Federal Trade Commission Chairwoman
Lina Khan
has a “shoot first, ask questions later” approach to merger policy. Khan asserts her war against mergers is for the common good as opposed to the pursuit of her own political agenda.
Still, new documents uncovered by Bloomberg
indicate
that Khan ignored the recommendation of the
FTC’s
top ethics official to recuse herself from an antitrust case against platform company Meta. This violates a promise Khan made to Congress to abide by the ethics department’s advice. Congress must investigate Khan’s failure to recuse herself from the Meta case and other lawsuits that the FTC has brought during Khan’s tenure.
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In July 2022, the FTC
sued
to block Meta’s acquisition of Within, a virtual reality fitness app developer. Instead of attempting to show harm to consumers, the FTC accused Meta of attempting to monopolize the market for “VR dedicated fitness apps.” Not only does the lawsuit exclude competitors such as Peloton and FitXR, but the suit also ignores other ways to exercise, such as walking on a treadmill or swimming. There have been multiple reports that Khan’s involvement in the Meta/Within case, which a judge tossed in February, has not been on the up-and-up. Khan pressed forward to sue Meta despite agency experts recommending that the FTC abandon the case. Meta only found out about the lawsuit
through Twitter
, raising further process concerns.
The Bloomberg report adds to a growing cloud of suspicion surrounding Khan’s decision-making.
In an August 2022
memo
, FTC ethics head Lorielle Pankey recommended Khan recuse herself from the Meta/Within case to “avoid an appearance of partiality.” Pankey expresses “strong reservations with Chair Khan participating as an adjudicator in this proceeding where … she repeatedly called for the FTC to block any future acquisition by Facebook. In [Pankey’s] view, such statements would raise a question in the mind of a reasonable person about Chair Khan’s impartiality …”
The report indicates that Khan ignored Pankey’s recommendation after consulting with her general counsel. The FTC’s Democratic majority subsequently greenlit Khan’s involvement in the Meta/Within case, redacting all mentions of the ethics recommendation from former Commissioner Christine Wilson’s dissent. Wilson announced her resignation in a blistering Wall Street Journal
op-ed
shortly thereafter, accusing Khan of numerous abuses of power, including muzzling dissent in the agency.
Khan has misled Congress about her adherence to the ethics process on at least one occasion. Sen. Mike Lee (R-UT) questioned Khan on recusal during her confirmation hearing. Khan said, “I would seek the guidance of the relevant ethics officials at the agency and proceed accordingly” when deciding to recuse herself. Apparently, Khan’s definition of “proceeding accordingly” means completely ignoring the recommendation of a career ethics official if it gets in the way of her agenda.
Khan’s failure to recuse herself from the Meta case raises an obvious question — are there other cases where Khan has ignored ethics advice?
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The FTC just sued Amazon for allegedly making it too difficult to cancel a Prime membership despite the fact that it takes
more clicks
to file comments with the FTC than it does to cancel Prime. Did ethics officials advise Khan to recuse herself from the Amazon case based on her well-documented
animus
toward the company?
Ultimately, this is a larger problem than any individual lawsuit. The head of a very powerful government agency is ignoring the guidance of ethics officials in pursuit of her own agenda, misleading lawmakers in the process. Congress needs to get to the bottom of this before the agency’s credibility fully crumbles.
Tom Hebert is Director of Competition and Regulatory Policy at Americans for Tax Reform and executive director of the Open Competition Center.
