Deep Dive Episode 109 – Regulating by Consent Agreement: Examining FTC’s YouTube Settlement and Beyond

On September 4, 2019, the Federal Trade Commission announced sweeping regulatory changes to the operation of YouTube, one of the internet’s most popular websites. YouTube has 2 billion monthly active users and features content from more than 50 million individual creators, most of whom are small businesses or individuals. Many of the creators affected earn money using YouTube and stand to lose, in aggregate, hundreds of thousands if not millions of dollars from these regulatory changes. Some will need to restructure their business model. The changes also subject content creators to increased risk of prosecution and stiff fines. Yet these significant regulatory changes were never put before a legislature; none of the content creators or users of the website were privy to the rationale or design of the regulation; and there was no public process for comment. Instead, the new regulation was confidentially negotiated between YouTube and FTC staff and put into place by a court.

FTC settlements have long been praised by those who value the “soft law” benefits of such an approach: flexibility to deal with case-by-case specific problems, particularly in fast-changing industries; reduced need to establish one-size-fits-all industry-wide rules; efficient resolution of cases; the ability to shape future behavior through a kind of common law. Such settlements have also long been criticized by those who emphasize the difference between them and hard law: a creation of regulatory ambiguity; lack of process that considers the interests of the full range of stakeholders; a “rulemaking” environment with a power differential between the negotiating parties; and an agency ability to accumulate incremental changes to the law that in total can be quite significant.

This episode explores FTC settlements and consent decrees, including the YouTube case and what it means for FTC enforcement going forward. It will take place as part of the Federalist Society's Executive Branch Review Week.

Featuring:

• Jessica Rich, Distinguished Fellow, Institute for Technology Law & Policy, Georgetown Law
• Sean Royall, Partner, Kirkland & Ellis LLP
• Gerard Stegmaier, Partner, Reed Smith LLP
• [Moderator] Neil Chilson, Senior Research Fellow for Technology and Innovation, Charles Koch Institute

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