Facebook lawsuit follows FTC Chair Lina Khan’s progressive agenda

Lina M. Khan, appointed FTC Commissioner, testifies during a Senate Commerce, Science, and Transportation Committee confirmation hearing on Capitol Hill in Washington, DC on April 21, 2021.

Graeme Jennings | AFP | Getty Images

Federal Trade Commission Chairman Lina Khan high vision to bring tough cases to expand the limits of antitrust enforcement is no longer just talk.

This is the message sent by the agency new trial seeking to block facebook owner Meta acquisition of virtual reality fitness app maker Within Unlimited. The lawsuit, filed Wednesday, alleges that Meta is trying to buy dominance in an emerging market at the expense of creating greater competition and innovation that would otherwise benefit consumers. A spokesperson for Meta said in a statement, the case is not supported 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 largest case that either agency has brought to date,” said William Kovacic, former FTC commissioner. who now teaches competition law at George Washington University.

“That’s exactly the kind of case they were promising,” Kovacic added.

Risky cases that expand competition law

So far, the main technology cases conducted by the FTC and the antitrust division have been inherited from the Trump administration: Facebook and Google cases of monopolization, respectively.

The FTC’s new merger case against Meta represents a major milestone under Khan’s leadership, just months after she finally secured a decisive fifth vote with the confirmation of Democratic Commissioner Alvaro Bedoya.

Khan and his counterpart in the Justice Department’s antitrust division, Jonathan Kanter, said it was important to bring cases to risk to at least have a chance of stretching antitrust law to the limits. This strategy seems even more important to progressive leaders now that it is more and more blurry if a antitrust bill on key technologies will receive a vote before the August recess of Congress.

Khan outlined his philosophy behind the risky pursuits in a January interview with CNBC anchor Andrew Ross Sorkin and contributor Kara Swisher.

“Even if it’s not a slam dunk affair, even if there’s a risk that you’ll lose, there can be… huge upsides to taking that risk,” Khan said. “I think what we can see is that inaction after inaction after inaction can have significant costs. And that’s what we’re really trying to reverse.”

Khan also said in his September note agency staff that the FTC should be “forward-looking” in its enforcement and pay close attention to “next-generation technologies, innovations, and emerging industries in all sectors.”

Facebook has made a number of strategic acquisitions as it has grown, including buying photo social network Instagram and private messaging app WhatApp for $19 billion in 2014. mergers, allowing Facebook to buy fledgling rivals unhindered.

The FTC now alleges in a separate lawsuit, first brought under Khan’s predecessorthat Facebook actually used these acquisitions to grow its monopoly by eating up potential rivals.

But while some circumstances may be similar, Kovacic noted that the FTC’s Meta-Within merger complaint has unique characteristics that could make his case harder to prove. For example, he said, this deal is an example of a vertical merger, where Meta would use the acquisition to add complementary functionality.

“Instagram’s theory was more than Instagram was an actual threat to becoming a direct rival as a social network,” he said.

The Within case is “deliberately experimental”, he added.

He suspects there will be riskier cases to come from law enforcement agencies.

“I feel like this is the first in a series of cases very consciously designed to test the limits of doctrine,” Kovacic said. “I have to think there are more in the pipeline. But this is a big step.”

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