Facebook lawsuit confirms progressive agenda of FTC Chair Lina Hahn

Federal Trade Commission Commissioner nominee Lina M. Khan testifies during the Senate Committee on Commerce, Science, and Transportation’s confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.

Graham Jennings | AFP | Getty Images

Federal Trade Commission Chair Lina Khan lofty vision or filing complex cases to push the boundaries of antitrust enforcement is no longer just talk.

This is a message sent with agencies new lawsuit trying to block the Facebook owner Meta Acquisition of virtual reality fitness app maker Within Unlimited. The complaint, filed on Wednesday, alleges that Meta is trying to buy dominance in an emerging market by creating more competition and innovation that would otherwise benefit consumers. Meta Representative said in the statement, the case is unsupported by evidence and the company is “confident” that the acquisition will benefit the space and consumers.

“In the area of ​​merger enforcement, this is the most important case that any agency has done so far,” said William Kovacic, a former FTC commissioner who now teaches competition law at George Washington University.

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

Risky Cases Expanding Antitrust Laws

So far, the main technical cases handled by the FTC and the antitrust agency have been inherited from the Trump administration: Facebook and Google cases of monopolization, respectively.

The new FTC merger case against Meta represents a major milestone under Khan’s leadership, just a couple of months after she finally won a fifth casting vote with confirmation by Democratic Commissioner Álvaro Bedoya.

Both Khan and her colleague at the Justice Department’s antitrust division, Jonathan Kanter, said it was important to take risky cases to at least try to expand antitrust laws to the periphery. This strategy looks even more important to the progressive siloviki now that it more and more unclear if key technical antitrust bill will receive a vote before the August recess of Congress.

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

“Even if it’s not a slam dunk case, even if there’s a risk that you could lose, maybe … a huge payoff from that kind of risk,” Khan said. “I think we are seeing that inaction after inaction after inaction can have serious consequences. And that’s what we’re really trying to reverse.”

Khan also said in his September memo agency staff that the FTC should be “forward-looking” in its enforcement and focus on “technology, innovation and emerging industries across all sectors.”

Facebook has made a number of strategic acquisitions as it has grown, most notably buying the photo social network Instagram and the personal messaging app WhatApp for $19 billion in 2014. mergers that allow Facebook to seamlessly buy nascent competitors.

The FTC now claims in a separate lawsuit, first placed under the rule of the Khan’s predecessorthat Facebook was actually using these acquisitions to increase its monopoly by absorbing potential competitors.

But while some circumstances may be similar, Kovacic noted that the FTC’s Meta-Within merger complaint has unique features that could make her case difficult to prove. For example, he said, this deal is an example of a vertical merger, where Meta will use the acquisition to add an additional feature.

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

He added that the Within case is “deliberately experimental”.

He suspects more risky cases will come from law enforcement.

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

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