"Industry is fearful of the new Democratic majority at the FTC and a new serious commitment to address privacy," said Chester, executive director of the Center for Digital Democracy, a digital rights group. "Commerce is the wrong place to protect consumers."
The Commerce Department and the Obama administration have an interest in protecting U.S. companies, and Google, in particular, has strong ties to the White House, Chester said. Those ties "place consumer privacy further at risk," he said.
The Commerce Department appears to be headed toward minimal privacy regulations, with online companies allowed to continue their data collection practices, Chester added. The White House launched an inter-agency committee on Internet privacy last month, with a focus on creating new legislative proposals.
Representatives of Google and Facebook, two companies that have faced privacy criticism in recent months, declined to comment on the Commerce Department's privacy activities.
FTC officials downplayed the possibility of conflicts between their agency and the Commerce Department. Commerce has included the FTC in its privacy deliberations, and there are enough privacy issues for both agencies to tackle, said a source familiar with the FTC.
A new privacy coordinator in the Obama administration could be beneficial to U.S. commerce, said Justin Brookman, senior fellow at the Center for Democracy and Technology, a digital rights group. A lack of modern privacy laws puts the U.S. out of step with much of the rest of the world, in particular the European Union, causing problems for international companies trying to transport data back and forth, he said.
A privacy coordinator in the White House or Commerce Department could focus on data portability issues, he said. "The lack of regulation is really hurting us competitively," Brookman said.