Khan not ready to ease off throttle at US FTC as she marks first year at helm

09 June 2022 04:00 by Mike Swift


As she marks her first year at the helm of the US Federal Trade Commission, Chair Lina Khan isn't backing off her ambition to push the agency to be an active, forward-looking antitrust and privacy enforcer.

Asked whether the FTC has the bandwidth to take on a second significant antitrust conduct suit beyond its ongoing litigation against Meta Platforms, Khan told MLex Wednesday that the FTC would be “negligent” if it failed to recognize it has “a mandate to be active” in its enforcement of Section 2 of the Sherman Act.

“Yeah, look, stay tuned,” Khan said, appearing relaxed and confident over a Zoom link during a one-on-one interview with MLex. “Again, these are commission actions. So we don’t want to, of course, prejudge anything on that. So there’s nothing more we can share. But I will say as a general matter, expect this upcoming year to be a very active one for us.”

The progress has been herky-jerky at times during Khan’s first year running the FTC. She was confirmed last June 15.

Khan moved aggressively during the Democrats’ 3-2 majority on the five-member commission, but her agenda was temporarily stymied after Commissioner Rohit Chopra moved to the Consumer Financial Protection Bureau last fall, leaving the FTC with a 2-2 deadlock between Democrats and Republicans. A survey of the FTC staff in late April showed a significant rift with senior leadership. Now, with Alvaro Bedoya restoring the Democrats' majority last month, Khan has a window to get things done.

She appears to be tightly focused on tangible results with the regulatory tools in her arsenal. “I don’t have the luxury of living in theory and ... engaging in thought experiments, so I’m really focused on what we are able to do and what we are able to prioritize,” she said.

Khan sat down in Zoom video chats Wednesday for a series of one-on-one, on-the-record, 15-minute conversations with MLex and other news organizations — one of the first times she has had a back-and-forth conversation with journalists who regularly cover the US enforcer.

The FTC is widely believed to be deep into an antitrust probe of Amazon. Khan would not discuss the specifics of any ongoing FTC antitrust probe, nor the timing of any potential complaint. But she said while the FTC must react to merger filings, it would be “a huge missed opportunity” if it failed to search out areas of the economy where competition isn’t flourishing to apply Section 2 of the Sherman Act, which prohibits monopolies gained through anticompetitive conduct.

“It’s really our main tool to be able to go after existing areas where we see a lack of competition and where unlawful monopolistic practices are occurring. And so, in as much as there's been a broader recognition that more and more pockets of our economy are suffering from these types of market practices, it's incredibly important, and in fact the FTC has a mandate to be active,” Khan said. “I would view it as ... negligent for us to ignore Section Two or not be enforcing Section Two or decide that we're devoting all of our resources to mergers. I would view that as a huge missed opportunity and negligent and failing to pursue and follow through on our statutory obligations.”

In the meantime, the FTC is plowing forward with a key probe, revealed in 2020, of Big Tech companies' use of consumer data. The agency is examining how Amazon, TikTok, Discord, Reddit, Snap, Twitter, Google’s YouTube and Meta’s Facebook and WhatsApp platforms collect and use personal data to make money through targeting ads or other methods.

The results of the probe, conducted under the FTC's Section 6(b) authority, will be made public, Khan said.

“Obviously, these are markets where we see deep information asymmetries, and a whole set of opacity. It was a broad 6(b) that covered an incredible number of distinct topics. And so, as you can imagine, it's taken time to make sure we fully have all the data and information we need and that we're able to fully sift through it and make sense of it,” Khan said. “We were able to retain a particular expert, a technological expert, that has deep knowledge in this area to aid us with that work. And so that's continuing apace, and I definitely feel a sense of urgency in making sure this drives forward and we're able to share with the public what the findings are from that.”

The FTC has already signaled its plan to move forward with privacy rulemaking, an alternative to Congress passing legislation to regulate the collection and use of personal data. With a potential bipartisan compromise in Congress appearing last week, Khan said the FTC will be watching the process closely, starting with a hearing in the House next week.

“Look, we're always making our decisions based on, where can we have the biggest value-add, given that we have limited resources,” Khan said, when asked about whether the FTC will pursue rulemaking if Congress moves forward with privacy legislation. Action by Congress “would of course significantly affect the FTC with its effect on what types of business practices are lawful or unlawful,” requiring the FTC to rethink “how we are deploying our resources.”

But if Congress can’t broker a compromise on privacy legislation, Khan suggested the FTC won’t sit on its hands. “Until Congress does take those steps, we feel an incredible impetus to make sure that we're using all of our existing tools at our disposal to be active and be protecting Americans from unlawful data practices,” she said.

During the interview, Khan peppered her conversation with the words “active” and "urgent," reflecting her intention to quickly take the agency in new directions.

Facebook, Kahn said, engaged in illegal conduct through its purchases of Instagram and WhatsApp at a key moment of technological transformation — the transition from desktop to mobile Internet.

“Facebook was not on its own merits able to manage that transition successfully. And that's when they ended up resorting to unlawful tactics, including unlawful acquisitions as well as unlawful conduct,” Khan said.

The FTC sued Facebook in 2020, alleging that the company is illegally maintaining its personal social networking monopoly through anticompetitive conduct, including its acquisitions. Facebook defended the purchases of Instagram and Whatsapp, pointing out — among other things — that the FTC approved the deals before they were consummated.

“We are now seeing in a whole host of areas — new next-generation cloud, technological platforms and technologies emerge,” she said. “And so similarly, we need to be very vigilant and very mindful that the types of unlawful practices that incumbents were able to use to maintain their monopoly illegally from the transition to desktop to mobile, that we're not once again allowing that to happen as we transition to these next-generation technologies.

“That's relevant in a whole set of areas via ... virtual reality, augmented reality, smart-home technologies, voice assistants, cloud,” Khan said. “So, these are, I think, important issues for us as an agency to be mindful of.”

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