Technology

Losing record in hand, FTC chief faces Jim Jordan

After major setbacks, FTC Chair Lina Khan heads to the Hill for a grilling on her performance, her track record — and everything else.

On the heels of a stinging courtroom loss, Federal Trade Commission Chair Lina Khan — a progressive star of President Joe Biden’s antitrust agenda — will get the full House Judiciary Chair Jim Jordan treatment this morning.

In her first appearance before Jordan’s committee, Khan will likely be criticized over her alleged mismanagement of the agency, perceived attacks on big business and whether she is using her position to advance a partisan progressive agenda — all key Republican attack points on Biden’s policies.

Khan is among the most activist figures in Biden’s administration, having pushed hard against numerous corporate mergers in Big Tech and other industries. But she enters the Capitol at a low point in her tenure, having just lost a critical court case in the agency’s bid to block Microsoft’s takeover of video game giant Activision Blizzard.

That follows a loss earlier this year in its case against Meta’s purchase of a virtual reality app. The agency abandoned the Meta case but is appealing the Microsoft ruling.

Jordan, who earlier needled Khan for asking too many official questions about Elon Musk’s takeover of Twitter, plans this morning to launch broader attacks on Khan’s management of her agency, as well as her effectiveness as a regulator.

“After two years under your leadership, public information raises serious concerns about mismanagement, a ‘toxic’ environment, and a failure to enforce antitrust and consumer protection laws,” Jordan (R-Ohio) and House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) wrote to Khan in a Wednesday letter obtained exclusively by POLITICO. McMorris Rodgers is leading a separate oversight probe of Khan and the FTC.

An FTC spokesperson declined to comment ahead of the hearing.

Khan is an ideal target for Jordan, the partisan GOP attack dog who just yesterday led a five-hour inquisition of FBI chief Christopher Wray. She is a progressive darling who he says is deliberately targeting conservatives, and a fierce opponent of the market power of tech giants and businesses across the economy.

Among their grievances is Khan’s decision to not recuse from the agency’s challenge to Meta’s virtual reality app deal. Former Republican FTC Commissioner Christine Wilson resigned earlier this year over the issue, and one of her staffers at the agency now works for Jordan. It was reported in recent weeks that Khan went against the agency’s informal ethics guidance that she recuse from the case over statements she made prior to joining the agency. Khan maintains she acted appropriately.

Ultimately, Jordan will have little sway over Khan’s far-reaching goals at the agency. He will, however, do whatever he can to block the FTC’s four-fold budget request.

For her part, Khan is expected to defend her tenure at the agency. She has previously said the FTC must be aggressive and can’t be afraid to lose cases. And she will not be without allies today. Democrats on the committee, including ranking member Jerry Nadler (D-N.Y.), are likely to tout her aggressive approach to rein in the alleged anti-competitive behaviors of large tech companies as a positive for consumers and small businesses. A spokesperson for Nadler did not respond for comment.

For the business community, the hearing will shed much-needed light on what they see as an out-of-control regulator.

“We hope that there is a substantive conversation that really brings forth a level of accountability that we think is missing from the current direction that the FTC has headed under chair Khan’s watch,” Sean Heather, senior vice president for international regulatory affairs and antitrust at the U.S. Chamber of Commerce, said in an interview.

The Chamber has taken issue with a number of the FTC’s actions including what it sees as added roadblocks to mergers and proposals for burdensome regulations, including a proposed ban on nearly all noncompete agreements in employment contracts. House Republicans are expected to quiz Khan on those and other issues.

Khan’s supporters, while not surprised at the expected tone of the hearing, are unhappy.

It’s “disappointing” that Jordan will use the hearing to tear down an agency designed to help ensure a robust economy, Anna Aurilio, senior campaign director with the progressive advocacy group Economic Security Project, said in an interview. “Especially because she is the first chair in a long time to use the agency’s full authority to rein in corporate power.”

Jordan and McMorris Rodgers’ letter highlighted low employee satisfaction, including media reports that 71 senior attorneys left FTC from 2021-2022 – the most in a two-year period since 2000. The lawmakers also asked Khan to share all communications related to complaints about senior FTC leadership, lodged by mostly career-level employees in the competition, enforcement and consumer protection divisions.

Jordan, who also chairs the Judiciary’s Weaponization of the Federal Government Subcommittee, is also likely to ask about a subpoena he sent in April for documents related to the FTC’s ongoing probe into Elon Musk’s takeover and the resulting resignation of Twitter’s top privacy officials that may have violated a May 2022 privacy settlement, where Twitter paid $150 million for misusing user’s data.

The Weaponization subcommittee released a report in March summarizing more than a dozen FTC letters sent to Musk in the months after he bought Twitter in October 2022. Soon after Musk’s takeover, Twitter’s top privacy, cybersecurity and compliance officers left, raising concerns that Twitter would not abide by the settlement agreement. These high-profile exits prompted a rare warning from the agency’s spokesperson: “We are tracking recent developments at Twitter with deep concern,” adding that "[n]o CEO or company is above the law, and companies must follow our consent decrees.”

Jordan is expected to interrogate Khan over her attempting to “harass” Twitter — as his subcommittee report put it — suggesting the FTC’s ongoing enforcement of the settlement is partisan. The FTC has strongly refuted those claims.

“As the chair you’re responsible for answering those questions and explaining to Congress, why you’re doing what you’re doing, whether that’s a good use of resources, because obviously Congress controls the power of the purse,” the Chamber’s Heather said.