House Republicans interrogate FTC’s Khan over regulation of Big Tech

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WASHINGTON (AP) — The chair of the Federal Trade Commission defended her aggressive legal strategy toward the country’s biggest technology companies Thursday as House Republicans charged that the agency has become overzealous and politicized under President Joe Biden.

Republicans charged that Lina Khan is “harassing” Twitter since its acquisition by Elon Musk, arbitrarily suing large tech companies and declining to recuse herself from certain cases. In April, the committee subpoenaed Khan after an investigation by the panel that concluded the agency went after Musk for political reasons.

Khan pushed back on the criticism, arguing that more regulation is necessary as the companies have grown and that tech conglomeration could hurt the economy and consumers.

“Our competition mission is driven by the tenet that vigorous antitrust enforcement is critical to the growth and dynamism of our economy, as well as to our shared prosperity and liberty,” Khan said. “Recent decades, however, have vividly illustrated how Americans lose out when markets become more consolidated and less competitive.”

The hearing comes as the agency has been embroiled in several legal cases against technology companies and as Khan — an outspoken critic of Big Tech before becoming the agency’s head — has tried, not always successfully, to toughen government regulation of those companies and prevent them from growing any larger.

Khan and the agency suffered a major defeat Tuesday when a federal judge declined to block Microsoft’s looming $69 billion takeover of video game company Activision Blizzard. The FTC had sought to ax the deal, saying it will hurt competition.

U.S. District Judge Jacqueline Scott Corley said the deal, the largest in the history of the tech industry, deserved scrutiny but the FTC hadn’t shown that it would cause serious harm. The FTC is now appealing her ruling.

In a similar case, another judge rebuffed the FTC’s attempt earlier this year to stop Meta from taking over the virtual reality fitness company Within Unlimited.

Republicans focused on the agency’s poor legal record on those antitrust cases.

“Are you losing on purpose?” asked Rep. Kevin Kiley, a California Republican, citing a past comment from Khan that suggested courtroom losses would signal to Congress that it needs to update its antitrust laws.

“Absolutely not,” Khan replied, while acknowledging that “unfortunately, things don’t always go our way.”

Republicans questioned the wisdom behind aggressive regulation, and whether it could hurt small businesses as well. California Rep. Darrell Issa criticized the FTC’s “left turn” since she took over two years ago.

“Shame on you,” Issa said. “The reality is we’re a global market, and you are thinking only of who you want to go after for some reason, and I cannot find your logic.”

As the hearing drew to a close, White House Spokesman Michael Kikukawa issued a statement saying that Biden appointed Khan “because he believes in fair and vigorous enforcement” of antitrust laws.

“Chair Khan has delivered results for families, consumers, workers, small businesses, and entrepreneurs — on everything from protecting our kids from unlawful use of their personal data, to making it cheaper and easier for consumers to repair items they own, to moving to ban non-competes that hurt workers, to stopping bad mergers like a semiconductor megamerger that would’ve stifled innovation,” Kukukawa said.

The FTC has also sued Amazon for allegedly engaging in a yearslong effort to enroll consumers without consent into Amazon Prime and making it difficult for them to cancel their subscriptions. In a complaint filed in federal court last month, the agency accused Amazon of using deceptive designs, known as “dark patterns,” to deceive consumers into enrolling in the service.

In addition, Khan and other FTC officials have repeatedly warned they will also crack down on harmful business practices involving artificial intelligence, in messages partly directed at the developers of widely-used AI tools such as ChatGPT.

Much of the Republicans’ focus has been on the FTC’s actions toward Twitter, which the agency has been investigating as part of ongoing oversight into the social media company’s privacy and cybersecurity practices. The GOP lawmakers noted that the agency probe included efforts this spring to obtain Musk’s internal communications and information about journalists he hired, and gave access to internal records, to investigate the company’s past actions before he took over.

House Judiciary Committee Chairman Jim Jordan, R-Ohio, said that Khan’s oversight of Twitter seems like an “obsession.”

“Why are you harassing Twitter?” Jordan asked.

Khan said the agency has been focused on Twitter’s lax security and privacy policies and noted that the agency has been investigating the platform for years, since before Musk’s tenure.

The FTC has been watching the company since Twitter agreed to a 2011 consent order alleging serious data security lapses. But the agency’s concerns spiked with the tumult that followed Musk’s October takeover of the company and mass layoffs.

Twitter, now under parent company X Corp., on Thursday ahead of the congressional hearing asked a federal court to end that consent order and “rein in an investigation that has spiraled out of control and become tainted by bias.”

Republicans also criticized Khan for not recusing herself from the Meta case after the company had sought her recusal over Khan’s past advocacy against Facebook’s big mergers. They questioned her about whether she had ignored recommendations to do so, citing an internal agency memo.

“There was no violation under the ethics law,” Khan said, noting that she had no financial entanglements with the company.

Democrats defended Khan’s work. New York Rep. Jerry Nadler, the top Democrat on the Judiciary panel, told Khan at the opening of the hearing that he hopes Republicans can put their “baseless and often personal attacks on pause long enough to focus on the importance of your mission.”

Khan, a legal scholar, was a known tech critic when she took over the agency in 2021. Her nomination was seen as a signal from the Biden administration that it would be tough on technology companies as they have been under intense pressure from other regulators and state attorneys general.

She was a professor at Columbia University Law School and became known for her scholarly work in 2017 as a Yale law student, “Amazon’s Antitrust Paradox.” That work helped lay the foundation for a new way of looking at antitrust law beyond the impact of big-company market dominance on consumer prices.

And she has experience with the Judiciary committee, having served as a counsel to the panel’s antitrust subcommittee in 2019 and 2020. In that position she played a key role in a sweeping bipartisan investigation of the market power of the tech giants.

Jordan’s House Judiciary panel has gone after the tech companies, as well, for what Republicans say is censorship of conservatives. The committee subpoenaed the chief executives of the five largest tech companies in February as part of an effort to investigate Big Tech’s moderation of content.

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O’Brien reported from Providence, Rhode Island.