WASHINGTON – The confirmation of a third Democrat to the Federal Trade Commission on Wednesday broke a partisan deadlock at the agency. That’s good news for Lina Khan, the agency’s chair and a Democrat.
It is also a test.
With the FTC’s new Democratic majority – which came with the confirmation of Alvaro Bedoya, who becomes the fifth commissioner, in a slot that had been vacant since October – Ms. Khan’s allies and critics are watching to see if she pushes forward plans to address corporate power. That could include filing an antitrust lawsuit against Amazon, setting online privacy rules and tapping little-used agency powers to clip the wings of companies like Meta, Apple and Google.
As Congress remains gridlocked and the midterm elections near, agencies like the FTC and the Department of Justice are likely the best remaining hope for activists and policymakers who want the government to restrain corporate power. President Biden, who has promised to crack down, last year ordered the FTC and other federal agencies to take steps to limit concentration.
Under Ms. Khan, 33, who became the chair in June, the FTC has already tried tamping down mergers by threatening to challenge deals after they close. The commission has said it will punish companies that make it hard for users to repair their products. And it settled a case with the company once known as Weight Watchers over a diet app that collected data from young children.
But Ms. Khan’s new Democratic majority is essential for a broader “realization of her vision,” said William E. Kovacic, a former chair of the FTC “And the clock’s ticking.”
In a statement, Ms. Khan said she was “excited” to work with Mr. Bedoya and the other commissioners. She did not address how the FTC’s new majority would affect her plans.
The FTC’s previous split between two Republicans and two Democrats led to impasses. In February, the commission could not reach an agreement to move forward with a study of the practices of pharmacy benefit managers.
Sarah Miller, the executive director of the American Economic Liberties Project, a progressive group that wants more antitrust enforcement, described the FTC’s two Republicans, Noah Phillips and Christine Wilson, as “libertarian holdouts” who have “kind of thrown the brakes” on Ms . Khan’s ability to advance her agenda.
Mr. Phillips said in an email that he supported the commission’s “long tradition of bipartisan work to advance the interests of American consumers.” But he will not support Ms. Khan’s agenda when it “exceeds our legal authority,” raises prices for consumers or harms innovation, he said.
Ms. Wilson pointed to three speeches she gave over the last year criticizing Ms. Khan’s philosophy. In one speech last month, Ms. Wilson said Ms. Khan and her allies were drawing on tenets from Marxism.
Senator Chuck Schumer of New York, the Democratic majority leader, said Wednesday’s vote confirming Mr. Bedoya was “pivotal to unshackling the FTC”
Now Ms. Khan may gain the ability to pursue a legal case against Amazon. She wrote a student law review article in 2017 criticizing the company’s dominance. The FTC began investigating the retail giant under the Trump administration; some state attorneys general have also conducted inquiries into the company.
Ms. Khan could file a lawsuit to challenge Amazon’s recent purchase of the Metro-Goldwyn-Mayer movie studio. When the $ 8.5 billion transaction closed in March, an FTC spokeswoman noted that the agency “may challenge a deal at any time if it determines that it violates the law.”
Ms. Khan may put her stamp on other deals. The agency is examining Microsoft’s $ 70 billion purchase of video game publisher Activision Blizzard and sent a request to the companies this year for additional information.
An executive order from Mr. Biden last year encouraging more aggressive antitrust policy pushed the FTC and the Justice Department to update the guidelines they use to approve deals, which could lead to stricter scrutiny. Ms. Khan is likely to need the support of the commission’s two other Democrats, Mr. Bedoya and Rebecca Kelly Slaughter, to approve aggressive new guidelines or to challenge major mergers.
Ms. Khan has also said she wants to bulk up the agency’s powers by considering regulations governing privacy and how algorithms make decisions. She has said that the FTC underutilized its role as a rules-making body and that regulations would enhance its mandate to protect consumers.
“Given that our economy will only continue to further digitize, marketwide rules could help provide clear notice and render enforcement more impactful and efficient,” she said last month at a privacy conference.
The FTC could also act on requests from progressive activist groups that want the agency to ban data-driven advertising business models and forbid noncompete agreements that stop workers from taking a job with a competitor of their current employer.
But former FTC officials said Ms. Khan faced challenges, even with the Democratic majority. The creation of privacy regulations could take years, said Daniel Kaufman, a former deputy head of the agency’s consumer protection bureau. Businesses are likely to challenge rules in court that don’t fit into the FTC’s mandate to protect consumers from deceptive and unfair practices.
“The FTC’s rule-making abilities are not designed to tackle behavioral advertising so I’ve been telling my clients the agency could kick something off with a lot of press but it’s unclear where it will go,” Mr. Kaufman, a partner at the law firm BakerHostetler, said.
Ms. Khan’s efforts are also sure to continue facing opposition from Mr. Phillips and Ms. Wilson. Mr. Phillips has said he has reservations about the agency’s becoming a more muscular regulator. In January, he said Congress, not the FTC, should be the one to make new privacy rules.
Ms. Wilson recently posted screenshots of an internal survey showing that satisfaction among the FTC’s career staff has fallen. “New leadership has marginalized and disrespected staff, resulting in a brain drain that will take a generation to fix,” she said.
To overcome their opposition, Ms. Khan will have to keep her majority intact. That gives leverage to Mr. Bedoya, a privacy expert who has focused on the civil rights dangers of new technologies, and Ms. Slaughter, a former top member of Senator Schumer’s staff.
Ms. Slaughter said in a statement that Mr. Bedoya’s privacy expertise would serve the FTC well. She did not comment on the agency’s Democratic majority.
Mr. Bedoya was tight-lipped about his own plans, saying only that he was “excited” to work with his new FTC colleagues.