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The fight between the FTC and Facebook comes down to who votes

Those who know how the agency works say Facebook’s effort is long-drawn. A ruling against Khan would not only be a blow to this case, but would call into question the FTC’s ability to achieve the lofty goals it has set for the agency, including controlling other tech giants.

Prior to joining the FTC last month, Khan spent his career as an academic and lawyer arguing that antitrust enforcement had failed against Big Tech. As recently as last year, Khan said Facebook and Amazon have engaged in illegal activities, calling the social network’s acquisitions a “land grab to … lock in the market” and accusing Amazon of seeking to “militarize” the data of its rivals. She was also a senior investigator for the House Judiciary’s antitrust investigation into online market competition.

Facebook cited these facts in a petition it filed with the FTC last week, urging Khan to recuse himself, a request similar to that filed by Amazon earlier this month.

Khan said she had no financial disputes that would require his recusal of cases involving the tech giants. But Facebook and Amazon claim Khan has “prejudged” the cases against them.

The debate over Facebook’s recusal request raises delicate questions about the neutrality of those appointed by the independent agency and whether that changes depending on the circumstances,

It’s also a sign of the pullback that is likely to intensify against a number of the progressive antitrust crusaders Biden has provoked. He has selected progressive favorites for a number of high-level positions, including choosing Jonathan Kanter to be the Justice Department’s antitrust chief and Tim Wu as the White House’s top adviser on technology and competition.

In the case of the FTC, it’s common for commissioners to have represented companies in antitrust cases and weighed in on competition policy issues, sometimes even individual cases, said Bill Kovacic, the former chairman of the FTC. agency appointed by President George W. Bush.

“The reason you are chosen for the job is that you know something about the field and share an agenda and a worldview,” said Kovacic, who was also general counsel for the FTC before being appointed commissioner. “In some cases you are quite picky about where and how you think the law should be applied.”

A challenge in the Facebook case could be a particularly difficult sale, as the allegations will be decided by a federal judge, and not by the commissioners themselves.

The cases the companies are relying on to argue for Khan’s recusal involve instances where the FTC was issuing rules or pursuing a case in its internal court, said Stephen Calkins, another former general counsel for the agency. . In these cases, the FTC commissioners were effectively functioning as judges, which meant they had to weigh the evidence and make a decision.

With the Facebook case, “we’re not in this world,” said Calkins, now a professor at Wayne State University Law School in Michigan. In this case, the commissioners are more akin to prosecutors because they vote if there is “reason to believe” that Facebook has violated the law, while leaving that judgment to the Federal Court, he said. .

“But,” he noted, “there are still limits for prosecutors.” For example, prosecutors cannot have a personal interest, such as a financial interest, in the outcome of a case.

But even the Supreme Court case cited by Facebook for limits on prosecutors recognizes that “strict neutrality requirements cannot be the same for administrative prosecutors as for judges.”

Even if Khan’s job were to be seen as a conflict of interest, Biden might have other options to keep her in the mix. Administrations have sometimes bypassed potential conflict of interest issues in other independent agencies with waivers.

During the Trump administration, the White House granted several waivers of ethical commitments for Bernard McNamee, a member of the Federal Energy Regulatory Commission, so that he could participate in cases involving his recent legal clients. This allowed FERC to maintain a quorum and vote to approve electricity market rules and pipeline construction applications despite McNamee having worked for companies with a financial interest in these cases.

The FTC’s disqualification rules were put in place in 1981 after courts overturned two of the agency’s rulings and a regulation on perceived bias by commissioners. The procedures were designed to make it easier for businesses to challenge the involvement of a commissioner earlier in the process, rather than waiting for an appeal to Federal Court that often takes place years later.

This came into play in 2007, when two advocacy groups sought to stop Kovacic and then FTC President Deborah Platt Majoras from examining Google’s merger with ad technology company DoubleClick. Kovacic and Platt Majoras were both married to antitrust attorneys who worked for the law firm Jones Day, which was involved in the merger review in Europe.

The duo released statements explaining why they did not intend to recuse themselves, and the agency’s three other commissioners said they saw “no legal grounds that would disqualify them.”

Khan could use the same strategy here and issue a statement explaining why she thinks a challenge is unnecessary, Calkins said. Facebook could then ask the federal judge in the case to decide whether its involvement violates the ethical or constitutional requirements of due process.

The FTC has been pursuing an antitrust case against Facebook since 2019 and sued the company in December. Last month, a federal judge dismissed the FTC’s complaint against Facebook, saying the agency had not provided enough details for its claims that the social network had monopoly power. But U.S. District Judge James Boasberg offered the agency a chance to try again with an amended complaint, setting a July 29 deadline for the FTC to file new allegations.

In December, then-president Joseph Simons was the key vote, joining the agency’s two Democrats in favor of filing the FTC complaint. That makes Khan’s vote the pivot now.

FTC spokeswoman Lindsay Kryzak declined to comment on Facebook’s recusal motion or how the agency intends to resolve it. But she said the FTC will announce how it plans to proceed before the court deadline of July 29.

Additional reporting by Gavin Bade.

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