The Federal Trade Commission (FTC) oversight hearing on July 13 was quite the spectacle. Typically, these congressional events are hebetudinous affairs, but both sides of the aisle put together several hours of entertainment for viewers. Democrats accused their opponents of racism. Republicans called FTC Chair Lina Khan “a bully” and “a disaster.” The agency chief evaded questions, stuck to talking points, and concealed the entity’s true motives. For concerned citizens who tuned in, they might have regretted not warming up the popcorn.
Bully tactics. Targeted harassment. Politicized rulemaking. Mismanagement. This is the record Lina Khan has put together since becoming head of the Federal Trade Commission in 2021, according to Republican lawmakers serving on the House Judicial Committee. However, if anyone in the GOP dared question the FTC’s record under Khan, then they are only doing so because of her ethnicity, says Rep. Hank Johnson (D-GA).
“When we treat a witness who looks like you with the politics of personal destruction, and when we only attack witnesses who look like you with allegations of incompetence and a lack of ability to lead their agency, it’s indicative of the need for this committee to reflect what the American people look like,” he stated.
Khan is a British-born American with Pakistani parents. So, are these criticisms of Chair Khan justified, or are conservative critics only making complaints of FTC overreach because of her skin color?
‘Obsession’ Over Twitter
Twitter was one of the main focal points of the congressional hearing. Rep. Jim Jordan (R-OH), who is also the committee chair, wondered why the FTC possesses an “obsession” with Elon Musk as the social media network requested a federal court absolve a consent decree allowing US government data oversight of the company.
Rep. Jordan asked point blank: “Why are you harassing Twitter?” Khan explained that FTC’s work on Twitter extends a decade. Jordan noted that he was not referencing a decade but the present. “Twelve demand letters in 10 weeks, 300 – over 350 separate requests you’ve demanded of Twitter. Why are you harassing them?” he said. The FTC head purported that the social network maintains a history of lax privacy policies and security, adding that this facilitated unauthorized users to coopt Twitter accounts. “Subsequently, Twitter voluntarily entered into a consent order with the FTC,” Khan said.
Jordan then quoted a correspondence authored by Khan: “Identify all journalists and other members of the media to whom Twitter has granted access since Musk bought the company.” This prompted Jordan to ask if her request to know the name of every reporter a private firm has talked to is consistent with the First Amendment. “Congressman, as a former journalist, I take extremely seriously the valuable work that they do and understand that there can be instances in which government action is unjustifiably chilling,” Khan responded.
The hearing took place the same day that Twitter (which is now known as X Corp.) petitioned the US District Court for the Northern District of California that has “spiraled out of control and become tainted by bias.” The company stated that it has complied with the “avalanche of demands,” responding to FTC inquiries and submitting roughly 22,000 documents to date.
Microsoft and Activision
Microsoft recently proposed buying Activision Blizzard for $96 billion. This perturbed the FTC, submitting a request to install a preliminary injunction that would have stopped the acquisition from being completed before the July 18 deadline. But the US District Judge Jacqueline Scott Corley ruled against the FTC, forcing the federal agency to ask the Ninth Circuit Court of Appeals in San Francisco to overturn the decision. The argument was that the possible merger would diminish competition in the video game market, be it consoles and cloud gaming.
Khan told the House Judicial Committee that there was “a law violation,” adding that “when we get an adverse ruling, our teams look closely at the text of opinion and see if there are errors on matters of law that warrant an appeal.”
Several Republican lawmakers alluded to the FTC’s losing record in corporate merger trials. Rep. Kevin Kiley (R-CA) wondered why the FTC loses so much. But some House GOP members think the entity is purposely losing to push Congress to pass even more antitrust legislation. “My problem here today is that you’re a bully. You run this organization, and its left turn came when you took over,” said Rep. Darrell Issa (R-CA). “You have half a billion dollars to spend, and you choose to spend it promoting a policy that every merger has to be somehow bad for the company and good for the consumer, a standard that cannot be met.”
In June, Bloomberg News published FTC documents that revealed Khan chose to not recuse herself from the agency’s review of Meta’s merger with virtual reality app maker Within Limited. Lorielle Pankey, a designated ethics official, stated in an August 2022 memo that Khan should remove herself from the probe to “avoid an appearance of partiality.” Khan insisted that she did nothing wrong and acted appropriately because she does not own a single share in any of these companies.
But Rep. Harriet Hageman (R-WY) contended that it was “unbelievable” that she would not request for written ethics advice on this issue. “You admit that you have received written ethics advice on other topics, but on this topic, you claim you did not see the written memo,” Hageman purported. “Instead, you want us to believe that you only received oral advice and not specific oral advice, but only general advice on ‘understanding the legal framework’ today to give you advice that is different than what was written in the memoranda.”
Some Democrats did not appreciate this line of questioning. Rep. Jerry Nadler (D-NY), who is also the ranking member on the committee, asked if all Republican staff will recuse themselves from any issue relating to their work. “Because that is the standard they are holding Chair Khan to,” he said.
The Khan Doctrine
It is no secret that Lina Khan has attempted to transform the Federal Trade Commission into a “forward-looking” force that homes in on “next-generation technologies, innovations, and nascent industries across sectors.” But this new worldview has resulted in the FTC to target large companies ushering in significant change, from Twitter to OpenAI’s ChatGPT. As many Republicans on the committee alluded to, a lot of the legislative and regulatory pushes have been a detriment to the marketplace. But this might be the summary of the agency. Whether it is Lina Khan or somebody else, this is the FTC’s mandate.
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