Protocol | Policy

Facebook and Amazon want Khan’s recusal at the FTC. What now?

Any action against Facebook and Amazon will be tougher if either can prompt the FTC chair to recuse herself, but the companies don't need to succeed to make the agency's work a slog.

FTC building exterior
Photo: bpperry/Getty Images

Petitions by Facebook and Amazon asking Lina Khan, chair of the U.S. Federal Trade Commission, to recuse herself from actions against them appear to be doomed for the time being, but they can still be potent weapons.

Since President Joe Biden named noted tech critic Khan to the FTC in June, the two digital giants have moved quickly to petition to have her removed from their cases, saying her prior public statements and work in academia, think tanks and Congress mean she had prejudged the facts of proceedings against them.

Relations are more tense than usual between the companies and the FTC. The agency is not only probing Amazon's competitive conduct and its proposed acquisition of MGM, but will likely soon refile its complaint in its landmark case seeking to break up Facebook.

Experts who spoke with Protocol think it unlikely Khan would recuse herself from those matters. The petitions, however, could still complicate FTC efforts to use some of its most reliable tactics, create delays due to the upcoming departure of another commissioner and signal a long fight by the companies to keep throwing up roadblocks to the agency's long-term plans to regulate industry.

"Simply by filing these, they are creating additional distractions and concerns for the agency, and that slows things down a little bit," said Stephen Calkins, a former FTC general counsel who is now a law professor at Wayne State University.

Khan similarly faced questions in her confirmation hearing as to whether her work on the House antitrust subcommittee's probe of competition in Big Tech, which found widespread anti-competitive behavior by companies including Amazon and Facebook, would require her to recuse herself from the major FTC cases.

Khan allowed that she would follow the guidance of agency ethics officials in response to recusal motions but made clear she didn't expect to pull her punches going in. "I have none of the financial conflicts or personal ties that are the basis for recusal under federal ethics laws, and I would be approaching these issues with an eye to the underlying facts," she said at the time.

Since then, the companies have made their formal objections, with Facebook following Amazon closely in arguing her work has been too pointed and too public. They cite the example of Kennedy-era FTC Chair Paul Rand Dixon, whose prior work as a lawyer for a Senate subcommittee's antitrust investigation prompted a court, in order to avoid "both unfairness and the appearance of unfairness," to invalidate an agency order that involved one of the companies from the probe.

"Those are substantial questions" raised in the petitions, Calkins said. However, he added, he wasn't sure the companies would win and courts have previously ruled that expertise by commissioners on "broad policy or legal issues" is insufficient for recusal. Experience is usually viewed as the most important prerequisite for top government jobs, and commissioners often give their thoughts in public and work in related fields.

The petitions could present more significant hurdles to the FTC, though, if the commission decided to pursue a case against Amazon within its own internal administrative court or if it decided to reroute the Facebook case to that in-house forum, which is often viewed as more deferential to the agency.

The companies point to another instance involving Dixon, where a court found that this internal process demanded commissioners keep their views particularly close to their chests to ensure fairness, which he had failed to do in a speech. Khan had also spoken to the media in prior roles, including at a think tank, Open Markets Institute, that pushes for competition reform.

Additionally, under federal regulations, the petitions by the companies would automatically prompt a vote by the remaining commissioners if Khan declined to recuse herself from the in-house process. Once the question goes to the remaining four commissioners, a party line vote would result in a 2-2 tie, and the motion for recusal would fail, leaving her free to participate in the matter, Calkins said.

But Biden has named one of the commission's other Democrats, Rohit Chopra, to take over the Consumer Financial Protection Bureau. Chopra will exit his FTC role once the Senate confirms him as CFPB director, potentially making it so the two Republican commissioners who voted against bringing the Facebook suit could overrule the one remaining Democrat, or else prompting Khan to wait for the confirmation of an as-yet unnamed Democrat to the vacant seat.

The companies can also appeal decisions of the internal administrative judge to the commission. They can then appeal the commission's decision to a federal court, even as the FTC has routinely found itself losing in the judiciary. The steps provide ample opportunity for Amazon and Facebook to raise the issue of recusal.

That's not the only way they could slow down Khan's agenda. Over Republican objections, she and the other Democrats recently cleared the way for the FTC to more easily craft and issue rules that govern entire sectors. Those sectors could include online advertising, digital privacy, ecommerce platforms and smart devices, which could impact Facebook or Amazon greatly. The same recusal rules that apply to the FTC's internal adjudication also apply to rule-making, meaning the companies could repeat the playbook and consistently put the GOP commissioners' objections on the record.

Khan's defenders, however, say the companies are attempting to use her own expertise against her.

Jeff Hauser, a former Justice Department antitrust attorney who has supported Khan, said it wouldn't make sense to have an agency head who hadn't contemplated the major issues she would confront.

"How would you not have an opinion about Big Tech platforms and be qualified to help lead an agency with antitrust responsibilities?" said Hauser, director of the Revolving Door Project, which tracks corporate employees in government. "If you've just not given the matter of antitrust and Big Tech thought, you're just unambiguously unqualified for that job."

After all, former congressional staff, including two of Khan's fellow commissioners, routinely ascend to the top levels of the FTC and other government agencies.

Hauser said that, in light of Khan's high public profile and moves toward a more aggressive agency, he wouldn't be surprised if the companies launched even more attacks on the FTC's structure and powers itself, such as the lawsuit that recently resulted in a Supreme Court decision broadening the discretion of the president to fire the CFPB chief.

"There's a lot of fear of the FTC out there," he said. "This just reflects that the stakes are high, and I think they want Khan to feel on the defensive from the jump."

Protocol | Policy

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Photo: Alex Wong/Getty Images

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