The Fair Trade Commission said Thursday it has compiled draft guidelines for tighter regulation of technology giants in order to strengthen protection of customer data, and aims to introduce the first such rules as early as October.
The antitrust watchdog said the guidelines are designed to address concern about major tech companies, such as Amazon.com Inc., Apple Inc., Facebook Inc. and Google LLC, obtaining personal data by making use of their “superior bargaining position.”
These companies are facing growing criticism that they are discouraging new companies from entering the market, by monopolizing customer data through their platforms to bolster their competitive positions.
The new guidelines will be applied to companies providing online shopping, social media, search engines and video, music and app distribution, the commission said.
The regulators will for the first time apply the antimonopoly law to business practices between a company and customers to protect consumer privacy.
The commission says tech giants are in “a superior bargaining position” when customers have no choice but to provide their data to use the services.
According to the draft guidelines, information technology giants offering digital platforms will be obliged to disclose to their users the purpose of personal information collection.
Acquisition of personal information without disclosing a purpose would constitute a violation of the antimonopoly law, the guidelines said. Provision of users’ personal information to a third party without their permission would be regarded as an abuse of superior bargaining power banned under the law, the FTC said.
There is a “disparity in the quality and quantity of information and negotiating power between consumers and a digital platform operator,” the commission said.
Similarly, acquisition of personal information without taking the precautionary measures needed to manage the collected information safely would also be considered illegal, according to the guidelines.
The FTC said it would issue cease-and-desist orders and impose fines if it finds such violations.
The guidelines will be finalized following a public consultation period through Sept. 30.
The new regulations were drawn up after the ruling Liberal Democratic Party called on the government to impose tougher restrictions on technology giants, in order to improve their privacy policies and to clarify rules governing their transactions with smaller vendors.
The government also aims to enact a new law next year to ensure transparency in business transactions with major technology companies.
Other countries are also stepping up scrutiny of such firms to assess whether they are engaging in practices that could undermine fair competition, stifle innovation or harm consumers.