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3310	9670	Welcome to the DEFCON Ethics Village again, and it is our honor to have with us Commissioner
9670	13430	Rohit Chopra of the Federal Trade Commission. Welcome, Commissioner.
13750	15610	Thanks, Andrea, for having me.
15610	18290	No, thank you for taking the time to join us.
18350	23390	So before we get started with nerdy substantive questions,
23390	29370	could you tell us a bit about your own career? Somewhere out there in the wilds of the
29370	36130	internet, there may be a teenager whose dream is to be an FTC commissioner. How does that teenager
36130	39730	fulfill the dream of growing up to be like you?
39990	48350	Well, you know, it's really easy for me to pinpoint what totally changed my thinking on the
48350	58790	world. And that was the subprime mortgage crisis. The absolute failure of not only big Wall Street
58790	67510	institutions, but also the failure of our regulators to actually take action to avoid
67510	74350	massive pain for so many people was a wake-up call to me. I really saw how clearly that
74950	83170	regulators in Washington were willing to be spoon-fed, you know, tall tales about market
83170	89670	efficiency and how everything is self-correcting. But in reality, many of these large, powerful
89670	96930	firms had weapons of destruction and they could cause damage while not really getting hurt much
96930	105070	themselves and even getting bailouts. So that really taught me about the need to jump into
105070	111950	the fray and fix this broken culture. And you know, I'm the first non-lawyer in about a quarter
111950	118570	century at the FTC. I'm one of the first to have a technologist on my team. So we are trying to
118570	123070	do things differently because it's clear the status quo is so fundamentally broken.
126480	133140	So with that, let's start talking about some of the things that are challenging and how the FTC
133140	138200	is working to address them. So the first issue, let's talk a bit about supply chains.
138200	143300	So supply chain integrity is something that is near and dear to the heart of every security
143300	149000	professional. And it's also something that's been in the news a lot, whether it's with Kaspersky
149000	155040	software being viewed as suspect for use in government operations, or the most recent
155040	162960	conversations about whether TikTok should be limited in its access to U.S. consumer markets.
163040	169980	You also recently concurred in a notice of proposed rulemaking around made-in-the-USA
169980	176760	labeling. Could you tell us about that concurrence and talk to us about some of these broader issues
176760	182960	around supply chain management and their impact on integrity and security of software?
183480	190180	Yeah, sure. So just to take a step back, I think everyone is really asking hard questions about
190860	198240	how mergers and how a lot of our policies, including offshoring and our trade agreements,
198240	204140	have actually undermined the resilience of our supply chains and how we produce
204140	212680	goods and services. It's obviously been in full view in the context of PPE and responding
213180	220320	to the COVID crisis. It's obviously top of mind for me when it comes to needed pharmaceuticals,
220320	227080	especially generic drugs. But it's also really come up in the context of our agricultural
227080	236840	supply chain. We saw how epidemics that took place in certain meatpacking facilities were
236840	242920	having ripple effects. And what it really represents is, I think, a tension between
243310	252480	the concept of efficiency and the value of resilience. Resilience, and many of you
252480	259540	watching will know this well, systems are only resilient when they have backstops,
259540	264280	when there's redundancies. And I think a lot of our economic policy in America
264800	273000	has really been in favor of consolidating to one single source. And when that single source
273000	281140	is disrupted, boy, is there chaos and panic. In the telecommunications and semiconductor sector,
281140	292420	we saw many years ago how one natural disaster near Taiwan led to OEMs in the United States being
292420	297460	unable to produce for an extended period of time because there was so much dependence of their
297460	304640	supply chains on that. And I think we're really rethinking a lot of that in the U.S. about what
304640	309920	does our healthcare supply chain look like? And really, what does our technology and telecommunication
309920	315820	supply chain look like? There's obviously been serious geopolitical tensions with respect to
315820	322360	the treatment of Huawei in many communications infrastructure in Europe and around the world.
322580	329180	And I do think there are some serious questions we have to tackle when it comes, one, to this issue
329180	337520	of resilience and redundancies and backstops. And two, whether we're really able to trace
338430	343480	the components of a supply chain, particularly in the digital sector,
343480	351500	we obviously really have some lack of understanding about where those supply chains share data,
351500	357260	the extent to which it could be shared with potentially an authoritarian government.
357260	363060	So there's a lot of live issues. You obviously mentioned the Made in USA question. I've really
363060	369640	been critical of the government's no-money, no-fault settlement approach when it comes to
369640	378480	Made in USA. I think this is totally a slap in the face to many honest businesses in the United
378480	383740	States, or frankly, any honest business that doesn't lie about where their products and
383740	391680	services are made. Because when you can have some lie about it and get a market advantage and then
391680	398240	settle it for no money and no admission of liability and really kind of nothing except
398240	404080	some paperwork and a promise not to do it again, that's not a penalty, that's an incentive. So
404080	412440	we put forth a proposal a year ago to create new penalties for this. I'm really happy to see that
412440	418080	we're pushing forward with it. And I think there's a lot of open questions in software and digital
418080	424320	services about how we think about country of origin claims. But I do know that our law protects
424960	430720	against those who lie about it. And I think we're going to need to develop our thinking around that,
430720	435860	especially as it relates to technology around election security and other things that have
435860	440600	such fundamental and big consequences for our democracy and our economy.
440640	446060	So there's a lot there. Obviously, right now, there's major discussions about TikTok.
446680	451740	You know, previously, the FTC has sanctioned TikTok for violating children's privacy. I thought
451740	458460	the violations were totally unacceptable. And I think there's more discussion that you're hearing,
459100	466280	frankly, across political views around the national security implications of the TikTok
466280	472260	corporate structure, and whether the existing corporate structure should be permitted to
472260	481560	operate as is in the US. You know, to be clear, of course, we want to allow a broad ecosystem
482880	489200	of apps and ways for people to connect. But of course, their corporate structure may need to
489200	495560	be modified if there are serious national security implications around the ownership structure and
495560	502240	how data is being handled, transferred, or potentially abused without user knowledge.
504800	510520	So you recently wrote that algorithmic discrimination is a silent pickpocket,
510820	517280	a lovely turn of phrase, that robs consumers of opportunities and the ability to foresee their
517280	524370	access to various services. What are the sorts of concerns that you're thinking about in the context
524500	532740	of algorithmic transparency and discrimination? And how do we think about creating a more
532740	539600	transparent system of algorithms that preserves information integrity for consumers and gives
539600	546240	them maximum fair access to various consumer markets? Yeah, so I think there's a myth out
546240	554760	there that algorithms take the bias out of things, and that humans are the ones that are biased,
554760	560860	and therefore the algorithms will be unbiased. And I think that is really such a dangerous point
560860	568440	of view. The reality is that these biases are built into these algorithms, often by the data
568440	576140	set that they are trained on. We know that that is how machine learning, artificial intelligence,
576140	581320	and algorithmic decision making works, and we know that it can have a disparate impact
582060	588460	on certain groups of individuals. And I'm worried that some algorithmic decision making
590400	596040	reinforces discrimination rather than taking discrimination out of it.
596040	602460	So one of the things that I have been writing about and speaking about to build more support
602460	613800	around is to use the FTC's prohibition on unfair practices, and there's a legal framework for that,
613800	619500	and to use that law to combat discriminatory algorithms.
619940	625880	And discrimination, I believe, is an unfair practice under the FTC Act, and we currently
625880	632920	have some existing laws that we can use to tackle discriminatory algorithms, whether it's
632920	638180	our laws protecting against housing discrimination, employment discrimination,
638180	646860	credit discrimination. And I do believe that the FTC Act could be a place that is a broad
646860	654020	anti-discrimination protection when it comes to algorithms. So I'll say this, in many cases there
654020	662380	will be algorithmic discrimination, but I would like to see more individuals and companies that
662380	668740	deploy those algorithms do what many other responsible entities do and do some basic
668740	678100	due diligence and testing to see what some of the impacts might be. I mean, to deploy some of this
678100	686460	and to not understand how it can cause harm and damage I just think is so blind. So there's a lot
686460	693340	more to do on this, but I do think that this moment that we're living in is such a reminder,
693340	700800	and it's not just facial recognition, it's not just biometric identification, it's all sorts of
700800	708660	automated decision making that I fear can be weaponized or I fear can be used as a tool to
708660	716940	exclude rather than to be a fair form of commercial activity. Particularly as databases get
716940	724620	merged with other databases and repurposed. So along those lines, but shifting gears a little
724620	730260	bit, it's been an exciting week in terms of congressional testimony. So I'm sure that you
730260	738160	heard about or watched the CEO testimony of big tech companies this week, or last week I guess,
738790	744860	in Congress. Would you have any impressions that you'd like to share with us about the kinds of
744860	752540	core FTC concerns that you saw reflected in the testimony and some observations about what was
752540	759580	asked or what was not asked? Yeah, well I want to be mindful about my comments because every single
759580	766980	one of those witnesses represents a company that is under an FTC order for one reason or another.
768160	778480	Obviously, I had major objections to the FTC's settlement with Facebook. I thought that it was
778480	787820	completely not the right way to do things, especially without even deposing or collecting
787820	795840	the documents in the custody of Mark Zuckerberg and then awarding a release of liability for him
795840	804180	and other top executives. But let's just say this, I think that it's important for
804800	813560	top business decision makers, including CEOs, to have to answer questions under oath when there is
814540	821860	scrutiny about whether their business practices are lawful. Too often I see a mentality in
821860	829580	Washington, including at the FTC, that treats small businesses, app developers,
829920	837060	and others who don't have a big corporation standing behind them to defend them. Those
837060	842960	individuals get put on the hot seat, they often get named in law enforcement actions, while too
842960	852500	often the largest firms or the individuals at the top called the shots completely evade any
852500	857380	scrutiny or accountability. And I just think that's fundamentally wrong. It goes back to
857380	863000	something earlier I said about the subprime mortgage crisis a decade ago. We really didn't
863000	871540	see many executives face serious scrutiny or accountability for the conduct of their institutions
871540	878720	while in the savings and loan scandal a generation ago, we saw dozens, if not hundreds, of bank
878720	886420	executives that were from smaller banks, in many cases locked up. So we need to remind ourselves
886420	894520	that the law does not have an exemption for the CEOs of the largest corporations on the planet
895250	900960	and obtaining their sworn testimony, you know, whether it be in a congressional investigation
900960	907360	or a federal law enforcement investigation or a state AG investigation, I think is critical
907980	912560	and they should not be able to lobby their way out of that.
913740	919440	So continuing along those lines, you recently tweeted that until we address big tech's business
919440	925300	models, any effort to combat disinformation is like shoveling snow during a blizzard.
925300	933040	Another vivid image. Which aspects of big tech's business models specifically concern you?
933160	942620	Well, there's a lot there. I mean, I hear so many responses from some of our largest firms
943340	950000	about what they're doing on everything from fake reviews to harmful content,
950000	958240	and often the response is to hire more people, to do more checking. And I think that misses the
958240	964620	point. And we're hearing, having some of these debates and there's a lot of discussion around
964620	973080	the some of the ad boycotts with respect to hateful content. You know, my view is that we're
973080	982240	always going to have content that we disagree with or that is hateful. You know, in some ways,
982240	988100	that is the price of living in an open society. Where the question is, is to what extent are
988100	996280	companies profiting from that? Are they profiting from amplifying it, from making it more prominent,
996280	1002460	knowing in their own research or machine learning or artificial intelligence
1003100	1010480	that it is this type of divisive content that is keeping us more hooked and more engaged,
1010480	1017040	because that's what makes us click and therefore makes them more money. Until we really look at
1017040	1022300	some of the business incentives, I don't think we're really going to ever be able to fix some
1022300	1028340	of it. And they can hire all the people they want, but some of it is just going to be too little,
1028340	1033920	too late. So I'd really like us to diagnose a lot of the problems we see on the platforms
1034520	1040120	by looking at their core business incentive of whether they even make money by fixing it.
1040140	1044140	You know, they make a lot of claims that it's better for them to fix it, but I don't
1044140	1050660	always see that to be the case. Sometimes I see their own financial interests come ahead,
1050660	1057080	including even when it comes to bots and disinformation. So take the issue in the
1057080	1062660	context of elections. You know, we hear a lot about what they're doing, but let's be honest
1062660	1070960	with ourselves. There are billions of fake accounts. There are so many false accounts that are
1070960	1077420	propagating and amplifying intrusive disinformation, and often that is connected
1078080	1084240	to state and non-state actors. So the question is, is how are some of the platforms actually
1084240	1090720	benefiting from these fake accounts and bots? It may actually be helping them when it comes to
1090720	1099420	juicing their ad metrics or making it look like more people are clicking so that they can charge
1099420	1105380	advertisers. So there's really very little transparency in this, and I think we need to
1105380	1110400	do much more to really understand what those business incentives are, how they are actually
1110400	1118460	deciding to curate and amplify content. And you know, there's a lot of talk about political bias
1118460	1124900	and all this. I'm really focused on the business incentives, what makes them money, and why certain
1124900	1133680	types of content are amplified, and what we need to do in order to fix that, rather than hearing a
1133680	1138420	bunch of PR stories about what they're doing to clean up their act.
1139720	1145120	The other half of that question might be the micro-targeting of consumers. Is micro-targeting
1145120	1150920	of consumers a problem in your mind? I do think it's a problem. I think that we have not fully
1150920	1159940	appreciated that when you, in normal advertising markets, you advertise to a demographic.
1159940	1165060	But in today's advertising markets online, you can advertise to a single individual.
1165340	1171000	And we know that this can be weaponized for the purposes of disinformation and manipulation.
1171140	1177700	In fact, there's been reports by NATO, by even reports for the Department of Homeland Security
1177700	1185800	in Australia and in Europe, about how these tools can be used to be weaponized to influence certain
1185800	1192900	individuals. And when you can essentially provide a list of individuals and send a message that
1192900	1198120	follows them across the digital world, you know, that is a recipe for manipulation. And look, we
1198120	1204460	saw this in the Cambridge Analytica scandal, and that scandal, I think, was just a small-scale
1204460	1211960	reflection of Facebook's overall business model. And I'm not so sure that the behavioral advertising
1211960	1217900	model or the surveillance-based advertising model that is tied to an individual person,
1217900	1225940	I'm not really sure that is completely in coexistence with our views on an open internet
1226700	1233400	and a fair digital marketplace. So we'll need to look at everything from the legal immunities they
1233400	1238540	enjoy, and maybe they shouldn't have some of those legal immunities if they have certain business
1238540	1243660	models, as well as how we correct the core business incentive that drives some of the
1243660	1250600	massive intrusions in privacy and security. You previously hinted at this issue, but could you
1250600	1256680	talk with us a bit more about how you see disinformation and misinformation management
1256680	1264220	happening on social networks and other platforms, and whether you feel that it's
1264220	1272780	meeting expectations or whether more needs to be done? I don't. I think the idea that there is
1272780	1281140	just going to be more content moderation, I have to tell you, one, I don't think it's going to work.
1281140	1291080	I have serious concerns that this is being adjudicated by the tech platforms themselves.
1291080	1296960	It's an enormous amount of power they hold, and I think some of those issues needed
1296960	1305760	to be decided through democratic governance, rather than a few people who control
1305760	1313380	the massive platforms for whatever decisions that they choose. And I think, ultimately, they will
1315240	1319420	make certain decisions that are in their shareholders' best interest and
1319420	1326520	their best interest, not necessarily in society's best interest. I think we have to change our
1326520	1332940	mindset completely when it comes to abuse and misuse of data. And I know that many of
1332940	1342980	you who think about ethics and the role of technology in society, you know that data
1342980	1350900	can be weaponized. I mean, just take a look at some of the massive intrusions. Equifax, Anthem,
1350900	1359460	Marriott, these were not done in order to open up credit cards in consumers' names.
1359460	1366460	We believe, according to what we're hearing from government enforcement, that these were connected
1366460	1372860	to state and non-state actors, and almost all of them, or the majority of them, are related to
1372860	1380320	essentially Chinese actors that are related to their own state's objectives. So we have
1380320	1386920	to start thinking about this as a national security issue, rather than as a narrow identity
1386920	1394820	theft issue. The remedy is not really credit monitoring for individuals. The remedy is much
1394820	1402760	different, and we have to quickly accept the harms that are not just to our pocketbooks, but are to
1402760	1412160	our safety and security as well. Following up on that, but switching gears a bit, let's talk about
1412160	1419660	anti-competitive conduct. Do you have concerns about the level of competition that's currently
1419660	1429320	occurring, or rather not occurring, in some technology spaces? I do. I really think that
1429320	1442000	the existing way that many platform businesses gain scale is often through a model of domination
1442000	1449640	where, if they have deep pockets, to lose a lot of money in order to create network effects. So
1449640	1457040	think rideshare, you know, think food delivery. There's so many examples. You worry that that
1457040	1464180	actually is a model that ultimately monetizes itself, not through a set of open protocols
1464180	1471360	where there's dynamic competition, but through essentially imposing more rents and regulations
1471360	1476220	on every side of the market, whether it's riders and passengers, whether it's restaurants
1476880	1487500	and their customers. We have to really think hard about the way that venture capital and
1487500	1494000	Wall Street incentives work. I'm also really concerned about, you know, the app economy,
1494000	1502880	the extent to which app developers face major gatekeepers and who can impose their own
1502880	1511460	regulations and commissions. And ultimately, sometimes maybe they're even able to use their
1511460	1519700	data in order to determine what new apps they might offer as a competitor, or what new products
1519700	1526680	or services they might offer. You know, the original conception of an open internet was
1526680	1533260	really low barriers to entry without gatekeepers. And I'm concerned that venture capital investment
1533260	1542500	doesn't go to startups that could just be squashed out by a major incumbent. Ultimately, I think that
1542500	1552620	reduces overall innovation, it slows us down, and it's not good for our digital progress. And
1552620	1561000	so I am worried about a slowdown in innovation because of the rent seeking and gatekeeper
1561000	1569080	activities and choke points that many people raise concerns about in today's digital marketplaces.
1569740	1574400	Following up on that question, one of the key dynamics that happens from the venture capital
1574400	1582660	standpoint is a reliance on consumer information databases as a way to monetize businesses that
1582660	1590000	may be otherwise losing money. How do you analyze the dynamics around the mergers of consumer
1590000	1597980	databases, particularly in vertical integration contexts? And how does that connect with the
1597980	1604640	short term return on investment pressure that so many VC firms face and pass on to the startups
1604640	1612960	that they work with? It's a great question. I do think that before I took office on the commission,
1612960	1624560	the FTC closed an investigation into Amazon and Whole Foods. And while I was not on the commission,
1624560	1632860	before I came on, I had the observation that a lot of deals like this are for the purposes
1632860	1642720	of acquiring more consumer data in order to price discriminate, in order to essentially create more
1642720	1650300	and more reliance on a particular platform. There's obviously been a lot of discussion
1650820	1659080	around the world about Google's proposed acquisition of Fitbit. There's lots and lots
1659080	1666800	of data acquisitions that I think ultimately could reduce competition in both directions.
1666800	1675420	In some ways, the target could have grown into a bigger challenger. And on the other side,
1675420	1683300	the buyer, it may lead them to shut down their own internal investments in building arrival.
1683680	1690720	And we need to really analyze that in multiple directions. I really supported an effort by the
1690720	1700640	commission to issue orders to Google, Facebook, Microsoft, Apple, Amazon, to report to us about
1700640	1706700	all of their acquisitions that did not meet the merger reporting requirements
1707220	1714740	so that we can understand whether we are even monitoring mergers and acquisitions appropriately.
1714740	1723300	And I really believe that in the private equity space and in many acquisition strategies,
1723300	1730620	we are seeing the roll-up of many small companies that may not meet merger reporting thresholds
1730640	1736840	but that can be used ultimately to reduce competition and innovation and exclude potential
1736840	1743780	rivals. And it's a real concern that we all need to be thinking about. And ultimately, with the
1743780	1752260	goal of making sure that our U.S. markets are the friendliest when it comes to new market entrants,
1752260	1760540	because ultimately that is what is going to drive the progress, not coddling a few
1760540	1768000	politically connected behemoths. So the last question, which is a bit open-ended,
1768000	1774420	is sort of a hopes and dreams question. How do you see the FTC and how do you hope the FTC
1774420	1781120	will use its authority going forward in the next five years to further its mission of consumer
1781120	1787960	protection and encouraging market competition? Yeah, I could go on about that forever,
1787960	1795660	but just a couple things. One, I think our enforcement remedies when it comes to law
1795660	1805720	breaking and when it comes to mergers need to be more surgical. And it can't just be,
1805720	1815160	don't do it again, in egregious illegal conduct. And it also has to think about market structure.
1815160	1823300	I mean, if we're going to challenge consummated mergers that reduce competition in violation of
1823300	1830780	the law, unscrambling that egg is going to require real thinking, particularly in tech
1830780	1837080	and digital markets. And we're going to need to think with engineers and developers and experts
1837080	1843700	about what is the right remedy. Is it going to require cloning? Is it going to require
1843700	1852220	open licensing? Is it going to require spinoffs? Is it going to require elimination of certain
1852220	1857740	conflicts of interest within a business model? And the list goes on and on. But we're going to
1857740	1864180	need to be data-driven, not press-driven. We're going to need to be analytical and not act on
1864180	1870120	hunch. And I think ultimately that's going to require diversifying a lot of the skill sets
1870120	1877660	at the FTC and other regulators. And it's also going to require us to be unearthing more information
1877660	1883940	about existing business practices. We're going to need to use our authorities to conduct more
1883940	1890260	industry-wide investigations. We're going to need to set real targets to make sure that we
1890260	1897440	are making sure that barriers to entry are low and that there is not a lot of harm from
1897440	1903840	exclusionary tactics, whether it be by digital gatekeepers or others in the economy. And that's
1903840	1913960	just when it comes to other key sectors, whether it be the pharmaceutical industry,
1913960	1922040	whether it be retail. But we have to bring that lens of data-driven analysis and a broad thinking
1922040	1929480	about remedies where we include broad participation from the public. That's just really imperative to
1929480	1935280	me. And I think there's going to be a new bipartisan consensus that is built around this
1935280	1943060	and that ultimately really wants to hold bad actors accountable, that wants to clean up market
1943060	1950100	structures so that anyone with a great idea can get in the game. And I hope that over the long
1950100	1955340	term that we will be able to move the FTC and a lot of our agencies in that direction.
1957570	1963190	As a bonus question, is there anything that I should have asked you about that I failed to ask you about?
1963550	1971690	Well, I think it's really important for all of us to think about our individual role when it
1971690	1982330	comes to thinking about the response and the recovery from COVID-19 and the resulting economic
1982330	1991170	crisis. We are all going to need to have an all-hands-on-deck mentality about what can
1991170	1999490	every government agency be doing better, what can every community be doing to really respond to this
1999490	2007730	and recover. And I'm so worried that our economy is going to look so different in a way that might
2007730	2015930	wipe out a lot of local businesses, that might make it even harder to break into markets,
2015930	2025490	and ultimately an economy and society that has disproportionate negative effects of some of these
2026750	2035230	cataclysmic events on the least fortunate among us, and can also have effects that overwhelmingly
2035230	2043130	or disproportionately affect people of color and others who may face discrimination. So,
2043130	2050790	I know that there's a lot we're doing in the digital world and in the tech community to think
2050790	2058270	more about civil rights and to think about fair markets, but this economic crisis and this
2058270	2066370	pandemic, I think, put it all in full view that we all need to step up,
2066370	2073270	and every single sector of the economy and society needs to be thinking differently about it.
2075110	2079570	Thank you so much, Commissioner Chopra, for taking the time to talk with us.
2079570	2083810	And I realized I failed to introduce myself at the beginning. I was too excited to interview you.
2083810	2089350	So, I'm Andrea Matwishan from Penn State, and we've been fortunate enough to talk with Commissioner
2089350	2095170	Rohit Chopra, and please stay tuned for a live question and answer session with the Commissioner.
2095170	2097790	Thanks. Thanks, Andrea.