InformationWeek

August 21, 2000

The FTC Hits a Home Run

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n The Gentleman From New York , Godfrey Hodgson's magnificent biography of a magnificent man, New York Sen. Daniel Patrick Moynihan, Hodgson writes that Moynihan's core political philosophy is "a complex, subtle attempt at reconciling freedom and order, the public and the individual, pessimism and pride, in the effort to build an inhabitable society on foundations of truth."

Holding aside any further praise for the subject (whom I admire extravagantly), I was struck by Hodgson's use of the words "subtle" and "complex" in describing "political" thought. Would that one could accurately ascribe any form of subtlety or complexity to the thoughts of those who lately have had so much fun lambasting government as it occasionally turns its attention to companies central or peripheral to the technology economy.

The latest government action to draw fire was the Federal Trade Commission's move to fine at least seven online companies for what the FTC alleges were violations of consumer-protection regulations. What, I ask, was the FTC supposed to do when confronted with evidence that the companies in question indeed failed to live up to their obligations?

Should it have simply given the companies a free pass because they are fairly new at what they're doing? Because the companies hadn't quite gotten the bugs out of their freshly integrated front-end and back-end systems? Because their phone systems "froze up" and they couldn't accommodate their customers' inquiries?

All of the companies involved in the FTC's rules-enforcement efforts are, to my mind, to be commended on one level. All seven (whose names I happily omit because they're deeds have by now been well chewed over) either took existing businesses and adapted them to capitalize on the new opportunities the technology economy has laid at their feet or were part of the vanguard of dot-com startups. Good for them, I say. They did what any self-respecting management team would have done if that team had the requisite courage, vision, and resources.

But the other thing all seven have in common is that the FTC says they've run afoul of the rules. Rules are rules, and one violates them at his own or her own peril. Dealers in Las Vegas (centerpiece of the ultimate market-focused economy) cut no slack for beginners. Kids learning to play baseball these days hit off tees, not live pitching. But when hard men play that hard game for money, they know that three strikes is an out and four balls get you to first base, with no accommodations for infirmity or inexperience.

Was government selective in pursuing actions against those seven? Of course. Were other companies likely in even more egregious violation of the rules of the game? I'd wager a great deal that such is the case. Was any of this intentional on the part of the alleged violators? Again, I'd wager a great deal that such isn't so.

Why, then, the great hue and cry over the FTC's doing its job? Why the thinking that any government entity should somehow look the other way when it comes to enforcing rules and regulations already on the books? From exactly which FTC regulations (or antitrust statutes, for that matter) are technology or technology-enabled companies exempted?

At the risk of the unsubtlety I see marking so much of the FTC and Justice Department debates, should Firestone Tire and Rubber be given a free pass from the feds because it tried hard to make good tires, but somehow fell short of its goal? A small slip here and a little excess humidity there are emerging as the causes for tires that don't hold up well in the heat. Certainly there are other companies operating with similar small violations of workplace regulations.

It is, of course, absurd to compare the tears of a disappointed child--no matter how painful to witness--with the loss of human life. But the arguments are, in the end, precisely the same: that government should somehow abdicate its responsibility (to paraphrase author Hodgson) "to build an inhabitable marketplace on foundations of truth."

The game, of course, changes, and I, for one, have never gotten a speeding ticket without thinking that others on the road were going at least as fast and got away scot-free. In the end, though, I knew the speed limit, I knew I was exceeding it, and I knew that I probably was cut a break on the fine when my speed was listed at 72 and not what the speedometer registered moments before I spotted the trooper.

Then, too, the laissez-faire advocates might be onto something. Next time I take to the diamond, I want hitters to be called out when I get two strikes against them . . . of course when I'm at bat, two balls will get me to first.

But I'm just being silly, right?

Lou Bertin is an industry consultant. He can be reached at Lou.Bertin@gte.net


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