Policy

The FTC’s new enforcement weapon spells death for algorithms

It may have found a new standard for penalizing tech companies that violate privacy and use deceptive data practices: algorithmic destruction.

The FTC’s new enforcement weapon spells death for algorithms

Forcing companies to delete algorithmic systems built with ill-gotten data could become a more routine approach. | Illustration: CreepyCube/iStock/Getty Images Plus; Protocol

The Federal Trade Commission has struggled over the years to find ways to combat deceptive digital data practices using its limited set of enforcement options. Now, it’s landed on one that could have a big impact on tech companies: algorithmic destruction. And as the agency gets more aggressive on tech by slowly introducing this new type of penalty, applying it in a settlement for the third time in three years could be the charm.

In a March 4 settlement order, the agency demanded that WW International — formerly known as Weight Watchers — destroy the algorithms or AI models it built using personal information collected through its Kurbo healthy eating app from kids as young as 8 without parental permission. The agency also fined the company $1.5 million and ordered it to delete the illegally harvested data.

When it comes to today’s data-centric business models, algorithmic systems and the data used to build and train them are intellectual property, products that are core to how many companies operate and generate revenue. While in the past the FTC has required companies to disgorge ill-gotten monetary gains obtained through deceptive practices, forcing them to delete algorithmic systems built with ill-gotten data could become a more routine approach, one that modernizes FTC enforcement to directly affect how companies do business.

A slow rollout

The FTC first used the approach in 2019, amid scandalous headlines that exposed Facebook’s privacy vulnerabilities and brought down political data and campaign consultancy Cambridge Analytica. The agency called on Cambridge Analytica to destroy the data it had gathered about Facebook users through deceptive means along with “information or work product, including any algorithms or equations” built using that data.

It was another two years before algorithmic disgorgement came around again when the commission settled a case with photo-sharing app company Everalbum. The company was charged with using facial recognition in its Ever app to detect people’s identities in images without allowing users to turn it off, and for using photos uploaded through the app to help build its facial recognition technology.

In that case, the commission told Everalbum to destroy the photos, videos and facial and biometric data it gleaned from app users and to delete products built using it, including “any models or algorithms developed in whole or in part” using that data.

Technically speaking, the term “algorithm” can cover any piece of code that can make a software application do a set of actions, said Krishna Gade, founder and CEO of AI monitoring software company Fiddler. When it comes to AI specifically, the term usually refers to an AI model or machine-learning model, he said.

Clearing the way for algorithmic destruction inside the FTC

It hasn’t always been clear that the FTC might use algorithmic disgorgement more regularly.

“Cambridge Analytica a was a good decision, but I wasn’t certain that that was going to become a pattern,” Pam Dixon, executive director of World Privacy Forum, said regarding the requirement for the company to delete its algorithmic models. Now, Dixon said, algorithmic disgorgement will likely become a standard enforcement mechanism, just like monetary fines. “This is definitely now to be expected whenever it is applicable or the right decision,” she said.

The winds inside the FTC seem to be shifting. “Commissioners have previously voted to allow data protection law violators to retain algorithms and technologies that derive much of their value from ill-gotten data,” former FTC Commissioner Rohit Chopra, now director of the Consumer Financial Protection Bureau, wrote in a statement related to the Everalbum case. He said requiring the company to “forfeit the fruits of its deception” was “an important course correction.”

“If Ever meant a course correction, Kurbo means full speed ahead,” said Jevan Hutson, associate at Hintze Law, a data privacy and security law firm.

FTC Commissioner Rebecca Slaughter has been a vocal supporter of algorithmic destruction as a way to penalize companies for unfair and deceptive data practices. In a Yale Journal of Law and Technology article published last year, she and FTC lawyers Janice Kopec and Mohamad Batal highlighted it as a tool the FTC could use to foster economic and algorithmic justice.

“The premise is simple: when companies collect data illegally, they should not be able to profit from either the data or any algorithm developed using it,” they wrote. “The authority to seek this type of remedy comes from the Commission’s power to order relief reasonably tailored to the violation of the law. This innovative enforcement approach should send a clear message to companies engaging in illicit data collection in order to train AI models: Not worth it.”

Indeed, some believe the threat to intellectual property value and tech product viability could make companies think twice about using data collected through unscrupulous means. “Big fines are the cost of doing business. Algorithmic disgorgement traced to illicit data collection/processing is an actual deterrent,” David Carroll, an associate professor of media design at The New School’s Parsons School of Design, said in a tweet. Carroll sued Cambridge Analytica in Europe to obtain his 2016 voter profile data from the now-defunct company.

Forecast: Future privacy use

When people sign up to use the Kurbo healthy eating app, they can choose a fruit or vegetable-themed avatar such as an artichoke, pea pod or pineapple. In exchange for health coaching and help tracking food intake and exercise, the app requires personal information about its users such as age, gender, height, weight and their food and exercise choices, which improve the app.

In its case against WW, the FTC said that until late 2019, Kurbo users could sign up for the service either by indicating that they were a parent signing up for their child or that they were over the age of 13 and registering for themselves. The agency said the company failed to ensure that the people signing up were actually parents or adult guardians rather than kids pretending to be adults. It also said that from 2014 to 2019, hundreds of users who signed up for the app originally claiming they were over age 13 later changed their profile birth dates to indicate they were actually under 13, but continued to have access to the app.

The fact that algorithmic disgorgement was used by the FTC in relation to one of the country’s only existing federal privacy laws could be a sign that it will be used again, legal and policy experts said. While the Cambridge Analytica and Everalbum cases charged those companies for violating the FTC Act, the Kurbo case added an important wrinkle, alleging that WW violated both the FTC Act and Children’s Online Privacy Protection Act. Both are important pieces of legislation under which the agency can bring consumer protection cases against businesses.

“This means that for any organization that has collected data illegally under COPPA that data is at risk and the models built on top of it are at risk for disgorgement,” Hutson said.

The use of COPPA could be a foundational precedent paving the way for the FTC to require destruction of algorithmic models under future legislation, such as a would-be comprehensive federal privacy law. “It stands to reason it would be leveraged in any other arena where the FTC has enforcement authority under legislation,” Hutson said.

Application of algorithmic disgorgement in the COPPA context is “a clear jurisdiction and trigger of enforcement through a law that exists and explicitly protects kids’ data, [so] if there was a corollary law for everyone it would allow the FTC to enforce in this way for companies that are not just gathering kids’ data,” said Ben Winters, a counsel for the Electronic Privacy Information Center.

He added, “It shows it would be really great if we had a privacy law for everybody, in addition to kids.”

 Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

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Workplace

Meet the CEO who wants to take walks with every person in his company

GoodRx co-CEO Doug Hirsch shows us his calendar.

We take you inside a day in the lives of the world’s biggest tech execs.

Illustration: Christopher T. Fong/Protocol

This is the first installment in Protocol's new Calendar Series, where we take you inside a day in the lives of the world’s biggest tech execs: the meetings on their agenda, how they manage their time, their best productivity hacks and what they prioritize in a busy day.

Doug Hirsch is the co-CEO of health care company GoodRx alongside business partner Trevor Bezdek. He characterizes himself as a “product entrepreneur,” and he and Bezdek split CEO duties, with Hirsch acting as more of the company’s “public face” and Bezdek responsible for more of the business development. Before co-founding the health care company with Bezdek and Scott Marlette in 2011, Hirsch was the VP of Product at Facebook, where he helped create Facebook Photos.

The Santa Monica-based company’s been busy. Just this month, it acquired vitaCare Prescription Services for $150 million in an effort to grow its pharma manufacturer solutions business.

Hirsch and I got together last week on Zoom to talk about what’s on his calendar today, March 22.

His schedule has been edited for brevity and clarity.

8-8:45 a.m. | Peloton

I’m celebrating my 500th ride tomorrow, so I’m very excited. I’m an Emma Lovewell fan. I do some athletic activity every morning before I get going. Sometimes I’ll do a pretty long morning walk, weightlifting, something every day so that I’m not sitting at the computer eating.

10-10:30 a.m. | Interns: Cecily and Cassie

I usually meet with all the interns at some point, either when they start or toward the end of their tenure at the company. On this particular day, I’m sitting down with some interns to talk about how to work in tech and health care, welcome them to the company and hopefully encourage them to continue to keep up the good work. This particular internship program is meant to prepare women and gender-expansive adults to be software developers. We’re really trying to build diversity in our workforce, especially in software development.

10:30-11:30 a.m. | Strategy check-in

We have two different executive check-ins. One’s a smaller group of about five people, and one’s about 20 people. We do a biweekly check-in to make sure we’re on the same page. It’s pretty fast and doesn’t always go the full hour, because why take up the time if we don’t need it?

11:30 a.m.-1:30 p.m. | Doug’s thinking time

I really need to book out time, because otherwise my entire schedule gets filled. As much as I love interacting with folks, I do need to actually do what I like to do best and think I’m best at, which is building great products and thinking about the future of the company. I have six hours a week where no meetings get scheduled, where I need to just go deep, do some writing and use a whiteboard. I would love to tell you that nobody disturbs me, and it’s perfect. In practice, especially as a public company, I’m not going to say that I get a full six hours of that quality time.

One example of something I used this time for was in December of 2020. My son wanted a new PlayStation for Christmas, and I went on the internet and searched “PlayStation” and quickly found out that there were no PlayStations anywhere to be had unless you scalped one from StockX for like a billion dollars. And then I thought to myself — and remember, this is the end of 2020 right at the cusp of FDA approval for the vaccines — “Wait a second, this exact problem that I’m dealing with to get a PlayStation is going to happen across America and the world as everyone frantically tries to find these vaccines.” So it was during one of these times where I thought, “What if we built a vaccine finder? The data is out there, but people don’t know where to look.” I think in the span of two hours, I thought about it, actually called the guy who owns the data who worked for the government and basically kickstarted that project. And we launched it about three months later.

2-2:30 p.m. | Iced tea walk with Kraig A.

Kraig is a GoodRx employee. I try to walk with every employee, and I do this two or three times a week. It’s funny because sometimes people will show up at my office, and they have a PowerPoint ready, and I’m like, “No, we’re going for an iced tea walk.” We’re walking to the nearest coffee shop down the street, about 10 minutes away. When you’re sitting in a conference room or if they come into my office, it’s like, “I’m in the boss’s office, so I must behave accordingly.” And the relationship between the two of us is clear: boss here, and employee here. Those are two words I hate, by the way. But the minute we get on the street, we’re just two people going to get a drink together.

I think they’re kind of shocked. Because then I ask them, “What do you do for fun? You got any kids?” and that kind of stuff. And all they want to do is talk work. But I think the way to ultimately have a tighter working relationship is to start by just getting to know each other. It’s also a way to impart our values. I spent a few hours this morning working on our values. And at the end of the day, if I send you a PowerPoint with values on it, you put it in your trash, right? I think you got to eat, sleep and breathe it. And that’s kind of what the iced tea walk is about.

3-3:30 p.m. | GoodRx provider deep dive

One of the things that’s most important to GoodRx is people think of us as the place that consumers come to find information savings for prescriptions. But actually a huge part of our operations here is working with providers, health care professionals, and looking at ways to improve their experience. And if we can give them the tools, they can help more people in a more efficient way. Because there’s a lot of doctors out there that are like, “I’d love to sit down with someone and talk for 20 minutes about the price of the drug you’re trying to get at 19 different pharmacies.” Some folks may have the time to do that, and other folks are just like, “I want to be able to move on to the next patient but know that my patient got the best price.” So that’s what the deep dive is about.

4-4:30 p.m. | Research

We have a product called GoodRx Health, and we publish incredible content. Think about the vantage point we have: A significant amount of prescriptions written in this country come through direct, so we know what people are prescribing. We know when people are depressed in Minneapolis versus San Francisco or whatever. So this is actually me working with Thomas Goetz, our chief of research and chief communications officer, to look at trends to understand what content we can write that’s better than the normal garbage that you get on the internet if you look up any condition, drug or side effect. We work on providing best-in-class content, often written by doctors and health care professionals.

4:30-5 p.m. | Trevor

Trevor is my co-founder, the guy I keep talking about. Trevor and I, surprisingly, even though we share an office, you’d be surprised how rarely we actually get to talk. He’s on the phone, I can hear him on the phone right now. So we try to set aside some time to catch up and make sure we’re in sync on the company and our priorities.

We usually schedule two walks on our calendars a week. We never get both. We usually put an hour, and it usually ends up being a half hour. But the point of that is, again, for us to get out of the chaos. Otherwise, we’re in our office, someone’s banging on the door, Slack’s going off. To be really able to talk about the future of the company in an uninterrupted setting often just means a walk around the block. I’m a big fan of getting outside. We talk about both hiring and HR and business development issues, M&A, to “Where’s health care heading in this country?”

Rapid-fire with Doug Hirsch

Outlook or Gmail?

Definitely Gmail. I do have a lot of issues with Gmail, which I was about to rant about on Twitter. When I mark something as spam, why does Gmail still let it through? It’s like the button when you cross the street that doesn’t actually do anything.

Phone calls or Zoom?

Phone calls for sure. In fact, I have started going old school and conferencing people on my iPhone. There’s all sorts of research that Zoom is stressful. By the way, plastic surgeons are making a ton of money off of it, because people look at themselves and go, “Oh, I’ve got to fix that.” I’m fine with Zoom for three-plus people, but when it’s one on one, getting on Zoom is a major pet peeve.

Optimal meeting length?

Depends. If it’s a check-in meeting, it should be 25 minutes. If it’s a real brainstorm, I’ll go for days.

Do you ever do focus days with no meetings?

I do them a lot, actually. I’m ultimately a product entrepreneur. I don’t think of myself as a CEO of a company. And my job is to stay in touch with the pain points that American consumers are experiencing. So I will spend time hanging out in pharmacies. I was at the doctor’s this morning, and I spent an extra hour after I left my appointment just interviewing the front desk about what’s going on. So, no meetings except for interacting with actual people with actual health care problems, if that makes sense.

Do you keep a separate calendar for your personal life?

I keep a separate one, but it’s visible so people know if I’m busy.

Is there anything you will make time for no matter what?

My son’s on the tennis team right now, and I will not miss one of his matches. I’m lucky that they tend to start at 4:30 or 5 [p.m.], so I just leave a half hour earlier. I’m not going to sacrifice my brief time with my kids for work.

Your favorite productivity hack?

I know this sounds so old school, but nothing beats a whiteboard and small group of people, as in less than six, preferably less than four, just hashing out a problem. Get a bunch of people in a room and not leave until we solve it. I know we live in a distributed Zoom world, but there is a chemistry that comes from being able to work in a room together and design products together. The perfect mode is: Everyone’s in the room together. The second option is to do another Zoom.

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Michelle Ma

Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.

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