FTC VS Big Tech — Round 1: Taking the Fight to Silicon Valley

There's no question about how dominant and powerful tech giants are: Amazon has a chokehold over the terms and conditions for businesses worldwide that sell on its platform, Google and Meta together take up nearly half of all existing digital advertising, and Meta has one of the most significant shares within the social networking market.

Because of this, it's no surprise that legislators and regulatory institutions have taken multiple aggressive moves toward limiting the power of big tech, to varying degrees of success.

However, the Federal Trade Commission (FTC) has gained a powerful regulator within its ranks: FTC Chair Lina Khan.

Who is Lina Khan?

Nominated by Joe Biden back in March 2021, opposition to Lina Khan's appointment came quickly as someone who was “a thirty-two-year-old academic who has no experience running anything.”

Best known for her 2017 Yale Law Journal article, “Amazon's Antitrust Paradox”, she called for a rethinking of antitrust enforcement across the digital markets that would reshape current industry processes.

After being appointed as FTC Chair, Amazon filed a petition asking that Khan recuse herself from “any antitrust investigation, adjudication litigation or proceedings” in which Amazon is involved. The company claimed that it was necessary as the new chair's prior statements create the appearance of her “having prejudged facts... relevant to the proceedings.”

The FTC VS

The opposition has done little to slow Khan's momentum though, as she and the FTC have taken the fight to big tech brands even more aggressively during her short term. Here are the most notable cases:

Meta

After a court dismissed the FTC's first case against Meta at the end of the Trump presidency, a Khan-led FTC filed an amended complaint during the Biden Administration. The new complaint added more factual support for allegations against Meta (then Facebook) of quashing competitors under a “buy or bury” scheme, these include acquisitions such as WhatsApp and Instagram.

The FTC also moved to block Meta's plans to purchase virtual reality content firms Within Unlimited Inc, the company behind the virtual reality fitness app Supernatural. The FTC claims that Meta's acquisition of Within negatively affects competition in the fitness market, as the company already owns the similar app Beat Saber.

The complaint says that “Meta in recent years has set its sights on building, and ultimately controlling, a VR' metaverse,”. This has become increasingly apparent as Meta CEO Mark Zuckerberg has poured billions of dollars into developing his company's metaverse.

The three-week trial began the first Thursday of December, marking the first high-profile public test of the FTC's efforts to broaden antitrust laws and rein in big tech.

Witnesses expected to take the stand include Meta founder and CEO Mark Zuckerberg and CTO Andrew Bosworth who took part in spearheading VR operations. Within founder, Chris Milk is also expected to testify.

In Meta Lawyer Mark Hansen's opening statement, he stated that “The deal is good for competition, good for everyone in the industry, and good for consumers,” and that “It’s an incredibly competitive space even without Meta’s participation.”

The FTC still has a long road ahead to prove its claims. Still if successful, they can claim their first victory in an extended battle against tech giants.

Amazon

The e-commerce giant has accused the FTC of harassing executive chairman Jeff Bezos and CEO Andy Jassy by requiring them to testify in the investigation of Amazon Prime's subscription service.

The FTC has been probing Amazon Prime over concerns of misleading users to sign up or cancel their subscriptions. According to a report from Insider “the company has been concerned since at least 2017 that user interface designs on Amazon.com have led customers to feel manipulated into signing up for Prime” but has not implemented changes despite this.

Amazon's lawyers said that the demand for Bezos and Jassy to testify is “...unreasonable, unduly burdensome, and calculated to serve no other purpose than to harass Amazon’s highest-ranking executives and disrupt its business operations.”

FTC Staff placed pressure on the company to conclude the investigation before fall, however, the scope of the investigation was "accelerated" and "expanded" to at least five additional non-prime subscription programs. These include Audible, Amazon Music, Kindle Unlimited, and Subscribe & Save.

Amazon has described the probe as “unworkable and unfair” though they added that they are still committed to getting the FTC the information it needs.

Ready for Round 2?

The FTC’s moves don’t end here. Their continued aggression against big tech can’t be contained in just 1 article so we've made two of them to keep you up to date. Check out FTC VS Big Tech — Round 2.