Welcome to the FTC UMC Roundup for June 10, 2022. This is a week of headlines! One would be forgiven for assuming that our focus, once again, would on the American Innovation and Choice Online Act (AICOA). I heard on the radio yesterday that it’s champion, Sen. Amy Klobuchar (D-MN), has the 60 votes it needs to pass, and we are told the vote will be “quite soon.” Yet that is not our headline this week. So it goes in a busy week of news.
This week’s headline is FTC Chair Lina Khan’s press tour–a clear sign of big things on the horizon. This past week she spoke with the AP, Axios, CNN, The Hill, Politico, Protocol, New York Times, Vox, Wall Street Journal, and Washington Post, and probably more. Almost a year to the day into her term as Chair, it seems she may have something to say? Yes: “There are [sic] a whole set of major policy initiatives that we have underway that we’re expecting will come to fruition over this next year.”
The Chair’s press tour consistently struck several chords. She emphasized three priorities: merger guidelines and enforcement, regulating non-compete compete agreements, and privacy and security. In several interviews she discussed the use of both enforcement and rulemaking. It seems clear that a proposal for rules targeting non-compete agreements using the FTC’s unfair methods of competition (UMC) authority is imminent. It also seems likely that these rules will be modest. In several of the interviews Khan emphasized proceeding cautiously with respect to process. This speaks to one of the questions everyone has been asking: will Khan approach UMC rulemaking slowly, using modest initial rules to lay the groundwork to support more ambitious future rules but risking the clock on her term as Chair running out before much can be accomplished–or will she instead take a more aggressive approach, for instance by pushing ahead with a slate of proposed rules right out of the gate. We seem to have at least an initial answer: she hopes slow and steady will in the race.
Slow and steady doesn’t mean not aggressive. Khan’s interviews clearly suggest more aggressive merger enforcement moving forward–including potential challenges to mergers that have cleared the HSR review period. While not new news, Khan also made clear her preference to block transactions outright instead of allowing firms to cure potentially problematic parts of proposed deals. And she also discussed potential rulemaking relating to mergers. Perhaps most noteworthy was her discussion of “user privacy and commercial surveillance” in several interviews–including some in which it was unclear whether these concerns sounded in consumer protection or competition. The inclusion of “commercial surveillance” suggests a broader focus than traditional privacy concerns–perhaps including business models or competition in the advertising space.
Another theme was Khan’s blurred distinction between merely enforcing existing law and transforming the FTC. Her view is probably best described as neither and both: technology has transformed the economy and the FTC’s existing law is flexible enough to adapt to those changes. That, surely, will frame the central questions–likely to ultimately be answered by the courts–as the FTC charts a course across this sea of change: whether Congress empowered the FTC to regulate wherever the market took it and, if so, whether such power is too broad for Congress to have given to an agency.
That brings us to Congress. AICOA’s uncertain future remains uncertain. We can say with certainty that the bill has entered the proxy war phase. Supporters of the bill, having already played the “exclude favored industries from the bill” hand, are now targeting leadership directly. And industry still covered by the bill–if you can call a small number of individual firms an industry–is pulling out the lobbying stops, including getting the message out directly to consumers.
If AICOA is to pass, it will do so upon a fragile coalition–at least 10 Republicans will need to cross party lines to support the legislation. Several Republicans seem poised to support the bill today, but will that be true tomorrow? Conservative voices including the Wall Street Journal are urging them not to. Not-so-conservative voices like Mike Masnick also raise concerns about the strange bedfellows needed to make the AICOA dream real. Both sides make the same point: Republican support for the bill comes from a belief that the bill addresses Republican concerns about censorship by BigTech. The Wall Street Journal argues that states are already addressing censorship concerns through narrower legislation that doesn’t risk the harm to innovation that AICOA could bring; Masnick warns Democrats that the Republican belief that AICOA could worsen the content moderation landscape is non-frivolous.
With Republican support for the bill built on so soft a foundation–clearly not based on antitrust concerns–it is quite possible for it to shift quickly. Indeed, one wonders whether this fragile bipartisan coalition will survive the January 6th Committee hearings started this week.
Some quick hits before we leave. This was a busy week for the FTC in healthcare. Continuing its focus on PBMs in recent weeks, the FTC has now opened a probe of PBMs. And the Commission has sued to block multiple hospital mergers in New Jersey and Utah. There were several reminders that Elon Musk’s proposed acquisition of Twitter has passed the HSR’s review period without challenge–perhaps someone should remind reporters on the Elon beat that that won’t prevent the FTC from challenging the merger? And in case anyone is wondering whether a settlement is on the table for Facebook, Khan has made clear that the FTC will gladly settle with Facebook–Facebook just needs to accept all the FTC’s terms.
A closing note: If you’re reading this on a lazy Friday afternoon in June and could use a good listen during lunch or on the commute home, you could do worse than listening to Richard Pierce, professor and Administrative Law guru, discuss whether administrative law allows the FTC to use rulemaking to change antitrust law.
The FTC UMC Roundup, part of the Truth on the Market FTC UMC Symposium, is a weekly roundup of news relating to the Federal Trade Commission’s antitrust and Unfair Methods of Competition authority. If you would like to receive this and other posts relating to these topics, subscribe to the RSS feed here. If you have news items you would like to suggest for inclusion, please mail them to us at firstname.lastname@example.org and/or email@example.com.