 

https://www.ftc.gov/system/files/documents/public_statements/735381/150813commissionstatementsection5.pdf.

4 See “Sen. Lee Expresses Concerns about Possible Revocation of FTC 2015 Statement of Section 5 Enforcement 

Principles.”(June 24, 2021), available at: https://www.lee.senate.gov/public/index.cfm/pressreleases?ID=88C0AA07-BB92-427C-8EEC-63B92E8E6A26.
3

consideration of proposals. We welcome the opportunity to further discuss these views and stand 

ready to provide additional input. 

Sincerely,

Ashley Baker 

Director of Public Policy 

The Committee for Justice

Daren Bakst

Senior Research Fellow in Regulatory Policy Studies

The Heritage Foundation 

Asheesh Agarwal

Former Assistant Director

FTC Office of Policy Planning

Robert H. Bork, Jr.

President

Antitrust Education Project

Dan Caprio

Senior Fellow

The Lares Institute

James Edwards

Executive Director

Conservatives for Property Rights

Richard A. Epstein

The Laurence A. Tisch Professor of Law,

New York University School of Law

The Peter and Kirsten Bedford Senior Fellow,

The Hoover Institution

The James Parker Hall Distinguished Service Professor of Law Emeritus and Senior Lecturer,

The University of Chicago

Theodore A. Gebhard 

Former Senior Attorney

FTC Office of Policy and Coordination

Douglas Holtz-Eakin

President
4

American Action Forum

Jennifer Huddleston

Director of Technology and Innovation Policy

American Action Forum

Thomas A. Lambert

Wall Family Chair and Professor of Law

University of Missouri Law School

Doug McCullough

Director 

Lone Star Policy Institute

Timothy Sandefur

Vice President for Litigation

The Goldwater Institute 

Thomas A. Schatz

President 

Citizens Against Government Waste

NOTE: Organizations and affiliations are listed for identification purposes only.
1

From: Scott Strumello < >

Sent: Wednesday, June 30, 2021 8:06 PM

To: JulyPublicComments

Subject: Public Comment Submission for July 1, 2021 Open Commission Meeting

Attachments: FTC Letter Insulin.pdf

I am choosing to participate in this open meeting in the following way: Submitting a written comment. Because my

written comment exceeds the character, I am emailing my statement to julypubliccomments@ftc.gov. Written

statements will be placed on the public record of the Commission.

Sincerely,

Scott Strumello
Page 1 of 6

Scott Strumello

The Honorable Lina Khan

Chair

U.S. Federal Trade Commission (FTC)

Washington, DC 20580

julypubliccomments@ftc.gov

July 1, 2021

Dear Ms. Kahn and FTC staff,

I sincerely appreciate the opportunity to submit a written statement for the Federal Trade Commission review. 

As an individual who has lived with autoimmune Type 1 diabetes for nearly a half century, my concerns are primarily with the 

U.S. pharmaceutical and biotech industry practices related to prescription drug (Rx) "rebates", exactly WHO benefits from 

those price concessions, how Rx rebates affect spending by both insurers and consumers, and the role pharmacy benefit 

managers ("PBM's") and other entities play in the process. Although the topic is complex, I believe a great deal was explained 

in the bipartisan U.S. Senate report "Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug" (see 

https://www.finance.senate.gov/download/grassley-wyden-insulin-report for the report) which is a through document 

containing details on the underlying business practices which is useful background information.

Rx Rebates Have Become the Primary Way in which Pharma Competes on Price, But Not All Benefit

Let me begin by acknowledging that back in the 1990's — when the National Association of Insurance Commissioners (NAIC) 

decided its Statutory Accounting Principles would not follow the Generally Accepted Accounting Principles (GAAP) that treated 

prescription drug rebates as price offsets — there were relatively small Rx rebates on most prescription drugs, most healthcare 

plans at the time still had small fixed co-pays, and a health plan's members were all more or less equally affected by the 

prescription drug rebating practice. Since then, changes in benefit designs means at least half of all individuals who receive 

employer-sponsored commercial healthcare insurance now has a high-deductible insurance plan. However, failure to adhere 

to generally accepted accounting standards means that billions of dollars is generally not even apparent to most auditors, 

which has grown into a massive problem.

Rx Rebates Have Ballooned Into a $187 Billion/Year Problem

As of 2020, prescription drug rebates had ballooned into $187 billion in size, and the figure has grown steadily in recent years. 

Rx rebates have grown far too big to simply be ignored by the U.S. FTC anymore. According to estimates from Adam J. Fein, 

who is the CEO of the Drug Channels Institute, a subsidiary of Pembroke Consulting, Inc. whose primary clients are pharma 

companies and entities involved in U.S. prescription drug distribution (including drug wholesalers and pharmacy benefits 

managers and their parent companies which are U.S commercial healthcare insurance companies), as of 2020, 77% of all U.S. 

prescription drug claims are now paid for by the three largest PBM's (CVS Health/Caremark/Aetna at 32%, Cigna's Express 

Scripts + Ascent Health Services at 24%, and United Healthcare Group's OptumRx unit at 21%). For the source data, visit 

https://www.drugchannels.net/2021/04/the-top-pharmacy-benefit-managers-pbms.html for details). Dr. Fein was also the 

source of the estimated the total value of gross-to-net reductions ("Rx rebates") for patent-protected brand-name drugs (Rx 

rebates) which he reveals totaled $187 billion in 2020, and that includes insulin as a therapeutic category. Insulin is unique in 

that there are no "generic" versions of this medicine sold in the U.S. today, and FDA-approved biosimilars not made and sold 

by one of the three primary suppliers are relatively few in number (so far), and are primarily in the basal insulin category, not 

the rapid-acting mealtime insulin category.
Page 2 of 6

Insulin Is One of the Most Heavily-Rebated Prescription Drugs in Existence

As it turns out, insulin is a therapeutic category of prescription drugs which happens to be among the most heavily-rebated 

categories in existence. The leading companies (Eli Lilly & Co., Novo Nordisk and Sanofi supply over 95% of all insulin sold in the 

U.S., the notable exception seems to be insulin sold in IV bags used by emergency and operating rooms, and that appears to be 

mainly from Pfizer. Of note is that a vast majority of insulin is self-administered by patients, except for those who happen to be 

hospitalized) are willing to pay big rebates in order to get their insulins listed on preferred drug formularies. In fact, we know 

with absolute certainty that one of the largest insulin manufacturers operating in the U.S., Denmark-based Novo Nordisk A/S 

(whose U.S.-based subsidiary Novo Nordisk, Inc. is based in Princeton, NJ), has started to openly disclose in the company's 

quarterly earnings presentations to investors exactly how much it spends on Rx rebates. In Novo Nordisk A/S Q4 2020 earnings 

presentation, the company now discloses rebates as a percentage of gross U.S. sales for insulin. An archived version for the 

company's Q4 2020 earnings presentation can be accessed free of charge at https://seekingalpha.com/article/4403040-novonordisk-s-2020-q4-results-earnings-call-presentation, and the data revealing 74% rebate percentage of gross sales are is 

revealed on slide #103.

Rx Rebates Are Nearly Impossible to Track Due to FASB Non-Compliance

As noted, the primary means by which the pharmaceutical and biotechnology industries secure commercial healthcare 

insurance formulary placement is with volume-based price concessions which are given in the form of prescription drug 

rebates. We know that rebates are given in aggregate from a given pharmaceutical company and paid to a pharmacy benefits 

manager. This also makes it challenging to discern the dollar amount of rebates paid for each pharmaceutical product, 

although Novo Nordisk is close because most of its revenues are derived from insulin, although the company has shifted focus 

away from insulin to GLP-1 drugs sold to treat Type 2 diabetes. 

Insulin is the ONLY FDA-approved drug for the treatment of autoimmune Type 1 diabetes, therein lies the problem. We also 

know with certainty that the top three PBM's now pay for more than 3/4 of all prescription drugs sold in the U.S.

Pharmaceutical Industry Raises Prices in Tandem, Down to the Last Cent

One troubling discovery is one which is remarkably similar to the one which Connecticut Attorney General William Tong who 

filed a compelling lawsuit in June 2020. His complaint saw 51 states and U.S. territories joining him in a price-fixing lawsuit in a 

conspiracy by generic drug manufacturers to artificially inflate and manipulate prices, reduce competition, and unreasonably 

restrain trade for generic drugs sold across the United States. Although the case must still be heard in court, for a case to have 

such overwhelming cooperation among all states and other territorial government attorneys suggests strongly that the case 

will likely be successful. 

The following charts are courtesy of the news outlet Business Insider, but the graphic images explain more than 1000 words 

can the lockstep insulin price increases for both rapid-acting and long-acting insulin varieties routinely used by patients from 

supposedly rival insulin manufacturers, so I wish to include them on the next page:
Page 3 of 6
Page 4 of 6

The suits argue that through telephone calls, text messages, emails, corporate conventions, and dinner parties, generic 

pharmaceutical executives were in constant communication, colluding to fix prices and restrain competition as though it were 

a standard course of business. Even though they knew what they were doing was wrong and likely illegal, and they took steps 

to try and evade accountability, using code words and warning each other in order to avoid email and detection. 

Between 2007 and 2014, a number of different generic drug manufacturers sold most of the generic drugs dispensed in the 

United States. The multistate investigation uncovered comprehensive, direct evidence of unlawful agreements to minimize 

competition and raise prices on more than 114 generic drugs. The first of three complaints alleged longstanding agreements 

among various manufacturers to ensure a "fair share" of the market for each competitor, and to prevent "price erosion" due to 

competition. If generic drug manufacturers are behaving in this manner, there is no reason to believe brand-name drug makers 

are not doing the same thing (see the original complaint at https://portal.ct.gov/-/media/AG/Press_Releases/2019/FINALRedacted-Public-Derm-Complaint.pdf for detail). All one needs to do is to simply look at historical price increases which have

moved in tandem with one another for years for insulin price increases.

That said, the U.S. Federal Trade Commission (FTC) has unique power to investigate the covert secret money-transfer of more 

than $180 billion/year in Rx rebates, as well as the brand-name drug industry's lockstep price-increases by the pharmaceutical 

companies on their insulin products, all of which suggests the same type of behavior is going on in the brand-name drug 

industry because they believe they can realistically get away with that anticompetitive behavior. Importantly, I urge the FTC to 

use this letter as a basis to begin immediate investigation into what genuinely look like anticompetitive (and criminal) 

behaviors by various entities involved in the manufacture, merchandising and sale of insulin products in the United States.

Vertical Integration of Commercial Healthcare Insurance Co's with PBM's Should Not Have Been FTC-Approved, But Were

Commercial healthcare insurance company payers are the colossal elephants in the room of U.S. insulin pricing. There has 

been a steady stream of mergers and acquisitions among healthcare insurance companies over the past 25 years, and the 

largest among them now cover more individuals than the European Union countries combined in terms of prescription drug 

sales. Adding to that complexity is the very recent vertical integration of pharmacy benefits managers ("PBM's") and 

commercial healthcare insurance companies. Previously, PBM's operated primarily as independent entities, today, the top 3 

PBM's are all owned by big healthcare insurance companies, and the FTC said almost nothing about that vertical integration

and raised no questions about the impact of those business combinations. Most notably, in the past 3 years, the FTC had 

allowed Cigna to acquire Express Scripts, and CVS Health to acquire Aetna. Perhaps with the benefit of hindsight, FTC can now

see those mergers should have specified certain divestitures.

The healthcare insurance company payers have used their weight to push for massive rebates, and then to create benefit 

designs where Americans pay for prescriptions as a percentage of "gross pharmacy claims expense." That's the front-end price 

at the pharmacy. It doesn't account for rebates and other offsets that travel around the back from manufacturers to insurers. 

In the 1990's — when the National Association of Insurance Commissioners (NAIC) decided its Statutory Accounting Principles 

would not follow the Generally Accepted Accounting Principles (GAAP) that treat rebates as price offsets — there were small 

rebates on most drugs, most health plans had small fixed co-pays, and a health plan's members were all more or less equally 

affected by the practice. Two decades later, about 90% of prescription fills are for generics that have no back-end rebating —

but for the remaining 10% of prescriptions, for brand-name drugs, rebates have exploded to more than $150 billion annually. 

Those include people who need insulin.

Meanwhile, half of Americans are now on healthcare plans with high deductibles or percentage cost-"sharing" that insurers 

base upon gross claims expense. This is why the calls for FTC investigation on insulin prices have grown so much in recent 

years. Patients are being routinely exposed to bogus drug list prices and they are pissed-off about it.
Page 5 of 6

Drug Channels: "High Rx Prices Are the Other Guy's Fault, Not Ours!"

The pharma lines were well-rehearsed, but ring hollow. First, pharma claimed that no one actually pays list price for drugs. 

That's a categorical falsehood today. 

Although no drug channel entity pays the bogus list price, more than half of all patients are regularly forced to pay the bogus 

list price at the pharmacy now because they have high-deductible insurance plans. Although the urgency could decline since 

the Internal Revenue Service (IRS) FINALLY added insulin and other diabetes medicines to the small list of "preventative 

treatments" eligible for pre-deductible coverage, the reality is that differing "plan year" dates have enabled commercial 

healthcare insurance companies to collect billions of dollars in Rx rebates and not share them with patients and justify not 

sharing the money due to different plan year dates for each policy sold. We also know that the destination for those billions 

isn't insurance companies' bottom lines, but are instead flowing to employers, being given to employers as "premium offsets". 

It is the reason former FDA chief Scott Gottlieb made headlines in 2018 (see https://www.cnbc.com/2018/03/07/fdacommissioner-to-health-insurers-youre-doing-it-wrong.html for detail) when he told a conference of insurance company 

executives they were "doing it [healthcare insurance] wrong" and that the sick are not supposed to be subsidizing the healthy

in a functional healthcare system.

Dysfunctional Government Gives Drug Channel Entities Exactly What They Want Most: To Preserve the Costly Status Quo at 

the Expense of Patients

In reality, there is plenty of fault to go around amongst all entities which are primarily concerned with collecting money they 

have not earned from a dysfunctional drug distribution system, yet what the pharmaceutical industry, the commercial 

healthcare insurance industry, as well as a variety of drug channel entities including PBM's all want most is to preserve the 

expensive status quo of leaving everything as it is right now. Thanks to a divided and largely dysfunctional federal government, 

that is precisely what they've received. That said, states across the country have been taking actions on their own.

Colorado began with a price cap on insulin prices. Other states followed-suit. Ordinarily, price caps are not really an effective 

solution to a structural problem, but in this case, they are very effective solutions. The reason is because state-mandated price 

caps on insulin FORCE commercial healthcare insurance companies to share the benefit of the 74% insulin rebates they are 

already receiving from PBM's which they own outright with the covered patients whose prescription drug purchases generate 

those rebates in the first place. For insurance, it means they must reduce premiums using some other revenue source, not 

insulin Rx rebates.

Supreme Court Ruled in Rutledge v. Pharmaceutical Care Management Association That States CAN Regulate PBM Activities

Separately, in 2020, the U.S. Supreme Court handed the states a unanimous victory in governing pharmacy benefits managers 

("PBM's") in the Rutledge v. Pharmaceutical Care Management Association ruling (see the ruling at 

https://www.supremecourt.gov/opinions/20pdf/18-540_m64o.pdf for details) which the drug industry trade group known as 

the Pharmaceutical Research and Manufacturers of America (better known by its acronym PhRMA). The 19-page decision ruled 

that Arkansas Act 900 was legal because payments made for voluntarily-created employee benefit plans in private industry 

under the Employee Retirement Income Security Act of 1974, otherwise known as ERISA. ERISA plans are not regulated by 

state insurance departments and are typically self-funded. Yet when the Arkansas law went into effect in September 2015, the 

Pharmaceutical Care Management Association, which represents PBM's, immediately sued. The industry argued that state laws 

can't preempt PBM behaviors. The high court disagreed, thereby opening the door to various state laws to do what the Federal 

government has basically chosen to ignore.

To be sure, price-caps are not the best way to fix the problem, but they deliver an immediate fix to a complex problem which 

defies easy fixes. But the U.S. Federal Trade Commission (FTC) should immediately investigate the covert secret moneytransfer of $187 billion/year in Rx rebates, and lockstep price-increases by the pharmaceutical companies on their insulin 

products. Ordinary "free" markets do not typically behave in such a manner, unless the industry has concluded that it is in their 

best interests to simply not compete on price anymore.
Page 6 of 6

GoodRx Co-Founder/Co-CEO: "A Company Like Ours Should Not Need to Exist"

Aside from positive Supreme Court rulings and other litigation still working their way through the judicial process, we have 

witnessed an important development occur in the U.S. marketplace for prescription drugs. A Santa Monica, California-based 

startup known as GoodRx Holdings, Inc. is starting to deliver meaningful benefits to consumers in terms of runaway 

prescription drug prices. Without a long diatribe about how GoodRx actually works, some important things to know are that 

the company had a successful IPO on September 22, 2020. It is already very profitable.

Although one might presume that the company mainly serves uninsured customers with prescription drug coupons, in fact, 

more than 75% of GoodRx customers are individuals who already have insurance coverage, many with high deductible 

insurance plans which force them to pay bloated prices for prescription drugs until they have satisfied an annual deductible.

Unlike many rivals, GoodRx offers instant discounts of more than 75% off of many (not all) insulin products. The company has 

offered a way for many consumers to slash their out-of-pocket costs and find it is cheaper to buy prescription drugs like insulin 

with a GoodRx coupon than it is to buy it with their insurance, even though insurance purchases contribute towards 

deductibles they must satisfy.

Around the time of the GoodRx IPO, company co-founder and co-CEO Doug Hirsch revealed:

"It's [GoodRx] totally free, because it should be free. I say this, and people think it's a PR statement or something, but I 

would love someday to have our company not need to exist. I lived in England for a while, so I have some understanding 

of the NHS: It's such an advancement over what we have. A company like ours should not have to exist: People should 

be able to get the health care that they need, without having to do research and jump through hoops and get 

approvals. I spent an hour on the phone yesterday with a hospital because my son had a seizure six months ago, and 

I've got a stack of bills, trying to just get it straight. The amount of time and effort and energy being wasted in this 

country, it's mind blowing."

The critical take-away is that the Federal Trade Commission (FTC) has a critical role to play here. Currently, the secret cashflow for prescription drugs enables the commercial healthcare insurance companies to collect billions in Rx rebate money, use

that money to sell more insurance policies, and play massive financial games with insulin prices, because no one really has a 

very reliable accounting for where all those billions of dollars are going right now. The Federal Trade Commission (FTC) can 

play a meaningful and unique role with a thorough investigation of what the healthcare insurance industry is doing with all of 

the prescription drug rebates, and should really break-up the insurance companies so they're no longer vertically-integrated 

with the PBM's because that has proven to be very anticompetitive behavior and damaging to the retail pharmacy business, 

but that typically takes a lot of time and does not always yield immediate benefit. 

FTC Role: Not Simply Rubber-Stamping Corporate Mergers & Acquisitions

Consider what happened when the FTC broke-up the old Bell System back in 1984. My father worked for his entire career for 

the old AT&T and it provided very nicely for my family. But breaking-up the old Bell System ultimately yielded massive societal 

benefits, only it took several decades for those benefits to be realized. For example, today, I can pick up the telephone and call 

your office in Washington DC and pay next to nothing for the call. Back in 1984, that phone call would have cost me several 

dollars (depending upon the length of the call). Whenever monopolistic behavior occurs, un-doing that takes time, and in the 

meantime, there is not much societal benefit. But mandating Rx rebate pass-thru to patients at the cash register would provide 

immediate patient benefit while longer-term fixes are done in a prudent and more thoughtful manner.

I sincerely hope the FTC can investigate the underlying issues related to insulin prices, which have risen for many patients by 

more than 1,100% over the past decade. I look forward to seeing the U.S. FTC looking into this matter,

Sincerely,

Scott Strumello
June 30, 2021

Lina Khan

Chair

Federal Trade Commission

600 Pennsylvania Avenue

Washington, D.C. 20580

Re: Statement of Enforcement Principles Regarding ‘Unfair Methods of 

Competition’ Under Section 5 of the FTC Act” (2015)

Dear Chairwoman Khan,

On behalf of the National Employment Law Project (NELP), I write in support of the Federal 

Trade Commission (FTC) rescinding its interpretation of unfair competitive practices and 

pursuing rulemaking in the area of non-compete clauses and agreements. NELP is a nonprofit, non-partisan research and advocacy organization specializing in employment policy. 

Founded over 50 years ago, NELP aims to ensure that all workers in the US, and all who 

aspire to work, can attain economic opportunity, security, and prosperity through their 

labor. We regularly partner with federal, state and local lawmakers on a wide range of 

issues to promote workers’ rights and labor standards enforcement. NELP has provided 

testimony and technical assistance on the issue of non-competes to various organizations 

and state legislatures and continues to advocate for limiting the usage of these clauses.

The area of non-compete law is an important intersection between traditional competition 

concerns and workers rights and thus ripe for FTC intervention. Non-competition agreements 

are imposed by employers on employees, often as a condition of getting a job, or receiving a 

promotion and bar an employee or independent contractor from going to a competing 

employer or related business for a period following the end of an employment relationship or 

contract. Sometimes they are bound by either industry or geography, but some are very broad, 

implicating entire regions of the United States. Some may even list rival specific competitor 

companies that employees may not join after leaving their previous employer. Research 

suggests that nearly 1 in 5 workers in the United States are currently bound by a noncompete.1 Employers’ stated reasons for using non-competes are typically to protect trade 

secrets, screen for employees that intend to stay with the company, and protect investment in 

employee trainings.2 However, although non-compete agreements are more common in highpaying jobs with access to trade secrets, 12% of workers without a college degree and earning 

less than $40,000 a year reported signing a non-compete.3 This indicates that companies are 

not only using non-competes to protect trade secrets. Also, 

1 Evan Starr, J.J Prescott,. and Norman Bishara, Noncompetes in the U.S. Labor Force (December 24, 2017),

https://ssrn.com/abstract=2625714.

2 U.S. Department of Treasury Office of Economic Policy, Non-compete Contracts: Economic Effects and 

Policy Implications (2016),

https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implicat

ions_MAR2016.pdf

3 Two studies have shown that 30-40% of workers received the non-compete after they have accepted the job 

offer. Starr, Evan, J.J. Prescott, and Norman Bishara, Noncompetes in the U.S. Labor Force, University of 

Michigan Law & Econ Research Paper No. 18-013, 2019 and Marx, Matt, The Firm Strikes Back: NonCompete Agreements and the Mobility of Technical Professionals, American Sociological Review, vol. 76, 

no. 5, 2011, pp. 695-712.
there are other methods to protect trade secrets or protect investments that do not impede workers’ mobility 

and reduce their bargaining power, such as non-disclosure agreements narrowly tailored to address those 

issues and using the civil actions available under the Defend Trade Secrets Act.

Non-compete provisions are usually presented by employers in a ‘take it or leave it’ fashion. Most employees 

and independent contractors do not have the power to change them or negotiate their implementation. 

Workers are forced to sign or forego the job opportunity contract or promotion. Studies have shown that 

workers rarely negotiate on the issue of non-competes, largely because many receive the non-compete as a 

condition of a job offer or after accepting the job offer and lack the power to do so.4 Of those who received 

the non-compete before the job offer, only 10 percent bargained over the non-compete.5

The proliferation of these agreements has had the practical effect of stopping workers from moving to new 

jobs in their chosen industry. For workers in low wage industries, this can have dire consequences, as 

moving from company to company is often how workers receive raises. Non-competes have been shown to 

depress wages by reducing competition.6 Thus, many employers, by requiring workers to sit out of the labor 

market for a year to 18 months are depriving them of receiving the higher wages and benefits that they 

would receive through taking a job with a new company, often without any additional compensation for the 

time away from the workforce.

7 Recent research on a partial non-compete ban in Oregon found that banning 

non-competes for hourly workers contributed to higher hourly wages.8 Also, research has shown that in 

addition to lowering wages overall, the enforcement of non-competes may exacerbate the wage gap that

workers of color face.9

While some states have been moving toward partially banning or restricting non-competes, state laws 

governing non-competes are a patchwork of provisions and approaches that do not go far enough in 

regulating the use of these coercive practices.

10 In the wake of the Covid-19 pandemic, the FTC can contribute 

to a more just recovery. The FTC should not hesitate to weigh in on the legality of non-compete agreements. 

Such a step would change the national landscape for job mobility and provide relief and opportunity for 

millions of workers.

11

Respectfully submitted,

Najah A. Farley

Najah A. Farley

Senior Staff Attorney

4 Two studies have shown that 30-40% of workers received the non-compete after they have accepted the job offer. Starr, Evan, 

J.J. Prescott, and Norman Bishara, Noncompetes in the U.S. Labor Force, University of Michigan Law & Econ Research Paper 

No. 18-013, 2019 and Marx, Matt, The Firm Strikes Back: Non-Compete Agreements and the Mobility of Technical 

Professionals, American Sociological Review, vol. 76, no. 5, 2011, pp. 695-712.

5 Evan Starr, J.J Prescott,. and Norman Bishara, Noncompetes in the U.S. Labor Force (December 24, 2017),

https://ssrn.com/abstract=2625714.

6 Marshall Steinbaum, How widespread is Labor Monopsony? Some New Results Suggest its Pervasive, ROOSEVELT

INSTITUTE, December 18, 2017; Greg Robb, Wage growth is soft due to declining worker bargaining power, former Obama 

economist says, MARKETWATCH, August 24, 2018.

7 The requirement to pay the employee for the time of the restriction required by the non-compete has been included in the 2018 

Massachusetts non-compete law, MGL c.149, § 24L (2018) Massachusetts Noncompetition Agreement Act. 

8 Michael Lipsitz and Evan Starr, Low-wage workers and the enforceability of non-compete agreements, Academy of 

Management, July 29, 2020, https://journals.aom.org/doi/epdf/10.5465/AMBPP.2020.50.

9 Matthew S. Johnson, Kurt Lavetti, Michael Lipsitz, The Labor Market Effects of Legal Restrictions on Worker Mobility, 

February 17, 2021, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455381.

10 Beck Reed Riden, “New Map of Recent Changes to State Non-compete Laws,” Fair Competition Law, June 8, 2021, 

https://faircompetitionlaw.com/2021/06/08/new-map-of-recent-changes-to-state-noncompete-laws/.

11 Economic Policy Institute estimates that 36-60 million private sector workers are covered by non-competes. Alexander J.S. 

Colvin and Heidi Shierholz, Noncompete Agreements, December 10, 2019, https://www.epi.org/publication/noncompeteagreements/.
Page 1 of 6

Scott Strumello

The Honorable Lina Khan

Chair

U.S. Federal Trade Commission (FTC)

Washington, DC 20580

julypubliccomments@ftc.gov

July 1, 2021

Dear Ms. Kahn and FTC staff,

I sincerely appreciate the opportunity to submit a written statement for the Federal Trade Commission review. 

As an individual who has lived with autoimmune Type 1 diabetes for nearly a half century, my concerns are primarily with the 

U.S. pharmaceutical and biotech industry practices related to prescription drug (Rx) "rebates", exactly WHO benefits from 

those price concessions, how Rx rebates affect spending by both insurers and consumers, and the role pharmacy benefit 

managers ("PBM's") and other entities play in the process. Although the topic is complex, I believe a great deal was explained 

in the bipartisan U.S. Senate report "Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug" (see 

https://www.finance.senate.gov/download/grassley-wyden-insulin-report for the report) which is a through document 

containing details on the underlying business practices which is useful background information.

Rx Rebates Have Become the Primary Way in which Pharma Competes on Price, But Not All Benefit

Let me begin by acknowledging that back in the 1990's — when the National Association of Insurance Commissioners (NAIC) 

decided its Statutory Accounting Principles would not follow the Generally Accepted Accounting Principles (GAAP) that treated 

prescription drug rebates as price offsets — there were relatively small Rx rebates on most prescription drugs, most healthcare 

plans at the time still had small fixed co-pays, and a health plan's members were all more or less equally affected by the 

prescription drug rebating practice. Since then, changes in benefit designs means at least half of all individuals who receive 

employer-sponsored commercial healthcare insurance now has a high-deductible insurance plan. However, failure to adhere 

to generally accepted accounting standards means that billions of dollars is generally not even apparent to most auditors, 

which has grown into a massive problem.

Rx Rebates Have Ballooned Into a $187 Billion/Year Problem

As of 2020, prescription drug rebates had ballooned into $187 billion in size, and the figure has grown steadily in recent years. 

Rx rebates have grown far too big to simply be ignored by the U.S. FTC anymore. According to estimates from Adam J. Fein, 

who is the CEO of the Drug Channels Institute, a subsidiary of Pembroke Consulting, Inc. whose primary clients are pharma 

companies and entities involved in U.S. prescription drug distribution (including drug wholesalers and pharmacy benefits 

managers and their parent companies which are U.S commercial healthcare insurance companies), as of 2020, 77% of all U.S. 

prescription drug claims are now paid for by the three largest PBM's (CVS Health/Caremark/Aetna at 32%, Cigna's Express 

Scripts + Ascent Health Services at 24%, and United Healthcare Group's OptumRx unit at 21%). For the source data, visit 

https://www.drugchannels.net/2021/04/the-top-pharmacy-benefit-managers-pbms.html for details). Dr. Fein was also the 

source of the estimated the total value of gross-to-net reductions ("Rx rebates") for patent-protected brand-name drugs (Rx 

rebates) which he reveals totaled $187 billion in 2020, and that includes insulin as a therapeutic category. Insulin is unique in 

that there are no "generic" versions of this medicine sold in the U.S. today, and FDA-approved biosimilars not made and sold 

by one of the three primary suppliers are relatively few in number (so far), and are primarily in the basal insulin category, not 

the rapid-acting mealtime insulin category.
Page 2 of 6

Insulin Is One of the Most Heavily-Rebated Prescription Drugs in Existence

As it turns out, insulin is a therapeutic category of prescription drugs which happens to be among the most heavily-rebated 

categories in existence. The leading companies (Eli Lilly & Co., Novo Nordisk and Sanofi supply over 95% of all insulin sold in the 

U.S., the notable exception seems to be insulin sold in IV bags used by emergency and operating rooms, and that appears to be 

mainly from Pfizer. Of note is that a vast majority of insulin is self-administered by patients, except for those who happen to be 

hospitalized) are willing to pay big rebates in order to get their insulins listed on preferred drug formularies. In fact, we know 

with absolute certainty that one of the largest insulin manufacturers operating in the U.S., Denmark-based Novo Nordisk A/S 

(whose U.S.-based subsidiary Novo Nordisk, Inc. is based in Princeton, NJ), has started to openly disclose in the company's 

quarterly earnings presentations to investors exactly how much it spends on Rx rebates. In Novo Nordisk A/S Q4 2020 earnings 

presentation, the company now discloses rebates as a percentage of gross U.S. sales for insulin. An archived version for the 

company's Q4 2020 earnings presentation can be accessed free of charge at https://seekingalpha.com/article/4403040-novonordisk-s-2020-q4-results-earnings-call-presentation, and the data revealing 74% rebate percentage of gross sales are is 

revealed on slide #103.

Rx Rebates Are Nearly Impossible to Track Due to FASB Non-Compliance

As noted, the primary means by which the pharmaceutical and biotechnology industries secure commercial healthcare 

insurance formulary placement is with volume-based price concessions which are given in the form of prescription drug 

rebates. We know that rebates are given in aggregate from a given pharmaceutical company and paid to a pharmacy benefits 

manager. This also makes it challenging to discern the dollar amount of rebates paid for each pharmaceutical product, 

although Novo Nordisk is close because most of its revenues are derived from insulin, although the company has shifted focus 

away from insulin to GLP-1 drugs sold to treat Type 2 diabetes. 

Insulin is the ONLY FDA-approved drug for the treatment of autoimmune Type 1 diabetes, therein lies the problem. We also 

know with certainty that the top three PBM's now pay for more than 3/4 of all prescription drugs sold in the U.S.

Pharmaceutical Industry Raises Prices in Tandem, Down to the Last Cent

One troubling discovery is one which is remarkably similar to the one which Connecticut Attorney General William Tong who 

filed a compelling lawsuit in June 2020. His complaint saw 51 states and U.S. territories joining him in a price-fixing lawsuit in a 

conspiracy by generic drug manufacturers to artificially inflate and manipulate prices, reduce competition, and unreasonably 

restrain trade for generic drugs sold across the United States. Although the case must still be heard in court, for a case to have 

such overwhelming cooperation among all states and other territorial government attorneys suggests strongly that the case 

will likely be successful. 

The following charts are courtesy of the news outlet Business Insider, but the graphic images explain more than 1000 words 

can the lockstep insulin price increases for both rapid-acting and long-acting insulin varieties routinely used by patients from 

supposedly rival insulin manufacturers, so I wish to include them on the next page:
Page 3 of 6
Page 4 of 6

The suits argue that through telephone calls, text messages, emails, corporate conventions, and dinner parties, generic 

pharmaceutical executives were in constant communication, colluding to fix prices and restrain competition as though it were 

a standard course of business. Even though they knew what they were doing was wrong and likely illegal, and they took steps 

to try and evade accountability, using code words and warning each other in order to avoid email and detection. 

Between 2007 and 2014, a number of different generic drug manufacturers sold most of the generic drugs dispensed in the 

United States. The multistate investigation uncovered comprehensive, direct evidence of unlawful agreements to minimize 

competition and raise prices on more than 114 generic drugs. The first of three complaints alleged longstanding agreements 

among various manufacturers to ensure a "fair share" of the market for each competitor, and to prevent "price erosion" due to 

competition. If generic drug manufacturers are behaving in this manner, there is no reason to believe brand-name drug makers 

are not doing the same thing (see the original complaint at https://portal.ct.gov/-/media/AG/Press_Releases/2019/FINALRedacted-Public-Derm-Complaint.pdf for detail). All one needs to do is to simply look at historical price increases which have

moved in tandem with one another for years for insulin price increases.

That said, the U.S. Federal Trade Commission (FTC) has unique power to investigate the covert secret money-transfer of more 

than $180 billion/year in Rx rebates, as well as the brand-name drug industry's lockstep price-increases by the pharmaceutical 

companies on their insulin products, all of which suggests the same type of behavior is going on in the brand-name drug 

industry because they believe they can realistically get away with that anticompetitive behavior. Importantly, I urge the FTC to 

use this letter as a basis to begin immediate investigation into what genuinely look like anticompetitive (and criminal) 

behaviors by various entities involved in the manufacture, merchandising and sale of insulin products in the United States.

Vertical Integration of Commercial Healthcare Insurance Co's with PBM's Should Not Have Been FTC-Approved, But Were

Commercial healthcare insurance company payers are the colossal elephants in the room of U.S. insulin pricing. There has 

been a steady stream of mergers and acquisitions among healthcare insurance companies over the past 25 years, and the 

largest among them now cover more individuals than the European Union countries combined in terms of prescription drug 

sales. Adding to that complexity is the very recent vertical integration of pharmacy benefits managers ("PBM's") and 

commercial healthcare insurance companies. Previously, PBM's operated primarily as independent entities, today, the top 3 

PBM's are all owned by big healthcare insurance companies, and the FTC said almost nothing about that vertical integration

and raised no questions about the impact of those business combinations. Most notably, in the past 3 years, the FTC had 

allowed Cigna to acquire Express Scripts, and CVS Health to acquire Aetna. Perhaps with the benefit of hindsight, FTC can now

see those mergers should have specified certain divestitures.

The healthcare insurance company payers have used their weight to push for massive rebates, and then to create benefit 

designs where Americans pay for prescriptions as a percentage of "gross pharmacy claims expense." That's the front-end price 

at the pharmacy. It doesn't account for rebates and other offsets that travel around the back from manufacturers to insurers. 

In the 1990's — when the National Association of Insurance Commissioners (NAIC) decided its Statutory Accounting Principles 

would not follow the Generally Accepted Accounting Principles (GAAP) that treat rebates as price offsets — there were small 

rebates on most drugs, most health plans had small fixed co-pays, and a health plan's members were all more or less equally 

affected by the practice. Two decades later, about 90% of prescription fills are for generics that have no back-end rebating —

but for the remaining 10% of prescriptions, for brand-name drugs, rebates have exploded to more than $150 billion annually. 

Those include people who need insulin.

Meanwhile, half of Americans are now on healthcare plans with high deductibles or percentage cost-"sharing" that insurers 

base upon gross claims expense. This is why the calls for FTC investigation on insulin prices have grown so much in recent 

years. Patients are being routinely exposed to bogus drug list prices and they are pissed-off about it.
Page 5 of 6

Drug Channels: "High Rx Prices Are the Other Guy's Fault, Not Ours!"

The pharma lines were well-rehearsed, but ring hollow. First, pharma claimed that no one actually pays list price for drugs. 

That's a categorical falsehood today. 

Although no drug channel entity pays the bogus list price, more than half of all patients are regularly forced to pay the bogus 

list price at the pharmacy now because they have high-deductible insurance plans. Although the urgency could decline since 

the Internal Revenue Service (IRS) FINALLY added insulin and other diabetes medicines to the small list of "preventative 

treatments" eligible for pre-deductible coverage, the reality is that differing "plan year" dates have enabled commercial 

healthcare insurance companies to collect billions of dollars in Rx rebates and not share them with patients and justify not 

sharing the money due to different plan year dates for each policy sold. We also know that the destination for those billions 

isn't insurance companies' bottom lines, but are instead flowing to employers, being given to employers as "premium offsets". 

It is the reason former FDA chief Scott Gottlieb made headlines in 2018 (see https://www.cnbc.com/2018/03/07/fdacommissioner-to-health-insurers-youre-doing-it-wrong.html for detail) when he told a conference of insurance company 

executives they were "doing it [healthcare insurance] wrong" and that the sick are not supposed to be subsidizing the healthy

in a functional healthcare system.

Dysfunctional Government Gives Drug Channel Entities Exactly What They Want Most: To Preserve the Costly Status Quo at 

the Expense of Patients

In reality, there is plenty of fault to go around amongst all entities which are primarily concerned with collecting money they 

have not earned from a dysfunctional drug distribution system, yet what the pharmaceutical industry, the commercial 

healthcare insurance industry, as well as a variety of drug channel entities including PBM's all want most is to preserve the 

expensive status quo of leaving everything as it is right now. Thanks to a divided and largely dysfunctional federal government, 

that is precisely what they've received. That said, states across the country have been taking actions on their own.

Colorado began with a price cap on insulin prices. Other states followed-suit. Ordinarily, price caps are not really an effective 

solution to a structural problem, but in this case, they are very effective solutions. The reason is because state-mandated price 

caps on insulin FORCE commercial healthcare insurance companies to share the benefit of the 74% insulin rebates they are 

already receiving from PBM's which they own outright with the covered patients whose prescription drug purchases generate 

those rebates in the first place. For insurance, it means they must reduce premiums using some other revenue source, not 

insulin Rx rebates.

Supreme Court Ruled in Rutledge v. Pharmaceutical Care Management Association That States CAN Regulate PBM Activities

Separately, in 2020, the U.S. Supreme Court handed the states a unanimous victory in governing pharmacy benefits managers 

("PBM's") in the Rutledge v. Pharmaceutical Care Management Association ruling (see the ruling at 

https://www.supremecourt.gov/opinions/20pdf/18-540_m64o.pdf for details) which the drug industry trade group known as 

the Pharmaceutical Research and Manufacturers of America (better known by its acronym PhRMA). The 19-page decision ruled 

that Arkansas Act 900 was legal because payments made for voluntarily-created employee benefit plans in private industry 

under the Employee Retirement Income Security Act of 1974, otherwise known as ERISA. ERISA plans are not regulated by 

state insurance departments and are typically self-funded. Yet when the Arkansas law went into effect in September 2015, the 

Pharmaceutical Care Management Association, which represents PBM's, immediately sued. The industry argued that state laws 

can't preempt PBM behaviors. The high court disagreed, thereby opening the door to various state laws to do what the Federal 

government has basically chosen to ignore.

To be sure, price-caps are not the best way to fix the problem, but they deliver an immediate fix to a complex problem which 

defies easy fixes. But the U.S. Federal Trade Commission (FTC) should immediately investigate the covert secret moneytransfer of $187 billion/year in Rx rebates, and lockstep price-increases by the pharmaceutical companies on their insulin 

products. Ordinary "free" markets do not typically behave in such a manner, unless the industry has concluded that it is in their 

best interests to simply not compete on price anymore.
Page 6 of 6

GoodRx Co-Founder/Co-CEO: "A Company Like Ours Should Not Need to Exist"

Aside from positive Supreme Court rulings and other litigation still working their way through the judicial process, we have 

witnessed an important development occur in the U.S. marketplace for prescription drugs. A Santa Monica, California-based 

startup known as GoodRx Holdings, Inc. is starting to deliver meaningful benefits to consumers in terms of runaway 

prescription drug prices. Without a long diatribe about how GoodRx actually works, some important things to know are that 

the company had a successful IPO on September 22, 2020. It is already very profitable.

Although one might presume that the company mainly serves uninsured customers with prescription drug coupons, in fact, 

more than 75% of GoodRx customers are individuals who already have insurance coverage, many with high deductible 

insurance plans which force them to pay bloated prices for prescription drugs until they have satisfied an annual deductible.

Unlike many rivals, GoodRx offers instant discounts of more than 75% off of many (not all) insulin products. The company has 

offered a way for many consumers to slash their out-of-pocket costs and find it is cheaper to buy prescription drugs like insulin 

with a GoodRx coupon than it is to buy it with their insurance, even though insurance purchases contribute towards 

deductibles they must satisfy.

Around the time of the GoodRx IPO, company co-founder and co-CEO Doug Hirsch revealed:

"It's [GoodRx] totally free, because it should be free. I say this, and people think it's a PR statement or something, but I 

would love someday to have our company not need to exist. I lived in England for a while, so I have some understanding 

of the NHS: It's such an advancement over what we have. A company like ours should not have to exist: People should 

be able to get the health care that they need, without having to do research and jump through hoops and get 

approvals. I spent an hour on the phone yesterday with a hospital because my son had a seizure six months ago, and 

I've got a stack of bills, trying to just get it straight. The amount of time and effort and energy being wasted in this 

country, it's mind blowing."

The critical take-away is that the Federal Trade Commission (FTC) has a critical role to play here. Currently, the secret cashflow for prescription drugs enables the commercial healthcare insurance companies to collect billions in Rx rebate money, use

that money to sell more insurance policies, and play massive financial games with insulin prices, because no one really has a 

very reliable accounting for where all those billions of dollars are going right now. The Federal Trade Commission (FTC) can 

play a meaningful and unique role with a thorough investigation of what the healthcare insurance industry is doing with all of 

the prescription drug rebates, and should really break-up the insurance companies so they're no longer vertically-integrated 

with the PBM's because that has proven to be very anticompetitive behavior and damaging to the retail pharmacy business, 

but that typically takes a lot of time and does not always yield immediate benefit. 

FTC Role: Not Simply Rubber-Stamping Corporate Mergers & Acquisitions

Consider what happened when the FTC broke-up the old Bell System back in 1984. My father worked for his entire career for 

the old AT&T and it provided very nicely for my family. But breaking-up the old Bell System ultimately yielded massive societal 

benefits, only it took several decades for those benefits to be realized. For example, today, I can pick up the telephone and call 

your office in Washington DC and pay next to nothing for the call. Back in 1984, that phone call would have cost me several 

dollars (depending upon the length of the call). Whenever monopolistic behavior occurs, un-doing that takes time, and in the 

meantime, there is not much societal benefit. But mandating Rx rebate pass-thru to patients at the cash register would provide 

immediate patient benefit while longer-term fixes are done in a prudent and more thoughtful manner.

I sincerely hope the FTC can investigate the underlying issues related to insulin prices, which have risen for many patients by 

more than 1,100% over the past decade. I look forward to seeing the U.S. FTC looking into this matter,

Sincerely,

Scott Strumello
1

From: Corey Duteau < >

Sent: Thursday, July 1, 2021 3:49 PM

To: JulyPublicComments

Subject: Pharmacy Benefit Managers (PBMs) & DIR fees!!!

Dear FTC,

I am reaching out to you to make comments on the DIR fees that the Pharmacy Benefit Managers (PBMs) have taken

back from our small little Vermont pharmacy so far this year, not to mention from all the pharmacies in this country. As

you can see depicted by the first chart, to date, they have taken back $61,613.95!! so far this year. In 2020, the

PBMs took back $145,092.94. $115,000 of this was from CVS Caremark alone!!!! This is downright illegal and is

like dealing with organized crime. What other industry takes money back from a sale six to nine months after the

transaction was completed??!!

What is also interesting is that if you look at the third chart labeled CVS CAREMARK DIR FEES that focuses on CVS solely,

you will see how quickly they are increasing what they are taking back from our pharmacy alone. From 2019 to 2020,

CVS DIR fees increased by 60%!!!!! How are they allowed to do this?! They are allowed to do this because our Senators,

Congressmen/women, FTC and other government agencies have allowed the PBMs to fleece America’s independent

pharmacies for decades. Enough is enough!

What is frustrating to pharmacy owners is that it seems everyone in Washington just doesn’t understand why the

healthcare system in the United States is so expensive. Let me be blunt and point directly to the PBMs for medication

costs! It really doesn’t get any simpler than this. Our government has allowed mega companies like CVS to not only

reimburse pharmacies for medications, but they are allowed to own their own pharmacies where they reimburse

themselves more than they would an independent like us, and the government has even allowed companies like CVS to

own insurance companies. They now own the majority of the companies that are all part of the medication system in

the United States. Nothing like having so much money, you can buy your way in to monopolies and literally put your

competition out of business because your competition relies on receiving payments from the competition.

I hope that you saw the Supreme Court actually brought some justice and understanding to what the PBMs are

doing. SCOTUS sided with the AG from Arkansas who said what the PBMs are doing is nothing short of organized

crime. Why has no one else in the Senate, Congress, FTC, etc. been able to see what these companies are doing? It’s

shameful to say that our representatives and government agencies either don’t care or have been lobbied heavily by

these tyrants who say they are only helping save money.

What I would love to hear is that the FTC will investigate and break up these illegal monopolies!! Now that the Supreme

Court sided with Rutledge (Rutledge vs PCMA), there should be sufficient proof that the PBMs need to be regulated, and

you are in a position to start doing something to save all the independent pharmacies across this nation. In addition,

State after State are conducting their own review of just their Medicaid programs which are funded in part by Federal

money and just this week Delaware concluded an analysis of 2018-2020 and determined that the PBMs have

overcharged them 24.5 million dollars!!!! State by State, the proof is being shown that the PBMs are illegally profiting

from our government’s ignorance to how they operate. They are making BILLIONS of dollars all funded by the taxpayers

of this nation.

Now is the time to do something that will make a difference across the nation! Time to regulate PBMs at the Federal

level!!

2021 YTD
2

2020

CVS CAREMARK DIR FEES
3

Corey Duteau, R.Ph.

Pharmacy Manager

www.freedompharmacyvt.com

www.facebook.com/freedompharmacyvt

CONFIDENTIALITY NOTICE: The information contained in this transmission may be privileged, confidential and protected from disclosure under Federal Confidentiality Laws (42

CFR Part 2 and 45 CFR Parts 160-164). Any dissemination, distribution, or duplication of this communication is strictly prohibited without the consent of the writer. If you are not

the intended recipient, or you have received this communication in error, please notify the sender immediately at the email address above or delete this email.
1

From: Gary Boehler < >

Sent: Wednesday, June 30, 2021 2:13 PM

To: JulyPublicComments

Cc: Weinsten, Randall M.

Subject: FTC July 1st Comments

Importance: High

Good Afternoon,

Per Randall Weinsten I am submitting comments for your open hearing tomorrow. Using the original website, I was

consistently messaged with “Access Denied.” Mr. Weinsten suggested I use the email address above.

Below are my comments in my original writing.

Thank you.

Good Morning,

I am submitting comments as a consultant pharmacist with 51 years of experience, the past 35 focused primarily on

third party (pharmacy benefit manager) contracting, and the negative impacts on patients, plan sponsors, state and

federal taxpayers, and pharmacies across the nation. In my estimation this has largely developed because of a lack of

FTC scrutiny on the vertical integration of large insurance companies with pharmacy benefit managers, their self-owned

mail order and specialty pharmacies, behind the scenes rebate aggregators, patient clawbacks, and a myriad of other

egregious actions that are directly responsible for the rising costs of prescription drugs; all this in spite of the fact that

90% of all prescriptions filled are generic, generic deflation averages 10%-12% per year, yet patient costs and

copays/coinsurance continues to rise. At the same time, PBM profits continue to climb, CEOs are paid $36 million per

year (Larry Merlo, CVS Caremark) and everyone else is footing the bill.

1. The FTC has not done its job in stopping vertical integration. The top five PBMs now control 85% of the prescription

drug market. All of them either own or are owned by the largest health insurance carriers in this county (United

Healthcare, Cigna, Aetna). The huge savings espoused during these integrations are NOWHERE to be found.

2. Patients are being steered by these behemoths to PBMs' preferred or restricted networks (or their own mail

order/specialty facilities). Who is the PBM to tell a patient where he/she must obtain their prescriptions? Apparently it is

OK to force a patient to drive 25 or more miles one way to get their prescription needs. That's not freedom of choice -

it's steering pure and simple.

3. Manufacturers continue to be blamed for the high cost of drugs; I will grant you there is some blame to be laid at

manufacturers' doorsteps, but I am also firmly convinced 80% of the issue lies at the doorsteps of these vertically

integrated corporations, who have no fiduciary responsibility to anyone but themselves and their shareholders

.Manufacturers, by and large, are being held hostage by PBMs who engage in nothing less than "bidding wars" to see

what manufacturer(s) is/are willing to pony up the biggest rebates to a PBM for the "privilege" of being placed on a

formulary in a top tier position.

4. State and federal taxpayers are being swindled by PBMs. The amount of state and federal dollars being spent for state

Medicaid programs, Medicare Part D, veterans' prescription drug benefits, and all other taxpayer funded programs has

to run into billions of wasted dollars annually. One only look back to the past three to five years to see state findings of

spread pricing in state Medicaid programs; the same is true of Medicare Part D programs showing huge patient

clawbacks at the point of sale, DIR fees being extracted from pharmacies post-adjudication, and other performance

management fees being pulled back retrospectively. Does the federal government have any accountability in place to
2

really track how many of those fees that rightfully belong to U.S. taxpayers ever make it back to the government coffers?

If so, I would love to be informed how my taxpayer dollars are being recouped from these "guardians" of my taxpayer

dollars.

5. PBMs have no fiduciary responsibility of any kind except to themselves and their shareholders. Why is that allowed,

and why does the federal government/FTC/DOJ continue to allow this to happen. As a taxpayer I demand a reckoning of

my tax funded donations to the federal government. At age 74 and 51 years of non-stop work, as well as an in-depth

understanding of how PBMs operate in the shadows, it is time for those of us with that understanding to be allowed to

speak our piece and be heard.

6. Anything and everything a PBM does is FOIA protected; it is written all over their contracts and is another alarm bell

that there is something very amiss when this "sensitive information" may not be shared. It is nothing more than an overt

attempt to remain in the shadows and keep everyone else in the dark; that has become and is the PBMs' modus

operandi. I believe the FTC and government knows this but has not chosen to do anything about it.

7. The FTC is supposedly focused on anti-trust and anticompetitive practice in these United States. With respect to the

profession of pharmacy let me share with you some egregious actions of PBMs that point directly to those types of

actions:

a. Contracts of adhesion for independent pharmacies - take it or leave it; no negotiations. As a pharmacy you are in or

you're not. Additionally, during the term of a contact, a PBM can unilaterally move your store to another network, adjust

reimbursement rates, force your patients to their preferred/restricted networks of which you may not be a part

(multiple Medicare Part D networks do not even OFFER parts of their networks to an independent owner).

b. Patients being forced to big box stores or PBM owned mail order and/or specialty pharmacies, meaning direct

competition with a locally owned pharmacy over which the patient has no choice. This, even though practically ALL

patients want their prescriptions filled by their local pharmacist who they know and trust as opposed to a pharmacy

hundreds of miles away with no face and virtually NO interaction for patients on life saving drugs.

c. Unbridled restrictions on PBMs with DIR fees taken from pharmacies at will months after a prescription has been

filled! The PBMs set their own rules and guidelines, do not measure a pharmacy's performance based on that store's

own merits, but rather "lumps" all pharmacies in a network or grouping and rates them all on a "combined" average

score. That is anticompetitive when a top performing store is "fined" for being a top performer but is not treated as such

in the end with the financial reward deserved.

d. Prime Therapeutics, within the past 18 months, has "assigned" its adjudication and contracting to Express Scripts in

two steps .On April 1, 2020, Express Scripts began doing the claims adjudication for Prime Therapeutics. In so doing, the

contracted rates that Express Scripts had in its system were used instead of what pharmacies had contracted with Prime

Therapeutics - all because of the "assignment" clause Prime Therapeutics had in place with all of its contracted

pharmacies. Then..........on January 1, 2021, Express Scripts also began doing all pharmacy contracting on behalf of Prime

Therapeutics, meaning all negotiations for Prime Therapeutics are done through Express Scripts. The most recent

announcement came from Prime Therapeutics & Express Scripts stating that Express Scripts will now start doing

manufacturer rebate negotiations on behalf of Prime Therapeutics as well. It appears to me that this is another thinly

veiled vertical integration between Express Scripts and Prime Therapeutics without having signed the marriage

document or exchanged wedding rings. This is so blatantly obvious to all of us in the retail world of pharmacy! How can

that not be obvious to the FTC? Many of us feel the FTC is aware, but chooses to do nothing. My colleagues and I are

asking for a deep dive into these usurious actions by PBMs across the country and rein them in. The end result will be

billions of dollars in this country's annual drug spend. The rich are becoming richer at the expense of everyone else in

their path.

I am asking that you submit these comments to my U.S. Senator Amy Klobuchar. She has indicated a deep desire to

address anticompetitive issues in this country. Among them are those actions of PBMs and something that directly or

indirectly impacts every American in this country, both in monetary impacts as well as availability to receive the

appropriate prescription care that all are entitled to receive. We have a group of behemoths standing in the way that

needs to be addressed now, and not later. These companies are NOT too big to fail, nor will they. They need to be reined

in and have controls put in place in both state and federal venues. All of us "here on the outside" need your help.

I have also contacted Senator Klobuchar's office and told her staff to expect my comments in this email to be sent to her

office; I will be in touch with the Senator to set up meetings with her staff and the Senator if available to provide much
3

more in-depth proof of what is really happening behind the smoke and mirrors games of pharmacy benefit managers in

this country. It is interesting to note that the United States has the highest drug costs in the world by about 40%, while

at the same time we are the ONLY country in the world that utilizes PBMs (middlemen). This model needs to change

before it is too late.

Thank you for allowing me to share these comments.

Sincerely,

Gary W. Boehler, R.Ph.

Consultant Pharmacist

FTCComments_June302021

Gary Boehler, R.Ph.

Disclaimer

The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and

others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or

taking action in relation of the contents of this information is strictly prohibited and may be unlawful.

This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in

Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in;

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1

From: Ashley Baker < >

Sent: Wednesday, June 30, 2021 11:49 AM

To: JulyPublicComments

Subject: Public Comment Submission Form for July 1, 2021 Open Commission Meeting

Attachments: FTC July Meeting_Joint Comments.pdf

To whom it may concern,

I would like to submit the attached written comments to be placed on the public record of the Commission for the July

open meeting.

Please let me know if you have any questions.

Thank you,

Ashley Baker

Ashley Baker

Director of Public Policy

The Committee for Justice

Website | www.committeeforjustice.org

Twitter | @andashleysays | @CmteForJustice

To help protect your privacy, Microsoft Office prevented automatic download of this picture from the Internet.

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prevented

auto matic

download of

this picture

from the

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ᐧ
1

Submitted: June 30, 2021 

Lina Khan

Chair, Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

COMMENTS TO THE FEDERAL TRADE COMMISSION 

CONCERNING THE JULY 1, 2021 OPEN MEETING AGENDA

In Re: Rescission of 2015 Statement of Enforcement Principles On Unfair 

Methods of Competition Under FTC Act § 5

Dear Chair Khan and Commissioners Phillips, Chopra, Slaughter, and Wilson:

We, the undersigned, appreciate this opportunity to provide comments regarding the possible 

rescission of the Commission’s 2015 Statement of Enforcement Principles Regarding Unfair 

Methods of Competition (UMC) Under Federal Trade Commission Act § 5 (2015 statement). 

While we applaud the Commission’s broader goal of bringing transparency through a series of 

monthly open meetings, allowing only six days for public comment on significant agenda items 

that will drastically affect enforcement policy decisions is a deterrent to substantive public 

input.1 As Commissioner Noah Phillips stated, “a mere week’s notice on matters requiring 

serious deliberation, and a number of the policies themselves, undermine that very goal” of 

transparency.2 To allow for both transparency and substantive public participating in these 

proceedings, the Commission should allow for a standard of 30 days of public input. 

More troubling still is the fact that the Commission will be considering a significant shift in 

enforcement policy as the open meeting agenda will include this sudden push to revoke the 2015 

statement. This policy statement provides a bipartisan framework that lays out widely agreed 

upon core principles regarding antitrust law and the Commission’s Section 5 enforcement.

Among these principles is “the promotion of consumer welfare” and focusing enforcement on 

acts or practices that “must cause, or be likely to cause, harm to competition or the competitive 

process.” 

1 See “FTC Announces Agenda for July 1 Open Commission Meeting.” The Federal Trade Commission. (June 24, 

2021), available at: https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting.

2 Commissioner Noah J. Phillips. @FTC Phillips, Twitter. (June 25, 2021), available at:

https://twitter.com/FTCPhillips/status/1408459407134973955.
2

As the Commission explained when issuing its 2015 statement: “In describing the principles and 

overarching analytical framework that guide the Commission’s application of Section 5, our 

statement affirms that Section 5 is aligned with the other antitrust laws, which have evolved over 

time and are guided by the goal of promoting consumer welfare and informed by economic 

analysis.”3

The rescission of the 2015 statement would untether the Commission’s enforcement decisions 

from concerns over harms to consumers and to the competitive process. Consumer welfare is 

appropriately prioritized in the 2015 statement and remains the goal of antitrust as recognized 

and reaffirmed in existing case law. 

Additionally, the Commission’s recent Notice of the open meeting did not even state an 

objective justification for the quick removal of the 2015 policy, nor did it indicate whether it 

would be replaced by new guidance. 

Abandoning the 2015 statement’s framework would remove important guardrails that established 

predictability and guidance in enforcement actions. The lack of predictability resulting from the 

FTC’s re-expanded discretion in invoking broad Section 5 authority on a case-by-case basis 

would create uncertainty for businesses of all sizes and across all industries. The Commission’s 

misandventure into UMC expansionism would generate unwarranted confusion, and eventually

courts would have to grapple with questions of interpreting the outer boundaries of Section 5 

authority that were previously cabined by the 2015 statement. 

Above all, we are concerned that the Commission’s sudden rush to revoke the 2015 statement 

foreshadows a broader agenda to radically change antitrust law by greatly expanding the 

Commission’s enforcement discretion. 

These concerns have been echoed by others such as Senator Mike Lee (R-UT), who stated that 

“[s]hould the FTC rescind the statement, it will replace clarity with ambiguity in the midst of a 

fragile economic recovery. Rescinding the statement would also signal that the Commission 

rejects the idea that there are any limits to its power or regulatory reach, and that it intends to use 

Section 5 to address non-economic harms outside the agency’s purview or expertise.”4

Proposals to change well-functioning policies deserve serious deliberation and an opportunity for 

meaningful input from the public and from all stakeholders. We encourage the Commission to 

adopt a more open process and transparent approach that allows for proper notice and 

3 “Statement of the Federal Trade Commission On the Issuance of Enforcement Principles Regarding ‘Unfair 

Methods of Competition’ Under Section 5 of the FTC Act.” The Federal Trade Commission. (August 13, 2015), 

available at: 

https://www.ftc.gov/system/files/documents/public_statements/735381/150813commissionstatementsection5.pdf.

4 See “Sen. Lee Expresses Concerns about Possible Revocation of FTC 2015 Statement of Section 5 Enforcement 

Principles.”(June 24, 2021), available at: https://www.lee.senate.gov/public/index.cfm/pressreleases?ID=88C0AA07-BB92-427C-8EEC-63B92E8E6A26.
3

consideration of proposals. We welcome the opportunity to further discuss these views and stand 

ready to provide additional input. 

Sincerely,

Ashley Baker 

Director of Public Policy 

The Committee for Justice

Daren Bakst

Senior Research Fellow in Regulatory Policy Studies

The Heritage Foundation 

Asheesh Agarwal

Former Assistant Director

FTC Office of Policy Planning

Robert H. Bork, Jr.

President

Antitrust Education Project

Dan Caprio

Senior Fellow

The Lares Institute

James Edwards

Executive Director

Conservatives for Property Rights

Richard A. Epstein

The Laurence A. Tisch Professor of Law,

New York University School of Law

The Peter and Kirsten Bedford Senior Fellow,

The Hoover Institution

The James Parker Hall Distinguished Service Professor of Law Emeritus and Senior Lecturer,

The University of Chicago

Theodore A. Gebhard 

Former Senior Attorney

FTC Office of Policy and Coordination

Douglas Holtz-Eakin

President
4

American Action Forum

Jennifer Huddleston

Director of Technology and Innovation Policy

American Action Forum

Thomas A. Lambert

Wall Family Chair and Professor of Law

University of Missouri Law School

Doug McCullough

Director 

Lone Star Policy Institute

Timothy Sandefur

Vice President for Litigation

The Goldwater Institute 

Thomas A. Schatz

President 

Citizens Against Government Waste

NOTE: Organizations and affiliations are listed for identification purposes only.
1

Submitted: June 30, 2021 

Lina Khan

Chair, Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

COMMENTS TO THE FEDERAL TRADE COMMISSION 

CONCERNING THE JULY 1, 2021 OPEN MEETING AGENDA

In Re: Rescission of 2015 Statement of Enforcement Principles On Unfair 

Methods of Competition Under FTC Act § 5

Dear Chair Khan and Commissioners Phillips, Chopra, Slaughter, and Wilson:

We, the undersigned, appreciate this opportunity to provide comments regarding the possible 

rescission of the Commission’s 2015 Statement of Enforcement Principles Regarding Unfair 

Methods of Competition (UMC) Under Federal Trade Commission Act § 5 (2015 statement). 

While we applaud the Commission’s broader goal of bringing transparency through a series of 

monthly open meetings, allowing only six days for public comment on significant agenda items 

that will drastically affect enforcement policy decisions is a deterrent to substantive public 

input.1 As Commissioner Noah Phillips stated, “a mere week’s notice on matters requiring 

serious deliberation, and a number of the policies themselves, undermine that very goal” of 

transparency.2 To allow for both transparency and substantive public participating in these 

proceedings, the Commission should allow for a standard of 30 days of public input. 

More troubling still is the fact that the Commission will be considering a significant shift in 

enforcement policy as the open meeting agenda will include this sudden push to revoke the 2015 

statement. This policy statement provides a bipartisan framework that lays out widely agreed 

upon core principles regarding antitrust law and the Commission’s Section 5 enforcement.

Among these principles is “the promotion of consumer welfare” and focusing enforcement on 

acts or practices that “must cause, or be likely to cause, harm to competition or the competitive 

process.” 

1 See “FTC Announces Agenda for July 1 Open Commission Meeting.” The Federal Trade Commission. (June 24, 

2021), available at: https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting.

2 Commissioner Noah J. Phillips. @FTC Phillips, Twitter. (June 25, 2021), available at:

https://twitter.com/FTCPhillips/status/1408459407134973955.
2

As the Commission explained when issuing its 2015 statement: “In describing the principles and 

overarching analytical framework that guide the Commission’s application of Section 5, our 

statement affirms that Section 5 is aligned with the other antitrust laws, which have evolved over 

time and are guided by the goal of promoting consumer welfare and informed by economic 

analysis.”3

The rescission of the 2015 statement would untether the Commission’s enforcement decisions 

from concerns over harms to consumers and to the competitive process. Consumer welfare is 

appropriately prioritized in the 2015 statement and remains the goal of antitrust as recognized 

and reaffirmed in existing case law. 

Additionally, the Commission’s recent Notice of the open meeting did not even state an 

objective justification for the quick removal of the 2015 policy, nor did it indicate whether it 

would be replaced by new guidance. 

Abandoning the 2015 statement’s framework would remove important guardrails that established 

predictability and guidance in enforcement actions. The lack of predictability resulting from the 

FTC’s re-expanded discretion in invoking broad Section 5 authority on a case-by-case basis 

would create uncertainty for businesses of all sizes and across all industries. The Commission’s 

misandventure into UMC expansionism would generate unwarranted confusion, and eventually

courts would have to grapple with questions of interpreting the outer boundaries of Section 5 

authority that were previously cabined by the 2015 statement. 

Above all, we are concerned that the Commission’s sudden rush to revoke the 2015 statement 

foreshadows a broader agenda to radically change antitrust law by greatly expanding the 

Commission’s enforcement discretion. 

These concerns have been echoed by others such as Senator Mike Lee (R-UT), who stated that 

“[s]hould the FTC rescind the statement, it will replace clarity with ambiguity in the midst of a 

fragile economic recovery. Rescinding the statement would also signal that the Commission 

rejects the idea that there are any limits to its power or regulatory reach, and that it intends to use 

Section 5 to address non-economic harms outside the agency’s purview or expertise.”4

Proposals to change well-functioning policies deserve serious deliberation and an opportunity for 

meaningful input from the public and from all stakeholders. We encourage the Commission to 

adopt a more open process and transparent approach that allows for proper notice and 

3 “Statement of the Federal Trade Commission On the Issuance of Enforcement Principles Regarding ‘Unfair 

Methods of Competition’ Under Section 5 of the FTC Act.” The Federal Trade Commission. (August 13, 2015), 

available at: 

https://www.ftc.gov/system/files/documents/public_statements/735381/150813commissionstatementsection5.pdf.

4 See “Sen. Lee Expresses Concerns about Possible Revocation of FTC 2015 Statement of Section 5 Enforcement 

Principles.”(June 24, 2021), available at: https://www.lee.senate.gov/public/index.cfm/pressreleases?ID=88C0AA07-BB92-427C-8EEC-63B92E8E6A26.
3

consideration of proposals. We welcome the opportunity to further discuss these views and stand 

ready to provide additional input. 

Sincerely,

Ashley Baker 

Director of Public Policy 

The Committee for Justice

Daren Bakst

Senior Research Fellow in Regulatory Policy Studies

The Heritage Foundation 

Asheesh Agarwal

Former Assistant Director

FTC Office of Policy Planning

Robert H. Bork, Jr.

President

Antitrust Education Project

Dan Caprio

Senior Fellow

The Lares Institute

James Edwards

Executive Director

Conservatives for Property Rights

Richard A. Epstein

The Laurence A. Tisch Professor of Law,

New York University School of Law

The Peter and Kirsten Bedford Senior Fellow,

The Hoover Institution

The James Parker Hall Distinguished Service Professor of Law Emeritus and Senior Lecturer,

The University of Chicago

Theodore A. Gebhard 

Former Senior Attorney

FTC Office of Policy and Coordination

Douglas Holtz-Eakin

President
4

American Action Forum

Jennifer Huddleston

Director of Technology and Innovation Policy

American Action Forum

Thomas A. Lambert

Wall Family Chair and Professor of Law

University of Missouri Law School

Doug McCullough

Director 

Lone Star Policy Institute

Timothy Sandefur

Vice President for Litigation

The Goldwater Institute 

Thomas A. Schatz

President 

Citizens Against Government Waste

NOTE: Organizations and affiliations are listed for identification purposes only.
1

Submitted: June 30, 2021 

Lina Khan

Chair, Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

COMMENTS TO THE FEDERAL TRADE COMMISSION 

CONCERNING THE JULY 1, 2021 OPEN MEETING AGENDA

In Re: Rescission of 2015 Statement of Enforcement Principles On Unfair 

Methods of Competition Under FTC Act § 5

Dear Chair Khan and Commissioners Phillips, Chopra, Slaughter, and Wilson:

We, the undersigned, appreciate this opportunity to provide comments regarding the possible 

rescission of the Commission’s 2015 Statement of Enforcement Principles Regarding Unfair 

Methods of Competition (UMC) Under Federal Trade Commission Act § 5 (2015 statement). 

While we applaud the Commission’s broader goal of bringing transparency through a series of 

monthly open meetings, allowing only six days for public comment on significant agenda items 

that will drastically affect enforcement policy decisions is a deterrent to substantive public 

input.1 As Commissioner Noah Phillips stated, “a mere week’s notice on matters requiring 

serious deliberation, and a number of the policies themselves, undermine that very goal” of 

transparency.2 To allow for both transparency and substantive public participating in these 

proceedings, the Commission should allow for a standard of 30 days of public input. 

More troubling still is the fact that the Commission will be considering a significant shift in 

enforcement policy as the open meeting agenda will include this sudden push to revoke the 2015 

statement. This policy statement provides a bipartisan framework that lays out widely agreed 

upon core principles regarding antitrust law and the Commission’s Section 5 enforcement.

Among these principles is “the promotion of consumer welfare” and focusing enforcement on 

acts or practices that “must cause, or be likely to cause, harm to competition or the competitive 

process.” 

1 See “FTC Announces Agenda for July 1 Open Commission Meeting.” The Federal Trade Commission. (June 24, 

2021), available at: https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-opencommission-meeting.

2 Commissioner Noah J. Phillips. @FTC Phillips, Twitter. (June 25, 2021), available at:

https://twitter.com/FTCPhillips/status/1408459407134973955.
2

As the Commission explained when issuing its 2015 statement: “In describing the principles and 

overarching analytical framework that guide the Commission’s application of Section 5, our 

statement affirms that Section 5 is aligned with the other antitrust laws, which have evolved over 

time and are guided by the goal of promoting consumer welfare and informed by economic 

analysis.”3

The rescission of the 2015 statement would untether the Commission’s enforcement decisions 

from concerns over harms to consumers and to the competitive process. Consumer welfare is 

appropriately prioritized in the 2015 statement and remains the goal of antitrust as recognized 

and reaffirmed in existing case law. 

Additionally, the Commission’s recent Notice of the open meeting did not even state an 

objective justification for the quick removal of the 2015 policy, nor did it indicate whether it 

would be replaced by new guidance. 

Abandoning the 2015 statement’s framework would remove important guardrails that established 

predictability and guidance in enforcement actions. The lack of predictability resulting from the 

FTC’s re-expanded discretion in invoking broad Section 5 authority on a case-by-case basis 

would create uncertainty for businesses of all sizes and across all industries. The Commission’s 

misandventure into UMC expansionism would generate unwarranted confusion, and eventually

courts would have to grapple with questions of interpreting the outer boundaries of Section 5 

authority that were previously cabined by the 2015 statement. 

Above all, we are concerned that the Commission’s sudden rush to revoke the 2015 statement 

foreshadows a broader agenda to radically change antitrust law by greatly expanding the 

Commission’s enforcement discretion. 

These concerns have been echoed by others such as Senator Mike Lee (R-UT), who stated that 

“[s]hould the FTC rescind the statement, it will replace clarity with ambiguity in the midst of a 

fragile economic recovery. Rescinding the statement would also signal that the Commission 

rejects the idea that there are any limits to its power or regulatory reach, and that it intends to use 

Section 5 to address non-economic harms outside the agency’s purview or expertise.”4

Proposals to change well-functioning policies deserve serious deliberation and an opportunity for 

meaningful input from the public and from all stakeholders. We encourage the Commission to 

adopt a more open process and transparent approach that allows for proper notice and 

3 “Statement of the Federal Trade Commission On the Issuance of Enforcement Principles Regarding ‘Unfair 

Methods of Competition’ Under Section 5 of the FTC Act.” The Federal Trade Commission. (August 13, 2015), 

available at: 

https://www.ftc.gov/system/files/documents/public_statements/735381/150813commissionstatementsection5.pdf.

4 See “Sen. Lee Expresses Concerns about Possible Revocation of FTC 2015 Statement of Section 5 Enforcement 

Principles.”(June 24, 2021), available at: https://www.lee.senate.gov/public/index.cfm/pressreleases?ID=88C0AA07-BB92-427C-8EEC-63B92E8E6A26.
3

consideration of proposals. We welcome the opportunity to further discuss these views and stand 

ready to provide additional input. 

Sincerely,

Ashley Baker 

Director of Public Policy 

The Committee for Justice

Daren Bakst

Senior Research Fellow in Regulatory Policy Studies

The Heritage Foundation 

Asheesh Agarwal

Former Assistant Director

FTC Office of Policy Planning

Robert H. Bork, Jr.

President

Antitrust Education Project

Dan Caprio

Senior Fellow

The Lares Institute

James Edwards

Executive Director

Conservatives for Property Rights

Richard A. Epstein

The Laurence A. Tisch Professor of Law,

New York University School of Law

The Peter and Kirsten Bedford Senior Fellow,

The Hoover Institution

The James Parker Hall Distinguished Service Professor of Law Emeritus and Senior Lecturer,

The University of Chicago

Theodore A. Gebhard 

Former Senior Attorney

FTC Office of Policy and Coordination

Douglas Holtz-Eakin

President
4

American Action Forum

Jennifer Huddleston

Director of Technology and Innovation Policy

American Action Forum

Thomas A. Lambert

Wall Family Chair and Professor of Law

University of Missouri Law School

Doug McCullough

Director 

Lone Star Policy Institute

Timothy Sandefur

Vice President for Litigation

The Goldwater Institute 

Thomas A. Schatz

President 

Citizens Against Government Waste

NOTE: Organizations and affiliations are listed for identification purposes only.
1

From: Pam Dixon < >

Sent: Thursday, July 1, 2021 2:36 PM

To: JulyPublicComments

Subject: Comments of WPF pursuant to meeting

Attachments: WPF_Comments_FTC_OpenMeeting_01July2021_fs.pdf

Hi,

Attached please find our written comments with some details I was not able to add in my oral statement this morning

(July 1, 2021). Thank you for your work to make the commenting process smooth.

Please let me know if there are any questions,

Best regards, and thank you again for allowing the public to provide comments.

Pam

Pam Dixon

Executive Director

World Privacy Forum

p

Lake Oswego OR 97035

www.worldprivacyforum.org / @privacyforum
Comments of the World Privacy Forum to FTC Chair and 

Commissioners, Open FTC Commission Meeting 

July 1, 2021 

Chair Khan and Commissioners,

Thank you for the opportunity to make a public comment at this Open FTC 

Commission meeting. 

The FTC Health Breach Notification Rule implements the American Recovery and 

Reinvestment Act of 2009. Congress asked the FTC to craft a rule applicable to a 

vendor of PHRs or to a PHR-related entity in connection with a product or service 

offered by that entity. The FTC crafted an excellent rule, consistent with the limits 

provided by Congress. 

Fifteen years ago, PHR technology was clunky, and data transfers could be 

challenging. Today, there is significant expansion in health data ecosystems outside of 

HIPAA and include apps, smartwatches, mobile devices, and personal health records 

among other devices and mechanisms. 

The health ecosystem data flows outside of HIPAA protections have escaped the 

boundaries of the original rule. The World Privacy Forum requests that the Commission 

re-examine the Health Breach Notification rule to update it. The impacts of the global 

pandemic have put an exclamation point on the importance of this issue. 

Thank you for your work. 

Respectfully, 

Pam Dixon

Founder & Executive Director

World Privacy Forum 

Related documents:

World Privacy Forum Comments Page 1 of 2
• Comments of the World Privacy Forum to the FTC regarding Proposed Consent 

Order, In the Matter of Flo Health, File No. 1923133. March 1, 2021. (PDF, 4 pages) 

https://www.worldprivacyforum.org/wp-content/uploads/2021/03/

WPF_Comments_FloHealth_1March2021_fs.pdf

• Comments of the World Privacy Forum to the Federal Trade Commission regarding 

Health Breach Notification Rulemaking, Project No. R91102. June 1, 2009. (PDF, 12 

Pages) http://www.worldprivacyforum.org/wp-content/uploads/2009/08/

WPF_FTCBreachcomments_06012009_fs.pdf

World Privacy Forum Comments Page 2 of 2
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 2:57 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-14:57Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Corbin

LastName:Barthold

Affiliation:TechFreedom

FullEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

ThankyoufortheopportunitytocommentontheCommission’splan,atitsJuly1openmeeting,to“voteonwhethertorescindthepolicystatementissuedbythe

Commissionin2015[.]”FederalTradeCommission,FTCAnnouncesAgendaforJuly1OpenCommissionMeeting,https://bit.ly/2SBcxPT(June24,2021).ThePolicyStatement

givessubstancetotheopen-endedterm“unfairmethodsofcompetition,”inSection5.15U.S.C.§45(a)(1).

AbruptlyrevokingthePolicyStatementwouldcreatenon-delegation,removal-power,andnoticeproblems.Assuch,theCommissionshould,attheveryleast,proceed

throughnoticeandcommentbeforerescindingtheStatement.

Startwithnon-delegation.Gundyv.UnitedStates,139S.Ct.2116(2019),istheSupremeCourt’smostrecentstatementonhowmuchauthorityCongressmaydelegateto

executiveagencies,consistentwiththeconstitutionalimperativethatCongresshold“alllegislativePowers.”Art.I§1.

Gundyupholdsthebroad“intelligibleprinciple”test,underwhichCongress’spowertodelegateauthorityisbroadindeed.Onlyeightjusticesheardthecase,however,andonly

fourjusticesendorsedtheregnantstandard.Inabriefconcurrence,JusticeAlitoexpressedhis“support”

for“reconsider[ing]th[at]approach,”ifandwhenamajorityoftheCourtwishestodoso.139S.Ct.at2131.JusticeKavanaugh,whodidnotparticipateinGundy,hasexpressed

justsuchawillingness.SeePaulv.

UnitedStates,140S.Ct.342(2019)(StatementofKavanaugh,J.,respectingthedenialofcertiorari).AndJusticeGinsburg,oneofthefourjusticestostandbythe“intelligible

principle”standardinGundy,hasbeenreplacedbyJusticeBarrett.

JusticeGorsuch’sdissentinGundy—adissentjoinedbyChiefJusticeRobertsandJusticeThomas;andadissentJusticesAlito,Kavanaugh,andBarrettarelikelytofindattractive

inafuturecase—thuswarrantsmoreattentionthananaveragedissent.Iftheexecutivebranchmaymake“laws,”JusticeGorsuchnotes,theywill“notbefewinnumber,”nor

“theproductofwidespreadsocialconsensus,”nor“likelytoprotectminorityinterests,”not“apttoprovidestabilityandfairnotice.”

Gundy,139S.Ct.at2135.Executive“lawmaking”wouldalsoenableboththelegislatureandtheexecutivetoevadeaccountability,eachbranchblamingtheotherforthe

consequencesofopen-endedlegislationimplementedthroughdetailedagencyrules.Id.Fortheseandotherreasons,JusticeGorsuchurgestheCourttoendits“intelligible

principlemisadventure”

andinsistthat“Congress,andnottheExecutiveBranch,makethepolicyjudgments”thatareimplementedthroughagencyaction.Id.at2141.

AsthePolicyStatementitselfrecognizes,“CongresschosenottodefinethespecificactsandpracticesthatconstituteunfairmethodsofcompetitioninviolationofSection5.”

FederalTradeCommission,StatementofEnforcementPrinciplesRegarding“UnfairMethodsofCompetition”UnderSection5oftheFTCAct,https://bit.ly/3qAhW67(Aug.

13,2015).Wisely,therefore,thePolicyStatementattemptstocabintheCommission’sdiscretion,ensuringthattheCommissionwill“beguided,”initsenforcementofthe

“statuteonaflexiblecase-by-casebasis,subjecttojudicialreview,“bythepublicpolicyunderlyingtheantitrustlaws,namely,thepromotionofconsumerwelfare.”Id.ThePolicy

Statementalsoendorsestherule-of-reasonstandard,andobservesthattheCommissionwillbe“lesslikelytochallengeanactorpractice”if“theShermanorClaytonActis

sufficienttoaddress”it.Id.

ThePolicyStatementwasissuedbeforetheSupremeCourtdecidedGundy.Wenowknow,becauseofGundy,thatthePolicyStatementmaywellbeanecessarynarrowing

oftheCommission’sauthority—anarrowingthatensuresthattheCommissionisnotexercisinggreaterauthoritythanthelegislaturemaypermissiblydelegate.Inotherwords,

theCourt,goingforward,maywellconsideraphraselike“unfairmethodsofcompetition”toflouttheconstitutionalbanonnon-delegation.(“Theterm‘unfair’isanelusive

concept,oftendependentupontheeyeofthebeholder.”E.I.DuPontDeNemours&Co.v.FTC,729F.2d128,137-38(2dCir.1984).)ShouldtheCommissionbegintotestthe
2

outerboundaryofthephrase“unfairmethodsofcompetition,”itcouldinfactwinduppresentingtheCourttheverycaseinwhichitnarrowstheambitofpermissible

legislativedelegation.

Indeed,asCommissionerPhillipsobservedlastyear,NoahPhillips,Non-CompeteClausesintheWorkplace:ExaminingAntitrustandConsumerProtectionIssues(Jan.9,2020),

https://bit.ly/2U7jGrv,theterm“unfairmethodsofcompetition”inSection5is“almosttheexactwording”as“codesoffaircompetition,”thetermstruckdownunderthe

non-delegationdoctrineinA.L.A.SchechterPoultryCorp.v.UnitedStates,

295U.S.495,553(1935)(Cardozo,J.,concurring).

ThewieldingoflegislativepowerbytheCommissionisparticularlyproblematicbecausetheCommissionisnotjustanyagency.Rather,itisanindependentagency,with

principalofficersnotsubjecttoremovalbythePresident.TheCommissionisthusunaccountabletoeitherthelegislativeortheexecutivebranch.TheCourtrecentlymadeclear

thatHumphrey’sExecutorv.UnitedStates,295U.S.602(1935),thedecisionthatblessedtheFTC’sindependentstructure,shouldbe“take[n]...onitsownterms,”

SeilaLawLLCv.CFPB,140S.Ct.2183,2200n.4(2020).Humphrey’sExecutorstandsontheassumptionthattheFTCismerelya“legislative...aid”that“mak[es]reportsand

recommendationstoCongress.”140S.Ct.

at2200.When,therefore,theCommissionseekstoimplementsweepingpolicychangesonitsown—when,thatis,itgoesfarbeyondmaking“reportsand

recommendationstoCongress”—itunderminesthelegitimacyofitsindependence.Thisisespeciallysointhecontextofantitrust.Congressisatthisverymomentactively

consideringwhethertoamendorupdatethoselaws.AggressiveactionbytheFTCtoimplementabroadnewconceptionof“unfairmethodsofcompetition”would

circumventthosedemocraticdeliberations.Tosome,nodoubt,thatisthewholepoint.Butdeliberatelyevadingboththepoliticalbranchesisnot,inoursystemof

government,alegitimatetacticforrammingthroughsweepingnewpolicies.

Giventheseseriousconstitutionalconcerns,theCommissionshould,attheveryleast,engageinnoticeandcommentbeforerescindingthePolicyStatement.Theonlyreason

nottogothatroutewouldbeiftheCommissionintendsimmediatelytobringenforcementactionsunderaninnovativenewunderstandingoftheterm“unfairmethodsof

competition”—amovethatwouldsimplyinflame,ratherthandampen,theconstitutionalproblemsathand.SeeE.I.DuPont,729F.2dat139(“theCommissionowesaduty

todefine[whatconduct]wouldbeunfairsothatbusinesseswillhaveaninklingastowhattheycanlawfullydoratherthanbeleftinastateofcompleteunpredictability.”).

Engaginginnoticeandcomment,bycontrast,wouldpromotethevaluesofprocess,accountability,andpublicbuy-inthattheCommissionneedsifitistoactlegitimatelyasan

independentagencyinasystemofrepresentativegovernment.What’smore,engagingingreaterdeliberation,beforetakingaction,wouldbolsterthevalueofsuchpolicy

statementsmoregenerally.Afterall,anystatementstheCommissionmightissueinthefuturewillonlybeasstrong,stable,andreliableasaretheprecedents,setbythe

Commissiontoday,forwhatittakesforeachsuchstatementtoberevoked.Ifthestandardislow,nofuturestatementwillbeworththepaperit’swrittenon.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/110
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 11:44 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-11:43Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Scott

LastName:Shewcraft

Affiliation:EconomicInnovationGroup

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

ChairKhan,FederalTradeCommissioners,thankyoufortheopportunitytocommentonthequestionofwhethertorescindthe“StatementofEnforcementPrinciples

Regarding‘UnfairMethodsofCompetition’UnderSection5oftheFTCAct”(2015).IwriteonbehalfoftheEconomicInnovationGroup

(“EIG”)toexpressoursupportforproposalstosignificantlylimittheenforceabilityofcovenantsnottocompete(“non-competeagreements”or

“non-competes”)andtoarguethatfurtherCongressionalactionisneeded.

Non-competeagreementslimitworkermobilityanddampenthedynamismoftheU.S.economy.Oncereservedforseniorexecutivesandthosepossessingvaluabletrade

secrets,theseprovisionsarenowusedextensivelythroughoutthelabormarketandaffectmillionsoflow-wageandhighly-skilledworkersalike—withprofoundlydetrimental

resultsforindividualcareeradvancementandthebroadereconomy.

Greaterenforceabilityofnon-competessignificantlyreducesratesofcompanyspinoffsandnewfirmentryinknowledge-intensivesectorsoftheeconomy,andthecompanies

thatdostartunderstrictnon-competesenforcementregimesarelesslikelytogrowandsurvive.(JessicaJeffers,“TheImpactofRestrictingLaborMobilityonCorporate

InvestmentandEntrepreneurship,”

WorkingPaper.EvanStarr,etal.,“ScreeningSpinouts?Non-CompeteEnforceabilityandtheCreation,Growth,andSurvivalofNewFirms,”

ManagementScience64(2)(2018).MattMarx,“PunctuatedEntrepreneurship(AmongWomen)”U.S.CensusBureauWorkingPaperCES-18-26(2018)).

Empiricalevidenceshowsthatnon-competeenforcementalsohurtsworkerwagesandjobsatisfaction.(SeeEvanStarr“TheUse,Abuse,andEnforceabilityofNon-compete

andNo-PoachAgreements:ABriefReviewoftheTheory,Evidence,andRecentReformEfforts,”EconomicInnovationGroup(2019)).

Weagreethatnon-competeagreementsaretoolsofunfaircompetitionthatdeprivesomecompaniesoffairaccesstotalent,depriveworkersoffreeandfaircompetitionfor

theirlabor,andillegitimatelywardofftheformationofnewcompetitorsbyincumbentfirms.However,webelievethatdurablefederalreformthatstandsuptojudicialreview

mustincludecomplementaryCongressionalaction.MorerobustFTCenforcementshouldbejoinedupwithalegislativepushtodramaticallycurtailtheuseandabuseofnoncompeteagreementsacrosstheU.S.economytoprovideaclearandpowerfulsignaltoemployerswherethelawisheaded.

IntestimonytotheSenateCommitteeonSmallBusiness,JohnW.Lettieri,PresidentandCEOofEIG,arguedthatreformsshouldbeshapedaroundfourcoreobjectives.The

sameobjectivesareapplicabletoanypotentialactionstheFTCmaytakeinthefutureaswell.

• RequireTransparency:Manyofthenegativeeffectsofnon-competescanbe

reducedsimplybyensuringgreatertransparencyandimprovingworkers’

awarenessoftheirbargainingposition.Asnotedabove,employersexploittheirinformationaladvantagebyrequiringnon-competesinstateswheretheyareunenforceable,

orbyofferinganoncompeteonanemployee’sfirstdayofworkwhenotheroptionshavebeenforeclosed.Rulesgoverningnon-competesshouldbeclearandeasyto

administer,andemployeesshouldbegivenadequatenoticebeforebeingaskedtosignawayfuturejobopportunities.

Examples:Employersshouldberequiredtonotifyjobcandidatesoftheirintenttorequestsignatureaswellaspresentnon-competeswhentheformaljobofferismade–not

aftertheemployeehasacceptedthejob.Employersshoulddisclosetheirintenttorequireanoncompeteinanyjobpostingoradvertisementfortheposition.Additionally,

employersrequestinganoncompeteagreementshouldberequiredtofullyinformtheirprospectiveemployeeofapplicablestateandfederallawsandallowadequatetime

forthecandidatetodiscussthetermsoftheagreementbeforemakingadecision.

• CreateDisincentivesforOveruse:Therearecurrentlyfewdisincentives
2

foranemployertorequirenon-competesofitsemployees–evenwhenagreementsarewrittensobroadlyastobeunenforceable,andevenwhentheycoveremployees

whohavenospecializedskillsortradesecrets.Federallawshouldseektodiscourageoveruseofnon-competeswhereverpossiblebyensuringthatemployerscarefully

considerwhetherthebenefitsareworththecosts.

Examples:Employersshouldberequiredtocompensateformeremployeeswhiletheirnoncompeteisineffect.Non-competesdraftedinanoverlybroadmannershouldbe

renderedcompletelyvoid–notrewrittenbycourtstomakethemenforceable.Federallawshouldalsopenalizeemployerswhorequestsignatureinstateswherenoncompetesareunenforceable.

• LimitthePoolofEligibleWorkers:Moststatescurrentlyhaveno

restrictionsonthekindsofworkersthatcanbeboundbyanoncompete.Manyoptionsexisttonarrowtheeligiblepoolofworkersbyindustry,bywagelevel,orbyeducation

attainmentsothatnon-competesarereservedonlyforseniorexecutivesandothertoptalent.

Example:Signatureofanoncompeteshouldbedisallowedforanyworkeroutsideofthetopfivepercentofthenationalincomedistribution.

• LimittheScopeofAgreements:Evenwhenpolicymakersseeavalidusefor

non-competesundercertaincircumstances,mostagreethescopeofsuchagreementsshouldbelimitedinvariousways.

Examples:Thedurationofnon-competesshouldbelimitedtonomorethanoneyear,andanynoncompeteshouldbevoidedifanemployeeisterminatedwithoutcauseor

laidoff.

(availableat

https://eig.org/news/testimony-before-the-senate-committee-on-small-business-noncompete-agreements-and-american-workers).

EIGurgesCongresstoactontheWorkforceMobilityAct,bipartisanlegislationintroducedinbothchamberstolimittheuseofnon-competesexceptforinthesaleofabusiness

andthedissolutionofapartnership.Aspartofthismeeting’sstatedpurpose,theFTCwouldbenefitfromthisclearerexpressionofthecongressionalintenttocondemn“unfair

methodsofcompetition”thatpassageofthislegislationwouldprovide.Thisapproachwouldestablishanationwidepolicytothebenefitofworkersandentrepreneurswith

clearauthorityforadministrativeactionandenforcement.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/66
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 7:33 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-19:32Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Kathleen

LastName:Anthony

Affiliation:IndependentPharmacy

FullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:PleaseaddressthecorruptionandgreedofthemiddlemenknownasPharmacyBenefitManagersinthepharmaceuticalindustry.

ThePBMs'areresponsibleforthedemiseofourbusy,well-establishedindependentpharmacy.Formanyyearsnow,PBMs'haveinflictedlowdrugreimbursements/monies

andpunitiveDIRfees(anti-competitivebehavior)whichwoulddirectlyaffectedourbottomlineandeventuallyledtotheclosureofafamilyownedbusiness,inexistencefor

over80years.Notoneofmy4sonswentintotheprofession.ThePBMs'aredestroyingthepharmacyprofession.In2019,DIRfeeswentoffacliff,andevenduringaplague

(COVID),wewerestillbeinghitwithabusiveDIRfeesfromthePBMsevenwhilewestruggledtohelpourloyalcustomersthroughaplague.TheFTC'sdecisionin2007that

sidedwiththemergerofCVSwithCaremarkhasledtothesedeleteriouseffectsonindependentpharmaciesandisresponsiblefortheclosuresof100'soffamilyowned

businessesthroughouttheyears.Now,moreandmorecustomersarestartingtorealizethenegativeeffectsofthe3PBMsmonopoly(CVSCaremark,OptumRXandExpress

Scriptsowningalmost80%ofthemarket)isnotonlyhurtingindependentpharmaciesbutishurtingeveryoneelseinregardtohigherinsurancepremiums,denialsforservices

needed,longerwaittimes,forcingcustomerstotakecertaindrugsoverpreferreddrugsbytheirdoctors,delaysinmedication,forcedmailorderdrugsandthelistgoeson. The

PBMs'arenotsavinganyonemonies.Infact,anybenefitsinregardtotheirschemesaredirectedtotallytobenefitthemselvesandtheirshareholders.So,now,thereisless

choice,amoreexpensivechoice-aninferiorchoice. Wewereonthefrontlineseverydaytryingtohelpourcustomersnavigatethehealthcaredebacle,andwhenthe

PBM's/insurancecompanieswerenottheretoanswertheircustomers'

questions,weweretherefortheircustomerstoo.WeclosedinAugustof2020.Thepunitive,ever-changing,abusiveDIRfees,lowreimbursements,andexpenseforCOVID

precautionsinregardtokeepingeveryonesafewasjusttoomuch.Itwasn'tworthmyhusband'slife.HoldPBM'saccountable.Bringthemintothelight.Openthatbigblack

boxwhereinformationseemstogoinbutnothingeverseemstocomesout.IwillneverunderstandwhytheFTCallowedCVStomergewithCaremarkin2007andthenagain

said-sureeverythingisjustfine-in2012.Mytrustisshakentotheverycorebythisgovernmentalbetrayalonbehalfofthepharmacyprofessionandallthosefamilieswhohave

hadtoendurewhatwerecentlywentthrough.Intheend,therewasnooneelselefttoselltoexceptCVS.Then,theymademyhusbandworkthereforamonth.Theinjustice

ofitallisalmosttoomuchtobear.-KathyAnthony

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/138
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 12:47 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-12:46Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Elizabeth

LastName:Ropp

Affiliation:ThePeople'sOrganizationofCommunityAcupunctureFullEmailAddress:

Telephone:(

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:NH

Submitwrittencomment:

DearFTC,

Thankyouforreadingmycommentsandforhostingmonthlypublictownhalls.

Thisopportunitymeansalottome.IamalicensedacupuncturistinNewHampshire. IamaskingyoutoinvestigatetheNationalCertificationCommissionofAcupunctureand

OrientalMedicine(NCCAOM)overtheirmonopolyofthenationalcertificationforacupuncturists. Ourprofessionshouldbeallowedoptionsforothernationallyrecognized

certificationexamsthattestforsafetyandcompetency. In2006Ipaidalmost$2000tobenationallycertifiedthroughtheNCCAOM andhave"activestatus"withtheir

professionaltradeorganization/corporation. InNewHampshire,likeroughlyhalfoftheotherUSstates,ImustpaytheNCCAOMeveryfouryears tomaintainactivestatusasa

requirementtokeepmystatelicense.

AcupuncturistswhoarenotrequiredtopayforactivestatusintheirstatespayofftheNCCAOManywaybecausetheywouldbeprohibitedfromobtainingalicenseinanother

state.TheNCCAOMusesthefeesthatwepaythemtoadvancetheirorganization,nottheacupunctureprofession. IjustreceivedmyrenewalletterfromtheirKStreetofficein

Washington. Someofthe"benefits"tomaintainmyactivestatus,besidescomplyingwithmystatelaw,include"theabilitytoworkwiththeVeteransHealthAdministration,

whonowrequiresNCCAOMBoard-Certification(TM)"and"BepromotedbytheNCCAOMAdvocacyteamwhoareadvancingNCCAOMcertificationatthefederalandstate

level."

Thankyouforyourconsiderationonthisissue.

Sincerely,TheHonorableElizabethRopp,L.Ac.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/86
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 9:23 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-21:23Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Donna

LastName:Selle

Affiliation:.

FullEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

DearFTC,

Thankyouforreadingmycommentsandforhostingmonthlypublictownhalls.

Thisopportunitymeansalottome.IamalicensedacupuncturistinIdaho.

IamaskingyoutoinvestigatetheNationalCertificationCommissionofAcupunctureandOrientalMedicine(NCCAOM)overtheirmonopolyofthenationalcertificationfor

acupuncturists. Ourprofessionshouldbeallowedoptionsforothernationallyrecognizedcertificationexamsthattestforsafetyandcompetency. In2007Ipaidalmost$2000

tobenationallycertifiedthroughtheNCCAOM andhave"activestatus"withtheirprofessionaltradeorganization/corporation. InroughlyhalfoftheotherUSstates,Licensed

AcupuncturistsmustpaytheNCCAOMeveryfouryearstomaintainactivestatusasarequirementtokeepastatelicense.

AcupuncturistswhoarenotrequiredtopayforactivestatusintheirstatespayofftheNCCAOManywaybecausetheywouldbeprohibitedfromobtainingalicenseinanother

state.TheNCCAOMusesthefeesthatwepaythemtoadvancetheirorganization,nottheacupunctureprofession. IjustreceivedmyrenewalletterfromtheirKStreetofficein

Washington. Someofthe"benefits"tomaintainmyactivestatus,besidescomplyingwithmystatelaw,include"theabilitytoworkwiththeVeteransHealthAdministration,

whonowrequiresNCCAOMBoard-Certification(TM)"and"BepromotedbytheNCCAOMAdvocacyteamwhoareadvancingNCCAOMcertificationatthefederalandstate

level.

Thankyouforyourconsiderationonthisissue.

Sincerely,

DonnaJSelle,L.Ac.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/154
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 2:47 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-14:47Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Lisa

LastName:Rohleder

Affiliation:POCATechnicalInstitute

FullEmailAddress

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

PleaseinvestigatetheNationalCertificationCommissionforAcupunctureandOrientalMedicine(NCCAOM),thenationalcredentialingorganizationforlicensed

acupuncturists,foranti-competitivepracticesandforhavingananti-consumermonopoly.

MoststatesrequireapplicantsforacupuncturelicensuretobecertifiedbytheNCCAOM.NotonlycantheNCCAOMdecidewhatconstitutesentry-levelqualificationsfor

acupuncture,butbecauseithasnocompetition,theNCCAOMcansetanyratesitchoosesandimposeanyrequirementsitwants.Becauseitscustomershavenochoice,itcan

anddoessupplyinferiorproducts

(tests)andservices,withoutconsequence.OneofNCCAOM’sprimaryresponsibilitiestothepublicandtheAOMprofessionisthecreationoffair,andvalid,psychometrically

soundexamsthatserveasthestandardofwhatafirst-yearpractitionershouldknow.However,itsJobTaskAnalysisfallsshortofbestpractices,resultinginthecreationof

unrealistic,irrelevantstandardswhicheffectivelymandateacurriculumforacupunctureschools,costprospectivestudentsthousandsofdollarsinfees,andfunctiontorestrict

consumerchoicebyinvalidatingthegreatdiversityofacupuncturestyles.TheNCCAOM’santicompetitivepracticeshaveadisproportionateimpactonAsian-American

practitionersfrom“minority”

traditionsofacupuncturepractice,thuslimitingaccesstoacupunctureinAsiancommunitiesanddrivingotherwisequalifiedpractitionersunderground.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/106
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 1:52 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-13:52Submittedbyanonymoususer: Submittedvaluesare:

FirstName:David

LastName:Barclay

Affiliation:AmericanEconomicLibertiesProjectFullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:

ThepurposeofthiscommentistodrawattentiontotheFTC'scurrentpracticeofallowingpubliclyknownpharmaceuticalantitrustviolationstocontinueforyearswithout

intervention.Forexample,theFTCrecentlyfiledanamicusbriefinInreHumiraAntitrustLitigation,inwhichitrecognizedthepotentialforliabilityinthatpay-for-delaycase,but

theFTChasnototherwiseintervenedtoremedytheconductatissue.

TheFTCshouldstopallowingtheseknownpharmaceuticalantitrustviolationstocontinueunabated,especiallyregardingblockbusterdrugssuchasHumira,whichhashad

salesofnearly$20billioninrecentyearsandisnotexpectedtofacebiosimilarcompetitionuntil2023.TheFTChasthepowertoseekinjunctivereliefandothertoolsthatcould

endthistypeofanticompetitiveconductandsaveconsumersbillionsofdollars.TheFTCshouldusethefullscopeofitspowerstostopongoingPharmaantitrustviolations

beforemorepatientsarehurtbyPharma'songoingillegalconduct.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/90
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 3:44 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-15:43Submittedbyanonymoususer: Submittedvaluesare:

FirstName:James

LastName:Stuber

Affiliation:MadeinAmericaAgain,Inc.

FullEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

StatementofJamesA.StuberonbehalfofMadeinAmericaAgain,Inc.

withrespecttoenforcementofMadeinAmericalabelingstandards

MadeinAmericaAgain,Inc.,isanot-for-profitorganizationdedicatedtorebuildingAmericancommunitiesbyhavingconsumerbuythingsmadeinthosecommunities. Many

consumersdesiretobuyAmerican-madeproductsforthatpurpose,andothersaswell.

TheCommission’sstatedintentintheproposedruleistostrikeabalance,soconsumerscanconfidentlybuyAmerican,andcompaniescanrealizethebenefitsoftheMadein

USAlabel.

However,therulecannotaccomplishthisintentifconflictingstandardsareappliedatthestatelevel. Inthatcase,companiesmayeschewmakingaMadeinUSAclaimthat

wouldpassFTCmuster,forfearofviolatinga“stricter”statestandard,potentiallywithpaymentoffeesandcostsundera“privateattorneygeneral”enforcementmechanism.

Inthiscase,consumersaredeprivedoftheopportunitytoidentifyaproductasbeingmadeintheUSA,andthecompanycannotrealizethebenefitsoftheMadeinUSAlabel.

Thisisaclearcasewhereanationalstandardisneeded,andweurgeCongresstoamendSection45aoftheFederalTradeCommissionActtoprovideforfederalpreemption

ofstatelawsinthisfield.

Respectfullysubmitted,

JamesA.Stuber

FounderandPresident

MadeinAmericaAgain,Inc.

www.madeinamericaagain.org

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/118
1

From: Corbin Barthold < >

Sent: Wednesday, June 30, 2021 3:45 PM

To: JulyPublicComments

Subject: video addition to Corbin Barthold comment for July 1 meeting

Hello,

I just submitted a comment for the July 1 meeting. If I'm allowed to do so, I'd like please to add this video-statement link

to my submission:

https://techfreedom.org/wp-content/uploads/2021/06/CKB-Statement.mp4?_=2

Thank you very much for your time.

Best,

Corbin

Corbin K. Barthold

Internet Policy Counsel

TechFreedom | @TechFreedom
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 7:35 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-19:35Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Douglas

LastName:Mrdeza

Affiliation:CEOTopShelfBrands

FullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

DearChairKhanandRespectiveCommissioners,

Thankyoufortakingmyquestion.IhavebeenveryoutspokenandpublicregardingtheabusesandpainAmazonhasinflictedonmybusiness.WhattoolsdoestheFTChave

torecovermoniesfromfirmsthatonlyacquiredthosefundsthroughdeceptive/abusivemethodsinthefirstplace,andreturnthosefundstothevictim/businesses?Inmycase

Iamreferringtostolenproperty,overchargedfeesandsalestaxwhichwascollectedbutneverdisbursedtomybusinessbyAmazon.Theamountinquestionismillions,why

shouldIhavetopayforlitigationtogetwhatisrightfullyours?IaskthatChairKhanaddressthismatterplease.Thankyouverymuch!

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/142
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Thursday, July 1, 2021 9:25 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonThursday,July1,2021-09:25Submittedbyanonymoususer: Submittedvaluesare:

FirstName:VINCENT

LastName:DITATA

Affiliation:NONE

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

IdonotbelieveAmazonshouldbeatargetforinvestigationregardingunfaircompetitionpractices.

WherewastheFTCwhenWal-Martwasexpandingacrossthecountryinthenameoflowerpricescausedcountlesssmallfamilyownedbusinessestoclose.

WherewastheFTCwhenHomeDepotandLowesexpandedacrossthecountryinthenameoflowerpricesandcausedtheclosureofmostindependentfamilyowned

hardwarestorestoclose.WherewastheFTCwhenOfficeDepotexpandedacrossthecountryinthenameoflowerpricesandcausedallindependentfamilyownedsmall

businesstoclose.Amazonisthewrongtarget.Perhapsyoucouldlookatunfairparticipationbywealthyindividualstoinfluenceelectionsinstead.

FYI,IhavenoaffiliationwithAmazonanddon'tevenusetheproductsorservicesthatoften.Iprefertovisitstorestomakepurchases.

Thankyou.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/14
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 11:55 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-11:55Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Scott

LastName:Paul

Affiliation:AllianceforAmericanManufacturingFullEmailAddress:

Telephone:

FTC-RelatedTopic:ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

https://drive.google.com/file/d/1zpkXdqzSUzNuqjfFwDxLim-7XPQlA9b-/view?usp=sharing

Submitwrittencomment:

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/74
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 7:21 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-19:21Submittedbyanonymoususer Submittedvaluesare:

FirstName:Douglas

LastName:Mrdeza

Affiliation:BusinessmanharmedbyAmazonFullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-FTCOperations

Registertospeakduringmeeting:No

Linktowebvideostatement:

Submitwrittencomment:

DearChairKhanandRespectiveCommissioners

IhavebeenveryoutspokenandpublicwhenitcomestoAmazon'sabusivetacticsandunfairmethodsofcompetition.WhattoolsdoestheFTChavewhenitcomesto

recoveringmoneyfromfirmswhoonlyacquiredthefundsthroughdeceptivepracticesandmethods,andreturningthoseill-gottenfundstothevictims/businesses?Iwould

askthatChairKhanaddressthisquestion.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/134
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 11:52 AM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-11:51Submittedbyanonymoususer:

Submittedvaluesare:

FirstName:Garth

LastName:Reynolds

Affiliation:IllinoisPharmacistsAssociationFullEmailAddress:

Telephone:

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:Yes

Linktowebvideostatement:https://youtu.be/QUoYLFoT-9USubmitwrittencomment:Onbehalfofallofthepatientsweserve,theIllinoisPharmacistsAssociationasksthe

FTCtouseanyandallauthoritytoinvestigateandtakeactionconcerningthemanipulationoftrustandwantonfraud,waste,andabusebypharmacybenefitmanagers.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/70
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 1:53 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-13:53Submittedbyanonymoususer:

FirstName:David

LastName:Sobel

Affiliation:DakaManufacturing

FullEmailAddress:

ConfirmEmailAddress:

Telephone:

FTC-RelatedTopic:Competition

Registertospeakduringmeeting:Yes

Linktowebvideostatement:

Submitwrittencomment:IamanAmazonseller.AmazonisallowingAsiansellerstocopyAmericanproductsanddecimatesmallbusinesses.Iwouldliketosharemy

experienceinthetimeallotted.

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/94
1

From: Federal Trade Commission via Federal Trade Commission < >

Sent: Wednesday, June 30, 2021 2:42 PM

To: JulyPublicComments

Subject: Form submission from: Speaker Registration and Public Comment Submission Form for

July 1, 2021 Open Commission Meeting

SubmittedonWednesday,June30,2021-14:42Submittedbyanonymoususer: Submittedvaluesare:

FirstName:Alex

LastName:Olympidis

Affiliation:FamilyExpressCorp.

FullEmailAddress:

Telephone:(219)462-0144

FTC-RelatedTopic:

-Competition

-ConsumerProtection

Registertospeakduringmeeting:No

Linktowebvideostatement:

https://familyexpress.wistia.com/medias/wmafqx3sr5

Submitwrittencomment:

Theresultsofthissubmissionmaybeviewedat:

https://www.ftc.gov/node/1591350/submission/102
1

From: Berin Szóka < >

Sent: Thursday, July 1, 2021 10:46 AM

To: JulyPublicComments

Subject: Re: TechFreedom Comments

Hi. I just wanted to make sure you had received our comments.

My apologies for filing them late. We are a tiny organization and the tight-turnaround required on this was difficult for

us.

On Wed, Jun 30, 2021 at 9:46 PM Berin Szóka < > wrote:

Please find attached three comments regarding the Commission's July 1 public meeting and two attachments (labeled

accordingly).

The comments regarding the UMC policy statement duplicate those submitted by my colleague Corbin Barthold earlier

today, but with different formatting. Please use this version.

Thank you,

--

Berin Szóka | TechFreedom | @TechFreedom

--

Berin Szóka | TechFreedom | @TechFreedom
1

From: Douglas Mrdeza < >

Sent: Wednesday, June 30, 2021 7:33 PM

To: JulyPublicComments

Subject: Late Submission for Event tomorrow

Hello

Please forgive my tardiness, I just learned of the event taking place tomorrow and submitted the below question.

Although the submission was technically late, I humbly request your consideration.

"Dear Chair Khan and Respective Commissioners,

Thank you for taking my question. I have been very outspoken and public regarding the abuses and pain Amazon has

inflicted on my business. What tools does the FTC have to recover monies from firms that only acquired those funds

through deceptive/abusive methods in the first place, and return those funds to the victim/businesses? In my case I am

referring to stolen property, overcharged fees and sales tax which was collected but never disbursed to my business by

Amazon. The amount in question is millions, why should I have to pay for litigation to get what is rightfully ours? I ask

that Chair Khan address this matter please. Thank you very much! "

--

Douglas J Mrdeza

Chief Executive Officer

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nor any of its affiliated companies accept any liability for any damage caused by any virus transmitted by this email or its

attachments.
1

From: Jane Chung < >

Sent: Wednesday, June 30, 2021 11:45 AM

To: JulyPublicComments

Subject: Jane Chung comment on behalf of Athena Coalition

Attachments: Athena FTC Comment.docx

Attached. Thank you!
COMMENTS OF THE ATHENA COALITION

To

THE FEDERAL TRADE COMMISSION

For July 1, 2021 Open Commission Meeting

June 30, 2021

Chair Khan, Commissioners Slaughter, Chopra, Phillips, and Wilson. Thank you for the

opportunity to provide a public comment at this open meeting.

My name is Jane Chung, I am an advocate at Public Citizen and here representing Athena, a

broad coalition of organizations representing working people and small business people coming

together to create an economy where everyone can thrive. Our current fight is to rein in the

power of Amazon.

We believe the continuous digital and biometric surveillance1conducted by tech monopolies like

Amazon2constitute both unfair and deceptive practices and an unfair method of competition, and

we urge the FTC to ban them immediately.3

Continuous digital surveillance through devices like Amazon Alexa and Ring, reported to be

testing facial recognition, is unfair because it surveils community members (including children)

around Ring owners without consent, invades their privacy, violates their civil liberties, threatens

our democracy, and inflicts privacy harms that are not at all avoidable, with no countervailing

benefits.4

Additionally, biometric surveillance like facial and voice surveillance (or recognition

technology) is unfair as it fails people of color, women, and gender non conforming people,

causing substantial injury including even wrongful arrest of Black men, in ways these

communities cannot avoid, without any countervailing benefits.

Even for the consumer who buy Amazon Ring, Amazon’s continuous digital surveillance is

deceiving because the monopoly misrepresents and omits information about how that biometric

data is shared, for example with law enforcement, stored, potentially hacked, or otherwise

connected to profiles of them as individuals to be targeted with marketing and advertising, which

a consumer acting reasonably has no way to dispute or negotiate, let alone be meaningfully

aware of, given the complicated terms and conditions in user agreements, as well as the lack of

explainability of their data processes. Amazon is selling a state and marketing surveillance

device as a personal safety tool. It is unfair, deceptive, and needs to be banned.

Furthermore, we believe that operating continuous surveillance dragnets constitutes an unfair

method of competition, and that the FTC should undertake a rulemaking to ban this practice.5 To

take the example of Amazon again, neither competitors to Amazon nor sellers that rely on

Amazon for market access have the ability to monitor and track customers the way that Amazon

can. Amazon’s acquisitions of other data-hungry companies, including Ring doorbell and Kiva

Systems robotics, has further impeded the growth of would-be rivals. Through ongoing invasions
of customers’ and third parties’ privacy, Amazon’s data-driven monopoly power is thus

entrenched.

Prohibiting invasive, inaccurate, and discriminatory biometric surveillance is essential to

defending our privacy, protecting marginalized groups from discrimination, and fulfilling the

FTC’s mandate of consumer protection. Again, we urge the FTC to ban continuous digital and

biometric surveillance as unfair and deceptive practices, and unfair methods of competition,

under its existing authority.

1 We define biometric surveillance as including but not limited to facial surveillance (known as

facial recognition), voice surveillance (known as voice recognition), identification based on

fingerprints or palm prints, gait surveillance, and logging of an individuals’ head, face, or body

to infer emotion, associations, activities, or the location of an individual.

2 We provide examples of Amazon’s unfair and deceptive practices because the Athena coalition

focuses on Amazon; however, any action on continuous digital and biometric surveillance

requires an analysis of all Big Tech companies: Amazon, Apple, Facebook, Google, and

Amazon. Products from these monopolies worth investigation to this end include Google Nest

and Wink, Apple Watch, and Facebook Portal.

3 Data security and consumer privacy are squarely within the FTC’s UDAP authority, with

additional authority for data security and privacy coming from the Gramm-Leach-Bliley Act, the

Fair Credit Reporting Act, the Children's Online Privacy Protection Act.

4 Future applications from Amazon and other monopolies are even more disturbing; Amazon has

recently announced Sidewalk (a connected surveillance infrastructure), Sidekick (a surveillance

product specifically targeted toward children), and surveillance devices in Amazon delivery

trucks, all of which deserve increased scrutiny for discriminatory impact, privacy harms, security

risks, invasions of civil liberties, and unfair and deceptive trade practices.

5 Amazon’s market power is both a cause and consequence of their data collection practices. On

one hand, the economies of scale and scope from machine learning processing of rich data sets

helps companies that extract vast data sets from users to consolidate their market power. On the

other hand, this very market power allows them to extract increasingly intrusive data from

consumers left with few alternative options.
1 

July 1, 2021 

STATEMENT OF JONATHAN JACOBSON

REGARDING THE POSSIBLE REPEAL OF THE SECTION 5 POLICY

I write to address the Commission’s consideration of whether “to rescind the policy 

statement [regarding section 5 of the FTC Act, 15 U.S.C. § 45] issued by the 

Commission in 2015.” As I understand it, the suggestion is to rescind and no longer 

follow the “consumer welfare” standard in competition matters. Anyone with a 

devotion to sound competition principles should oppose such a change, as do I for the 

reasons given below. 

Some history. Prior to 1977, there was no accepted welfare standard for antitrust 

cases. Conduct and transactions were evaluated under an ad hoc approach based on 

the decision-maker’s own concepts of “competition.” The resulting confusion led the 

Court to inject clarity by adopting a number of per se rules, such as those condemning 

vertical territorial restraints (Schwinn) and maximum vertical price fixing (Albrecht). 

These per se rules were more clear, but led to condemnation of efficient business 

forms and the use of second- or third-best alternatives. The decisions led to a 

widespread concern that the United States was losing significant ground to countries 

around the world less hobbled by such harmful rules. 

Proponents of the Chicago School approach, most prominently Judge Bork, rebelled. 

They advocated a “total welfare” standard (incorrectly called consumer welfare). 

Under that highly permissive standard, transactions and conduct that did not reduce 

the combined surplus of consumers and producers would not be condemned. But the 

Supreme Court never went that far and never adopted that approach. Instead, in 

Brunswick, the Court made clear that antitrust laws are designed to protect 

competition, not individual competitors. And in Sylvania, the Court made clear for 

the first time that “[c]ompetitive economies have social and political as well as 

economic advantages, but an antitrust policy divorced from market considerations 

would lack any objective benchmarks.” Over time, adherence to that principle has led 

to abolition of many of the per se rules adopted in the 1950s though 1972. 

From 1977 to 1992, what this all meant was unclear (apart from overruling many of 

the old per se rules). There were debates as to whether there should be any standard, 

whether the standard should be “total” welfare, whether it should be “consumer” 

welfare, or whether it should be something else. In the mid-1980s government 

enforcement was perceived as moribund. During this period, however, “post-Chicago” 

analysis emerged. This analysis accepted many of the Chicago School’s basic 

arguments, but modified them in a way designed to recognize specific facts that might 

be inconsistent with Chicago’s rigid assumptions. One example was to leave behind 

the Chicago concern that harmful foreclosure is illusory, by pointing out that 
2 

practices that raise rivals’ costs by foreclosing them from access to at least some 

customers can harm consumer welfare by giving incumbents power over price. PostChicago analysis focused on true consumer welfare – emphasizing the harms that 

occur when output is restricted, or prices raised, or innovation deterred. And without 

saying so in so many words, this was the approach taken by the Supreme Court in 

the Kodak case in 1992 – and in every case the Court has decided since then. 

The consumer welfare standard. In the years after Kodak, antitrust achieved a 

rare and remarkable consensus among participants and decisionmakers – a 

consensus that the goals were understood and that outcomes would generally follow. 

That consensus continued and prevailed until very recently. It helped the Justice 

Department, the FTC, the courts, and state attorneys general to focus on economic 

effects, what Sylvania called “market considerations,” while avoiding detours into 

rulings that would protect competitors to the detriment of consumers. 

That is not to say that consumer welfare is a model of clarity. It most certainly is not. 

I addressed the most important differing interpretations in a 2015 article in Antitrust

magazine, “Another Take on the Welfare Standard for Antitrust” (Aug. 2015), at 

wsgr.com/a/web/170/jacobson-0815.pdf. But the differences are minor. All agreed – 

at least until now – that the touchtone of harm is restricted output, increased prices, 

materially reduced consumer choice, and retarded innovation. What the consumer 

welfare standard does not do is protect competitors over consumers. And for very 

good reason. Competitors fare best when competition is reduced. Conduct that 

creates a better product or greater quantities or lower costs helps consumers, but can 

harm competitors, often severely. 

The concern that appears to have motivated this call to repeal the consumer welfare 

standard is the protection of inferior competitors. They are the ones complaining so 

loudly of late. Protecting them at the expense of consumers, respectfully, is not a 

proper role for antitrust. If competitors are excluded in a manner that harms 

consumers, the antitrust laws should protect them. But if they are harmed by lower 

prices and the like, even from a dominant firm, that is competition in action. 

Repealing the consumer welfare standard would allow the Commission to make it up 

as it goes along. The courts will never stand for that. 

Antitrust went down a different path from the 1940s through the 1960s and a bit 

beyond. It was a resounding and widely-acknowledged failure. The pushback came 

in a form of an overcorrection that marginalized antitrust as never before. It was 

adoption of the consumer welfare standard that saved it. The FTC’s mission is to 

encourage competition and prevent those practices that damage it. Repeal of the 

Section 5 Statement would do the opposite. 
COMMENTS OF THE ATHENA COALITION

To

THE FEDERAL TRADE COMMISSION

For July 1, 2021 Open Commission Meeting

June 30, 2021

Chair Khan, Commissioners Slaughter, Chopra, Phillips, and Wilson. Thank you for the

opportunity to provide a public comment at this open meeting.

My name is Jane Chung, I am an advocate at Public Citizen and here representing Athena, a

broad coalition of organizations representing working people and small business people coming

together to create an economy where everyone can thrive. Our current fight is to rein in the

power of Amazon.

We believe the continuous digital and biometric surveillance1conducted by tech monopolies like

Amazon2constitute both unfair and deceptive practices and an unfair method of competition, and

we urge the FTC to ban them immediately.3

Continuous digital surveillance through devices like Amazon Alexa and Ring, reported to be

testing facial recognition, is unfair because it surveils community members (including children)

around Ring owners without consent, invades their privacy, violates their civil liberties, threatens

our democracy, and inflicts privacy harms that are not at all avoidable, with no countervailing

benefits.4

Additionally, biometric surveillance like facial and voice surveillance (or recognition

technology) is unfair as it fails people of color, women, and gender non conforming people,

causing substantial injury including even wrongful arrest of Black men, in ways these

communities cannot avoid, without any countervailing benefits.

Even for the consumer who buy Amazon Ring, Amazon’s continuous digital surveillance is

deceiving because the monopoly misrepresents and omits information about how that biometric

data is shared, for example with law enforcement, stored, potentially hacked, or otherwise

connected to profiles of them as individuals to be targeted with marketing and advertising, which

a consumer acting reasonably has no way to dispute or negotiate, let alone be meaningfully

aware of, given the complicated terms and conditions in user agreements, as well as the lack of

explainability of their data processes. Amazon is selling a state and marketing surveillance

device as a personal safety tool. It is unfair, deceptive, and needs to be banned.

Furthermore, we believe that operating continuous surveillance dragnets constitutes an unfair

method of competition, and that the FTC should undertake a rulemaking to ban this practice.5 To

take the example of Amazon again, neither competitors to Amazon nor sellers that rely on

Amazon for market access have the ability to monitor and track customers the way that Amazon

can. Amazon’s acquisitions of other data-hungry companies, including Ring doorbell and Kiva

Systems robotics, has further impeded the growth of would-be rivals. Through ongoing invasions
of customers’ and third parties’ privacy, Amazon’s data-driven monopoly power is thus

entrenched.

Prohibiting invasive, inaccurate, and discriminatory biometric surveillance is essential to

defending our privacy, protecting marginalized groups from discrimination, and fulfilling the

FTC’s mandate of consumer protection. Again, we urge the FTC to ban continuous digital and

biometric surveillance as unfair and deceptive practices, and unfair methods of competition,

under its existing authority.

1 We define biometric surveillance as including but not limited to facial surveillance (known as

facial recognition), voice surveillance (known as voice recognition), identification based on

fingerprints or palm prints, gait surveillance, and logging of an individuals’ head, face, or body

to infer emotion, associations, activities, or the location of an individual.

2 We provide examples of Amazon’s unfair and deceptive practices because the Athena coalition

focuses on Amazon; however, any action on continuous digital and biometric surveillance

requires an analysis of all Big Tech companies: Amazon, Apple, Facebook, Google, and

Amazon. Products from these monopolies worth investigation to this end include Google Nest

and Wink, Apple Watch, and Facebook Portal.

3 Data security and consumer privacy are squarely within the FTC’s UDAP authority, with

additional authority for data security and privacy coming from the Gramm-Leach-Bliley Act, the

Fair Credit Reporting Act, the Children's Online Privacy Protection Act.

4 Future applications from Amazon and other monopolies are even more disturbing; Amazon has

recently announced Sidewalk (a connected surveillance infrastructure), Sidekick (a surveillance

product specifically targeted toward children), and surveillance devices in Amazon delivery

trucks, all of which deserve increased scrutiny for discriminatory impact, privacy harms, security

risks, invasions of civil liberties, and unfair and deceptive trade practices.

5 Amazon’s market power is both a cause and consequence of their data collection practices. On

one hand, the economies of scale and scope from machine learning processing of rich data sets

helps companies that extract vast data sets from users to consolidate their market power. On the

other hand, this very market power allows them to extract increasingly intrusive data from

consumers left with few alternative options.