The Corner

Regulatory Policy

The FTC is Moving on Trustbusting. That’s Not a Good Thing

FTC Commissioner nominee Lina M. Khan testifies during a Senate Commerce, Science, and Transportation Committee hearing on Capitol Hill in Washington, D.C., April 21, 2021. (Graeme Jennings/Pool via Reuters)

When it comes to government expansion, ask, and ye shall receive. Conservatives in Congress have been arguing for greater regulation of Big Tech companies, specifically asking that antitrust laws be enforced more aggressively. They may not be entirely happy with what they get. Lina Khan, a critic of Big Tech, assumed leadership of the Federal Trade Commission this month in what was widely considered a victory for antitrust legislation. Unfortunately, Khan is now using her bureaucratic position to aggressively move beyond the “consumer harm” standard to create sweeping economic change.

Lina Khan came to prominence in the legal academic world for her entry in the Yale Law Review, which argued that consumer harm was an insufficient standard for monopolistic practices in the tech industry. Conservative commentators and politicians alike have agreed, attacking large, left-wing companies for perceived bias. But how did the consumer-harm standard come about in the first place? 

In 2015, the Federal Trade Commission issued a policy statement about enforcing Section 5 of the FTC Act. In it, the FTC specifically stated that consumer welfare will guide allegations of unfair competition. It was a bipartisan policy agreement premised on the basic idea that monopolies are bad when they result in monopoly pricing. 

This is a sensible premise for two reasons. For one, consumer harm is easier to measure. While all measurements of this scale are difficult, consumer-based statistics help to take the decisions out of bureaucrats’ hands. Second, localized monopolies can be relatively benign. Oftentimes the mere threat of competition naturally regulates corporate behavior. For example, there might be only one cellular provider in a rural area, but the fact that other major carriers exist and continuously expand keeps prices low. Thus, monopolies, in and of themselves, are not the problem. 

While this standard has been an agency policy for years, the Khan-led FTC is looking to rescind the FTC’s 2015 policy statement. It’s a move that has concerned Republicans on the FTC bench. According to the Washington Examiner, Republican commissioner Christine Wilson said:

Rescission of the FTC’s existing Section 5 policy statement would have many significant and harmful effects on American consumers and broader efforts to rebuild our economy post-COVID.

Also in the Examiner is an illuminating insight from Neil Chilson, a senior research fellow at the Charles Koch Institute (and former FTC bureaucrat). Chilson remarked:

It makes me curious to know what she would like to try under an expanded Section 5, which could mean the FTC being able to regulate any company if they can find a connection to competition.

The point is that expanding “anticompetitive” behavior beyond how it affects the customer allows regulators such as Khan to expand the federal government into more aspects of American life. Virtually every decision a business makes is “competitive” in some fashion. Just this March, Kelly Slaughter of the FTC argued that breaking up monopolies in the tech sector was the more “conservative” option. If breaking up Big Tech is “conservative” for Democrats at the FTC, we should be worried about what they think is “ambitious.” 

Imbued with the spirit of Theodore Roosevelt, Republicans have helped spearhead several antitrust bills that target the four largest tech companies. The politicians who supported these measures should look at the actions of the FTC, which clearly indicate that the agency is willing to use the new standards to encroach on the domestic economy. A free market of companies and ideas is a goal worth pursuing, but this is not the way towards it. 

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