Archives For Kovacha

Welcome back to the FTC UMC Roundup! The Senate is back in session and bills are dying. FTC is holding hearings and faith in the agency is dying. The more things change the more they stay the same. Which is a fancy way of saying that despite all the talk of change, little change seems likely. This is never more true than when midterm elections are on the horizon – this is high season for talk of change that will not happen.

This week’s headline is the unexpected death of the Journalism Competition and Preservation Act (JCPA), which seems to have met its fate in committee on Thursday. The JCPA sought to save “local journalism” by allowing select legacy media entities to form cartels to monopolistically negotiate with tech platforms. The expectation yesterday morning was that the bill would sail through committee. Enter Sen. Ted Cruz (R-TX), with an amendment to further help local journalism by limiting platforms’ use of content moderation – leading one of the bill’s chief sponsors, Sen. Amy Klobuchar (D-MN) to withdraw the bill from consideration.

The story here is partly about a bad bill meeting its timely demise – one does not bring “more cartels” as a solution to a competition fight. But the bigger story is about Senator Klobuchar’s ill-fated competition policy efforts and her failure to appreciate the anti-tech dynamic that she has relied on to bring Republican co-sponsors on board. My colleague Ian Adams captured the essential challenge in memetic form:

We’re a week into September, about 60 days from the midterms and three weeks from the end of the fiscal year. Senate Leader Schumer (D.NY) has bigger fish to fry than pushing legislation that will risk costing any Democrats seats. The demise of the JCPA is an object lesson in the politics of Senator Klobuchar’s American Innovation and Choice Online Act (AICOA) – and a preview of its likely fate.

A close contender for this week’s headline could have been the Commercial Surveillance and Data Security Public Forum hosted by the FTC on Thursday. But this charade doesn’t deserve headline status. The online forum, which was billed as a hearing relating to the FTC’s recently-announced a was plagued by technical difficulties from the start – slides not working, speakers on unstable Internet connections, and consistent “am I muted” problems – that are simply amateurish difficulties two years into the COVID-19 pandemic. 

But the bigger issue with the forum was that nearly three of its five scheduled hours were dedicated to one-sided panels stacked with panelists favoring FTC regulation. Assuming that the APRM ultimately results in the FTC adopting rules, the Commission is assembling a remarkably strong record to support claims of procedural bias. As I have previously discussed, the APRM itself does not meet the requirements of the Magnusson-Moss Act. Now, anyone challenging whatever rules the FTC may ultimately adopt (about which the ANPR has offered no basis for discussion) will readily be able to point to this hearing to demonstrate the the Commission’s rulemaking process is biased in favor of adopting specific regulations, not neutrally obtaining information to inform its rulemaking process.

There has been plenty of other FTC-related news over the past two weeks.

First, congratulations to Svetlana Gans! In addition to being a recent contributor to this ongoing symposium, Svetlana is the subject of a recent article identifying her as a “leading candidate” to take current commissioner Noah Phillips’s seat after he steps down. Of course, the article is critical of her – but that’s the nature of the appointments game. There are few individuals as qualified for this position as Svetlana. And I’m not just saying that because she has contributed to this symposium – she is a longtime FTC practitioner with deep institutional knowledge of the agency and an impeccable record of experience on antitrust and consumer protection matters. 

Second, not many people seem to have noticed this, but: the FTC released its latest five-year plan. The changes between this plan and the previous iteration are subtle but substantial. Most notably, the Commission has replaced its previous focus on protecting “consumers” with a focus on protecting “the public,” and is now focused on “fair competition,” instead of “vibrant competition”. Some agencies, like the Federal Communications Commission, have authority based around a public interest standard. It sounds like FTC Chair Lina Khan is trying to rewrite its UDAP and UMC authority – which Congress and the Courts have long focused on consumer concerns – to focus instead on broader “public interest” standards. One need not invoke major questions to question the propriety of one agency refocusing its strategic priorities around the statutory mandate of its agencies.

Third, Fourth, and Fifth: Walmart is going to war with the FTC; the Senate is going to war with the FTC; and the FTC’s ALJ is going to war with the FTC. Walmart is challenging the FTC’s absurd claim that the company is doing too little to protect consumers from scammers despite the company’s substantial efforts to protect consumers from scammers. With its equal split between Republicans and Democrats and in a preview of what may be to come in a new Congress, the Senate Judiciary Committee is planning to hold a DOJ and FTC oversight hearing. And in a loss for the Commission, the FTC’s ALJ has rejected the FTC’s contention that the Illumina/Grail merger would harm competition – a decision that will likely be appealed to and overturned by the FTC Commissioners, in a nice rebuke the the legitimacy of the agency’s decision-making process (see, inter alia, the pending Axon litigation before the Supreme Court). 

It is not wholly bad news for the FTC over the past two weeks. The Commission has only just started scrutinizing Amazon’s proposed acquisition of iRobot, so that case isn’t faltering yet. On the other hand, Kovacha, a firm that the FTC has accused of providing “precise geolocation data associated with unique persistent identifiers” in a way that establishes a unfair or deceptive acts or practices violation, preemptively brought suit against the FTC arguing that the FTC’s claims were unconstitutional. Kovacha smartly positioned its claims alongside the pending Axon litigation – which will be hear by the Supreme Court on November 7 – positioning its claims alongside the most potent recent challenges to the FTC’s Constitutional structure or authority.

This week’s closing note is that Queen Elizabeth II has passed away. As she moves on to the unknown country, it seems that we have lost one of the last figures of the twentieth century’s global order. To our British friends, God save your King – and may we all take a moment to reflect on the value of stability in our economic and political order tempered by the importance and inevitability of the sea of change.