FTC Commissioner nominee Lina M. Khan testifies during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.
Graeme Jennings | AFP | Getty Images
Republican lawmakers have for years launched barrages of criticism at Biden administration regulatory agencies and their diverse leaders — and Federal Trade Commission Chair Lina Khan is not any exception.
Partisan, cross-agency scrutiny is routine, from criticism of Transportation Secretary Pete Buttigieg’s oversight of the Southwest Airlines crisis to Republicans’ calls to disempower the Consumer Financial Protection Bureau, under Director Rohit Chopra.
However the 34-year-old Khan, the one woman of Asian descent to steer the FTC and the primary person of color to move it in five years, finds herself at the middle of a contentious tug-of-war between business and government in an era of social media takeovers and demands for more employee autonomy.
The London native born to Pakistani parents has said she and her family were “treated like potential terrorists” after they moved to the U.S. following the Sept. 11 attacks. Khan was only 11 years old.
But discrimination didn’t deter Khan. Her meteoric rise within the antitrust world began when she was a student at Yale University Law School, where her 2017 paper “Amazon’s Antitrust Paradox” led to more scrutiny of the e-commerce giant.
She had developed her passion for antitrust while working on the Open Markets Institute, a think tank based in Washington, D.C., that examines the results of monopolies on economic competition and growth, based on a 2021 profile in The Latest Yorker.
Soon after winning Senate confirmation that yr, Khan promised to uphold the FTC’s mission to “safeguard fair competition and protect consumers, staff, and honest businesses from unfair [and] deceptive practices.” Khan recently told a House committee that she intends to complete her term, which ends next yr, despite speculation that she would depart the agency at the top of her two-year leave of absence from Columbia Law School, where she is an associate professor, and after the birth of her first child in January.
As she made history in leading the agency, Khan’s sprawling oversight plans and give attention to fair competition in markets drew pushback from GOP leaders who denounced them as “politicized.” Her ambition for the agency even sparked resistance from inside it. Two Republican commissioners, Christine Wilson and Noah Joshua Phillips, have resigned under Khan, leaving the normally bipartisan board with only Democratic representation.
Khan’s broad role in probing Twitter’s privacy practices, blocking noncompete contracts and tackling President Joe Biden’s crusade against junk fees has made her a novel goal.
She is the “first FTC chair in an extended time to attempt to reestablish the centrality of market structure in politics,” said Matt Stoller, director of research on the American Economic Liberties Project and a detailed associate of Khan. The FTC chief’s status as an “interloper on this cloistered world” of antitrust bred resentment, Stoller said.
“Lina happens to be famous due to among the vital scholarship that she did prior to becoming the FTC chair,” he said. “And so she’s a very high-profile goal.”
The backlash to Khan’s antitrust platform has come from across the Republican caucuses in Congress — whilst many GOP lawmakers have backed antitrust policies or slammed Big Tech firms.
Soon after Khan’s appointment, Republican Sens. Chuck Grassley, of Iowa, and Mike Lee, of Utah, together with GOP Reps. Ken Buck, of Colorado, and Jim Jordan, of Ohio, dubbed the agency “America’s antitrust enforcement regime.” Grassley criticized the FTC’s “push for radical antitrust policies” in a September memo.
Khan has defended her positions, telling CNBC on May 10 that the FTC enforces antitrust laws passed by Congress.
“I believe we have seen time and time again that what’s best for consumers, what’s best for innovation, what’s best for ensuring that the U.S. is on the innovative is enforcing the antitrust laws,” she said.
Democrats comparable to Rhode Island’s Rep. David Cicilline, who’s on the House Judiciary Committee, and Sen. Amy Klobuchar, of Minnesota, have praised Khan’s dedication to her policy vision. Klobuchar, an antitrust hawk who sits on the Senate Judiciary Committee, lauded the FTC chief’s commitment to “strengthening competition policy and taking over monopolies.”
A spread of the FTC’s proposals under Khan have drawn pointed attacks from Republicans, especially on the GOP-led House Judiciary Committee. The panel moved to select apart Khan’s actions after the party gained House control in January.
Khan is now defending an array of plans from Republican backlash. Here is where the FTC chair’s ambitious agenda stands nearly two years into her historic tenure on the FTC.
Twitter feud
Khan is continuous the FTC’s multiyear investigation into Twitter’s data privacy practices — putting her in conflict with one in all the world’s wealthiest people and the brand new GOP House majority. Mass layoffs within the month after Elon Musk took over the platform in October attracted the FTC’s attention, as key security and privacy personnel were among the many casualties.
Musk’s unusual request to fulfill with Khan in person was rebuffed in January, based on The Latest York Times. Khan told Twitter’s counsel that she wouldn’t consider a gathering with Musk until the corporate had complied with investigators’ requests for information, based on the Times.
Many Republicans, a few of whom cheered the move by Musk’s ownership group to take Twitter private, have defended the corporate through the FTC’s ongoing probe. The House Judiciary Committee, led by Jordan, subpoenaed the agency last month for documents relevant to the privacy probe from the time after Musk bought the corporate.
“Definitely the FTC must be mindful of the indisputable fact that there may be a political effort against them right away from the GOP,” Jon Schweppe, director of policy on the conservative group American Principles Project, told CNBC.
Some within the GOP hailed Musk’s acquisition for relaxing content moderation, with Jordan tweeting, “Free speech is making a comeback.” Twitter was also notably absent amongst five big tech firms whose CEOs Jordan subpoenaed in February regarding what he called the “federal government’s reported collusion with Big Tech to suppress free speech.”
“The Republicans view Twitter because the town square, famously, and they don’t seem to be going to wish to see anything get in the way in which of [Musk’s] approach,” said Mo Cayer, a human resources lecturer on the University of Latest Haven in Connecticut.
Khan’s controversial employment plan
The FTC in January proposed a ban on noncompete clauses — perhaps essentially the most controversial policy thus far under Khan. Jordan and other GOP House members have criticized the plan as a “power grab.”
Khan had cited the ban in a 2021 list of policy priorities, saying that employer-mandated clauses “block staff from freely switching jobs, depriving them of upper wages and higher working conditions and depriving businesses of a talent pool that they should construct and expand.” The FTC estimated that wages would increase by $300 billion per yr if noncompetes were eliminated.
Jordan and other Republicans, meanwhile, say Khan lacks the authority to implement the ban.
In her dissent against the noncompete plan, Trump appointee Wilson, who slammed Khan in an op-ed upon leaving her post as commissioner, called the proposal “a radical departure from a whole lot of years of legal precedent.”
Echoing some within the GOP, Leslie Overton, a law partner at Axinn, Veltrop & Harkrider LLP, told CNBC that the Democratic FTC commissioners “are asserting their ability to do that rulemaking based on their broad interpretation of Section 5” of the FTC Act, which they are saying applies to “unfair methods of competition,” not necessarily antitrust violations.
The window for public comments on the noncompete proposal closed April 19. Khan said the agency is reviewing greater than 26,000 comments.
Trashing junk fees
The Biden administration has taken aim at so-called junk fees: hidden costs that affect concert ticketing, hotel rooms and other types of entertainment. The administration has proposed the Junk Fee Prevention Act, which, if passed, would grant the FTC and Khan broad enforcement powers.
The FTC has also said it’s considering a rule proposal to crack down on junk fees.
In a sweeping dissent to the October announcement, Wilson argued that the FTC doesn’t have jurisdiction over these sectors, calling the proposal “untethered from a solid foundation of FTC enforcement“ and saying it “relies on flawed assumptions and vague definitions; ignores impacts on competition; and diverts scarce agency resources from vital law enforcement efforts.”
But an FTC spokesperson said Khan’s agency has jurisdiction over all fees except banking and airlines. Junk fees are also a core component of the FTC’s consumer protection mission, the agency chair has said.
But any strategy opposing such populist proposals is a “political loser,” said Schweppe.
Upholding FTC goals
Khan has said she is going to press ahead with upholding the FTC’s antitrust standards in the approaching months, with an increased emphasis on competition.
The emergence of artificial intelligence technology comparable to ChatGPT, with its potential for consumer abuses, is next on Khan’s radar. She said the FTC can even work to be certain that up-and-coming AI firms can compete with tech giants, which include Google, Amazon and Apple.
“The FTC is well equipped with legal jurisdiction to handle the problems dropped at the fore by the rapidly developing AI sector, including collusion, monopolization, mergers, price discrimination and unfair methods of competition,” Khan wrote in an op-ed earlier this month.
The brand new objectives are sure to rattle corporate advocates throughout the GOP, but some Republicans are calling for legislative motion, as a substitute of executive branch policy, to deal with the problems.
“The Republican base is supportive of antitrust enforcement; they’re supportive of reining in specifically big tech firms,” Schweppe said.
That dynamic could cause the Republican resistance to antitrust enforcement to abate over time.
Aiden Buzzetti, president of conservative strategy organization The Bull Moose Project, told CNBC that he hopes the majority of GOP opposition will “subside over the subsequent couple of Congresses.”
“We’re hoping to make headway on that issue and make Republicans understand that antitrust can actually be helpful, no matter it’s Lina Khan or any person else on the FTC with the junk fee bills and the opposition to that,” Buzzetti said.
Correction: This story was updated to reflect that the think tank where Khan worked is known as the Open Markets Institute. A previous version of this story misstated the name.