Federal Trade Commission could soon penalize tech companies for targeted advertisements

Federal Trade Commissioner Rebecca Kelly Slaughter / Getty Images • April 21, 2021 3:40 pm

The Federal Trade Commission could soon begin investigating big tech companies whose algorithms result in racially biased ads or search results, signaling the Biden administration’s willingness to directly challenge social media companies’ main sources of revenue.

Companies like Facebook use algorithms that target ads to narrow sets of consumers by processing huge quantities of data, including user activity, location, and facial recognition. Facebook has faced scrutiny for its micro-targeting tools, which let landlords market their apartments exclusively to white people and let employers target certain demographics for job postings.

The FTC’s statement, released on the agency’s official blog, sets the stage for the first high-profile battle between the Biden administration and big tech. Big tech companies draw much of their revenue from advertising targeted to users’ personal information. That function could be sharply curtailed if the FTC considers ad targeting discriminatory.

The post cites laws that prohibit companies from using “racially biased algorithms.” The commission bans “unfair or deceptive business practices,” while other laws bar discrimination in credit or housing based on race or sex. The blog post’s author, FTC staff attorney Elisa Jillson, warns companies that if they fail to hold themselves accountable, “the FTC may do it for you.”

The FTC is one of several federal agencies that have begun investigating big tech algorithms. In December, the agency forced nine major social media companies to disclose how they target content to consumers. In 2019, the Department of Housing and Urban Development charged Facebook with discrimination for offering tools to help target ads that excluded “women in the workforce, moms of grade school kids, foreigners, Puerto Rico Islanders,” and others.

Facebook in particular has received criticism for its opaque algorithms. Researchers at the University of Southern California found this week that the site disproportionately filters job postings based on user gender and “learns and perpetuates” existing bias.

In February, a judge approved a

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