Facebook lawsuit yields FTC chairman Lina Khan’s progressive agenda

FTC Commissioner Lina M. Khan testifies at a Senate Committee on Commerce, Science and Transportation hearing on Capitol Hill in Washington, DC, April 21, 2021.

Graeme Jennings | AFP | Getty Images

The lofty vision of Federal Trade Commission chair Lina Khan to pursue defiant cases to push the boundaries of antitrust enforcement is no longer just talk.

That’s the message sent with the agency’s new lawsuit to block Facebook owner Meta’s acquisition of the maker of virtual reality fitness app Within Unlimited. The complaint, filed Wednesday, alleges that Meta is trying to buy dominance in an emerging market at the cost of creating more competition and innovation that would otherwise benefit consumers. A Meta spokesperson said in a statement the case is not supported by evidence and the company is “confident” that the acquisition will benefit the space and consumers.

“In terms of merger enforcement, this is the most important case either agency has brought to date,” said William Kovacic, a former FTC commissioner who now teaches competition law at George Washington University.

“This is exactly the kind of case they promised,” Kovacic added.

Risky Matters That Expand Antitrust Laws

So far, the most important technical cases conducted by the FTC and the Antitrust division have been taken over from the Trump administration: the monopolization cases of Facebook and Google, respectively.

The FTC’s new merger case against Meta represents a major milestone led by Khan just a few months after she finally got a fifth decisive vote with Democratic Commissioner Alvaro Bedoya’s confirmation.

Both Khan and her counterpart in the Justice Department’s Antitrust Division, Jonathan Kanter, have said it is important to bring high-risk cases to at least have a chance to expand antitrust law on the fringes. That strategy seems even more important to progressive enforcers as it becomes increasingly unclear whether a key tech antitrust bill will be voted on before Congress in August.

Khan described her philosophy behind risky lawsuits in a January interview with CNBC host Andrew Ross Sorkin and collaborator Kara Swisher.

“Even if it’s not a slam dunk thing, even if there’s a risk you could lose, there could be huge benefits from taking that risk,” Khan said. “I think we can see that inactivity after inactivity after inactivity can have serious costs. And that’s what we’re really trying to turn around.”

Khan also said in her September memo to agency staff that the FTC should be “forward-looking” in enforcement and pay special attention to “next-generation technologies, innovations and emerging industries across sectors.”

Facebook has made a number of strategic acquisitions as it grew, most notably buying photo social network Instagram and private messaging app WhatsApp for $19 billion in 2014. Some antitrust lawyers believe the FTC let the company off the hook at the time during its reviews of those mergers. allowing Facebook to buy emerging rivals without hindrance.

The FTC is now alleging in a separate lawsuit, first filed under Khan’s predecessor, that Facebook actually used those acquisitions to increase its monopoly by eating up potential rivals.

But while some circumstances may be similar, Kovacic noted that the FTC’s Meta-Inside merger has unique features that make it harder to prove its case. For example, he said this deal is an example of a vertical merger, where Meta would use the acquisition to add an additional feature.

“The theory in Instagram was more that Instagram was a real threat to become a direct rival as a social network,” he said.

The Within case is “deliberately experimental,” he added.

He suspects that more risky cases will come from the enforcers.

“I feel like this is the first of a series of cases that have been very deliberately designed to test the limits of doctrine,” Kovacic said. “I have to think there are others in the pipeline. But it’s a big step.”

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