Fox in the Henhouse: The Delegation of Regulatory and Privacy Enforcement to Big Tech

Abstract

The Federal Trade Commission (FTC) requires tech giants to identify and remove apps from their platforms that use deceitful sales tactics or violate user privacy. Tech giants have often resisted FTC orders because policing diminishes their profits. But while some firms have eventually complied with FTC demands, other firms have continued to shirk enforcement at the risk of escalating fines. What accounts for these different responses? Examining Apple, Google and Facebook, we find that tech giants willingly police consumer fraud but not consumer privacy violations. Failures to police fraud have led to public complaints and negative press attention, while failures to police data breaches often go undetected by users, the media and thus the FTC. We conclude that tech giants can act as effective regulatory agents on the government's behalf, but only when they police activities they cannot conceal.