Although the FTC’s budget allowed it to continue working through midday Friday, the impending lapse in funding will require it to suspend virtually all of its investigations and litigation. That would include the Facebook probe, according to David Vladeck, a former director of the FTC’s consumer protection bureau.
Preparations for the shutdown probably have already affected the probe, he said. “The key part of any investigation is the information-gathering stage, which is revealing documents and talking to people,” he said. “It just stops. And it has to stop in an organized way.”
Beyond the number of days or weeks the FTC is officially closed for business, shutdowns carry “enormous cost to government” because investigators must spend up to a week ahead of time winding down their work and a week afterward coming back up to speed, Vladeck said.
During that time, FTC investigators cannot conduct the normal fact-finding or research into companies they would otherwise be doing. Nor can the investigators effectively engage in negotiations with companies over a settlement. The FTC didn’t respond to multiple requests for comment.
The disruptions come at a critical moment for Silicon Valley as the FTC investigation, which began in March, could set the tone in a wider debate about the agency’s role as a tech regulator. Tech companies and some lawmakers in Congress have suggested giving the FTC more responsibility for overseeing the industry and its privacy practices. But some consumer advocates worry that the FTC is underequipped to fulfill that mission.
The investigation into Facebook is not the only FTC activity that could be disrupted if workers are furloughed. Under the FTC’s publicly released shutdown plan, consumer hotlines would not be staffed; the agency would not hold events, publish reports or respond to Freedom of Information Act Requests; and all other consumer protection activity would cease. Virtually all of the agency’s ongoing legal work would be put on hold. Certain cases may continue if a judge requires it or if there are other statutory deadlines involved, but it is unlikely that the Facebook case meets that threshold, according to former officials familiar with the investigatory process.
When business resumes, the FTC could find itself in a weaker position against Facebook if the shutdown caused agency-imposed deadlines to slip, said one former official, speaking on the condition of anonymity to discuss the FTC’s internal workings.
“When you impose a deadline, you’ve got a dynamic going,” the former official said. “And when the deadline is suddenly lifted, circumstances can change, new facts can arise, conversations take place that just change the dynamic of the situation.”
Outside actors can also change that dynamic. Last week, the D.C. attorney general filed a lawsuit against Facebook over its Cambridge Analytica fiasco, marking the first time officials in the United States have taken major legal action against the company over its recent troubles. The announcement underscored the way state regulators are increasingly taking the initiative when it comes to overseeing Silicon Valley, leaving some experts asking whether the public can depend on the FTC as a reliable industry regulator.
“Had the FTC moved promptly to reach a settlement with significant fines, the agency wouldn’t find itself in this position,” said Hal Singer, an economist and senior fellow at George Washington University’s Institute of Public Policy.
Yet as more information emerges about Facebook’s behavior, what began as an already complex investigation by the FTC could grow into a massive review of the company, putting more work on the agency’s plate and potentially becoming another source of delay. In prior cases, such as a settlement involving Uber, the FTC is known to have significantly expanded the scope of its investigation in light of new revelations.
In a statement, Facebook said it is cooperating with regulators around the world.
“We’ve provided public testimony, answered questions, and pledged to continue our assistance as their work continues,” the company said.