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Big Tech may seek recusal of new FTC chair Khan over objectivity questions

Lina Khan, the new chair of the Federal Trade Commission, is known as a prominent critic of Big Tech, a reputation that could actually hinder the ability to rein in tech firms' power, industry experts say.

Khan is an antitrust scholar who authored many publications, including "Amazon's Antitrust Paradox" in the Yale Law Journal. Khan also served as counsel on a House antitrust report that recommended structural separations of certain businesses last year. While Khan's appointment as FTC chair was celebrated by antitrust advocates, others warn that Khan's history could be used by Big Tech firms like Amazon.com Inc., Google LLC, Facebook Inc. and Apple Inc. to question independence and force a recusal.

"Regardless of any decision she makes, it will be seen with an air of prejudice," said Carl Szabo, vice president and general counsel at NetChoice, a trade association whose members include Amazon, Google and Facebook.

Legal precedent

Should Khan bring a case against a Big Tech company alleging illegal conduct, Szabo said Big Tech firms would have precedent on their side in seeking a recusal.

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Szabo pointed to a 1966 ruling in American Cyanamid Co. v. FTC, in which the court disqualified former FTC chair Paul Rand Dixon from the case due to previous service as chief counsel and staff director of a Senate subcommittee that conducted an investigation into some of the same parties and issues considered before the commission.

"The commissioners are expected to operate like judges," Szabo said. "They are expected to apply the laws as written, not as they want it to be."

Alex Petros, policy counsel for Public Knowledge, a Washington, D.C.-based nonprofit public interest group, expects similar pushback from Big Tech firms.

"They will pull out every stop that they possibly can," Petros said. "If you think that Big Tech is not running scared, they certainly are."

'Bold actions'

Petros referred to Khan as an extremely accomplished and knowledgeable expert on antitrust who is not afraid to challenge the status quo and expects Khan to take "big bold actions," including possible enforcement against Amazon’s planned $8.45 billion purchase of MGM Holdings Inc.

Citing people familiar with the matter, Dow Jones reported June 22 that the FTC will indeed be the agency to review the Amazon-MGM deal. Moreover, the FTC has already opened a multiyear investigation into Amazon and its relationship with third-party sellers.

But while Khan might be keen to rein in Big Tech's power and size, the path will be determined by whether Congress grants the FTC additional enforcement authority.

More teeth

While the independent agency is tasked with protecting consumers and preventing anticompetitive conduct, past FTC chairs have complained that the agency is hamstrung because it does not have civil penalty authority for first-time offenders of consumer data privacy rules, and they have called on Congress to give the agency expanded privacy authority under new comprehensive legislation.

Now though, a series of bills have been introduced in the U.S. House of Representatives that would essentially give the FTC and the U.S. Justice Department more powerful tools to go after tech firms for anticompetitive conduct. One bill, titled the "Ending Platform Monopolies Act," would mandate that platform operators like Amazon cannot own or control a line of business other than its own covered platform.

The House bills equip the FTC and the DOJ with the authority to subject those platforms to a "host of restrictions on their structure and on their operations," said William Kovacic, former chair of the FTC and a current law professor at George Washington University. The bills also give the FTC and the DOJ broad authority to bring lawsuits and challenge any violation of those new conduct prescriptions.

It remains unclear whether the House bills will advance in Congress with the likelihood of pushback from some Republicans, but Kovacic said the legislation is imperative to realizing Khan's agenda.

"I think if she wants to achieve the fullest expression of her vision, she needs that legislation," Kovacic said.

There are also questions over how stable Khan's coalition will be at the five-member commission, which needs three votes to pass rules.

Khan has two supportive Democratic voices on the commission: Rebecca Kelly Slaughter, FTC commissioner and former acting chair, and Rohit Chopra, who has been appointed to lead the Consumer Financial Protection Bureau. It is unclear who will be appointed as Chopra's replacement and whether that appointee will have the same preferences as Khan, Kovacic said.

"Will they appoint someone with a less expansive program in mind?" Kovacic said. "We won't know how much of her agenda she can realistically pursue until we know who the other members of the commission will be."