FTC Lina Khan pursues antitrust plans despite GOP opposition

Republican lawmakers have for years launched barrages of criticism at Biden administration regulatory agencies and their diverse leaders — and Federal Trade Commission Chair Lina Khan is no exception.

Partisan, cross-agency scrutiny is routine, from criticism of Transportation Secretary Pete Buttigieg’s oversight of the Southwest Airlines crisis to Republicans’ calls to disempower the Consumer Financial Protection Bureau, under Director Rohit Chopra.

But the 34-year-old Khan, the only woman of Asian descent to lead the FTC and the first person of color to head it in five years, finds herself at the center of a contentious tug-of-war between business and government in an era of social media takeovers and demands for more worker autonomy.

The London native born to Pakistani parents has said she and her family were “treated like potential terrorists” after they moved to the U.S. following the Sept. 11 attacks. Khan was only 11 years old.

But discrimination did not deter Khan. Her meteoric rise in the antitrust world began when she was a student at Yale University Law School, where her 2017 paper “Amazon’s Antitrust Paradox” led to more scrutiny of the e-commerce giant.

She had developed her passion for antitrust while working at the Open Markets Program, a think tank based in Washington, D.C., that examines the effects of monopolies on economic competition and growth, according to a 2021 profile in The New Yorker.

Soon after winning Senate confirmation that year, Khan promised to uphold the FTC’s mission to “safeguard fair competition and protect consumers, workers, and honest businesses from unfair [and] deceptive practices.” Khan recently told a House committee that she intends to finish her term, which ends next year, despite speculation that she would depart the agency at the end of her two-year leave of absence from Columbia Law School, where she is an associate professor, and after the birth of her first child in January.

As she made history in leading the agency, Khan’s sprawling oversight plans and focus on fair competition in markets drew pushback from GOP leaders who denounced them as “politicized.” Her ambition for the agency even sparked resistance from within it. Two Republican commissioners, Christine Wilson and Noah Joshua Phillips, have resigned under Khan, leaving the usually bipartisan board with only Democratic representation.

Khan’s broad role in probing Twitter’s privacy practices, blocking noncompete contracts and tackling President Joe Biden’s crusade against junk fees has made her a unique target.

She is the “first FTC chair in a long time to try to reestablish the centrality of market structure in politics,” said Matt Stoller, director of research at the American Economic Liberties Project and a close associate of Khan. The FTC chief’s status as an “interloper in this cloistered world” of antitrust bred resentment, Stoller said.

“Lina happens to be famous because of some of the important scholarship that she did prior to becoming the FTC chair,” he said. “And so she’s a particularly high-profile target.”

The backlash to Khan’s antitrust platform has come from across the Republican caucuses in Congress — even as many GOP lawmakers have backed antitrust policies or slammed Big Tech companies.

Soon after Khan’s appointment, Republican Sens. Chuck Grassley, of Iowa, and Mike Lee, of Utah, along with GOP Reps. Ken Buck, of Colorado, and Jim Jordan, of Ohio, dubbed the agency “America’s antitrust enforcement regime.” Grassley criticized the FTC’s “push for radical antitrust policies” in a September memo.

Khan has defended her positions, telling CNBC on May 10 that the FTC enforces antitrust laws passed by Congress.

“I think we’ve seen time and time again that what’s best for consumers, what’s best for innovation, what’s best for ensuring that the U.S. is at the cutting edge is enforcing the antitrust laws,” she said.

Democrats such as Rhode Island’s Rep. David Cicilline, who is on the House Judiciary Committee, and Sen. Amy Klobuchar, of Minnesota, have praised Khan’s dedication to her policy vision. Klobuchar, an antitrust hawk who sits on the Senate Judiciary Committee, lauded the FTC chief’s commitment to “strengthening competition policy and taking on monopolies.”

A range of the FTC’s proposals under Khan have drawn pointed attacks from Republicans, especially on the GOP-led House Judiciary Committee. The panel moved to pick apart Khan’s actions after the party gained House control in January.

Khan is now defending an array of plans from Republican backlash. Here is where the FTC chair’s ambitious agenda stands nearly two years into her historic tenure at the FTC.

Khan is continuing the FTC’s multiyear investigation into Twitter’s data privacy practices — putting her in conflict with one of the world’s wealthiest people and the new GOP House majority. Mass layoffs in the month after Elon Musk took over the platform in October attracted the FTC’s attention, as key security and privacy personnel were among the casualties.

Musk’s unusual request to meet with Khan in person was rebuffed in January, according to The New York Times. Khan told Twitter’s counsel that she would not consider a meeting with Musk until the company had complied with investigators’ requests for information, according to the Times.

Many Republicans, some of whom cheered the move by Musk’s ownership group to take Twitter private, have defended the company during the FTC’s ongoing probe. The House Judiciary Committee, led by Jordan, subpoenaed the agency last month for documents relevant to the privacy probe from the time after Musk bought the company.

“Certainly the FTC should be mindful of the fact that there is a political effort against them right now from the GOP,” Jon Schweppe, director of policy at the conservative group American Principles Project, told CNBC.

Some in the GOP hailed Musk’s acquisition for relaxing content moderation, with Jordan tweeting, “Free speech is making a comeback.” Twitter was also notably absent among five big tech companies whose CEOs Jordan subpoenaed in February regarding what he called the “federal government’s reported collusion with Big Tech to suppress free speech.”

“The Republicans view Twitter as the town square, famously, and they’re not going to want to see anything get in the way of [Musk’s] approach,” said Mo Cayer, a human resources lecturer at the University of New Haven in Connecticut.

The FTC in January proposed a ban on noncompete clauses — perhaps the most controversial policy to date under Khan. Jordan and other GOP House members have criticized the plan as a “power grab.”

Khan had cited the ban in a 2021 list of policy priorities, saying that employer-mandated clauses “block workers from freely switching jobs, depriving them of higher wages and better working conditions and depriving businesses of a talent pool that they need to build and expand.” The FTC estimated that wages would increase by $300 billion per year if noncompetes were eliminated.

Jordan and other Republicans, meanwhile, say Khan lacks the authority to implement the ban.

In her dissent against the noncompete plan, Trump appointee Wilson, who slammed Khan in an op-ed upon leaving her post as commissioner, called the proposal “a radical departure from hundreds of years of legal precedent.”

Echoing some in the GOP, Leslie Overton, a law partner at Axinn, Veltrop & Harkrider LLP, told CNBC that the Democratic FTC commissioners “are asserting their ability to do this rulemaking based on their broad interpretation of Section 5” of the FTC Act, which they say applies to “unfair methods of competition,” not necessarily antitrust violations.

The window for public comments on the noncompete proposal closed April 19. Khan said the agency is reviewing more than 26,000 comments.

The Biden administration has taken aim at so-called junk fees: hidden costs that affect concert ticketing, hotel rooms and other forms of entertainment. The administration has proposed the Junk Fee Prevention Act, which, if passed, would grant the FTC and Khan broad enforcement powers.

The FTC has also said it is considering a rule proposal to crack down on junk fees.

In a sweeping dissent to the October announcement, Wilson argued that the FTC does not have jurisdiction over these sectors, calling the proposal “untethered from a solid foundation of FTC enforcement“ and saying it “relies on flawed assumptions and vague definitions; ignores impacts on competition; and diverts scarce agency resources from important law enforcement efforts.”

But an FTC spokesperson said Khan’s agency has jurisdiction over all fees except banking and airlines. Junk fees are also a core component of the FTC’s consumer protection mission, the agency chair has said.

But any strategy opposing such populist proposals is a “political loser,” said Schweppe.

The emergence of artificial intelligence technology such as ChatGPT, with its potential for consumer abuses, is next on Khan’s radar. She said the FTC will also work to ensure that up-and-coming AI firms can compete with tech giants, which include Google, Amazon and Apple.

“The FTC is well equipped with legal jurisdiction to handle the issues brought to the fore by the rapidly developing AI sector, including collusion, monopolization, mergers, price discrimination and unfair methods of competition,” Khan wrote in an op-ed earlier this month.

The new objectives are sure to rattle corporate advocates within the GOP, but some Republicans are calling for legislative action, instead of executive branch policy, to address the issues.

“The Republican base is supportive of antitrust enforcement; they’re supportive of reining in specifically big tech companies,” Schweppe said.

That dynamic could cause the Republican resistance to antitrust enforcement to abate over time.

Aiden Buzzetti, president of conservative strategy organization The Bull Moose Project, told CNBC that he hopes the bulk of GOP opposition will “subside over the next couple of Congresses.”

“We’re hoping to make headway on that issue and make Republicans understand that antitrust can actually be beneficial, regardless of it’s Lina Khan or somebody else on the FTC with the junk fee bills and the opposition to that,” Buzzetti said.