Biden antitrust chief Lina Khan is suspicious of big mergers like the deal to buy the maker of Call of Duty—and isn’t scared to stop them in court.
To many observers, the Federal Trade Commission under the last administration was a paper tiger. But President Joe Biden’s FTC chair, Lina Khan, has been especially vocal about the dangers of market engagement, and brave to go to the courts to back up her own doubt. After some mild successes halting deals among shorter companies, on Dec. 8 Khan launched her greatest challenge yet: a suit to block microsoft activision deal Corp.’s $69 billion buy of Activision Blizzard Inc.
The FTC suit claims that combining a top maker of game consoles with one of the biggest online gaming companies could limit rivals’ access to the most famous titles, such as Activision’s blockbuster shooter Call of Duty. Microsoft has stated it plans to vigorously contest the case, filed in the agency’s in-house court with a trial planned for next summer. And US antitrust officials have in the past failed to get courts to stop deals between companies in adjacent markets. One example: is the Department of Justice’s unsuccessful suit to stir the 2018 merger of AT&T Inc. and Time Warner.
Khan’s readiness to sue to halt deals has won her praise from progressives and politicians who think prior administrations were too lax in their enforcement of antitrust rules. Today’s FTC has “a distinct default process,” says Ben Sirota, an antitrust lawyer at Kobre & Kim. “In any business they consider is hard or in a market that’s consolidated, the assumption rolling in will be to ask: ‘Can we challenge it?
Biden shocked the business world in June 2021 when he named Khan, 33, an antitrust professor from Columbia Law School, to helm the antitrust and customer protection agency. The president had initially selected her as one of the FTC’s three Democratic commissioners, reporting only after the Senate approved Khan that she would lead the 108-year-old agency.
The most immature person ever to head the FTC, Khan has made bold merger enforcement—especially against tech platforms—a hallmark of her chairmanship. In July the agency challenged Meta Platforms Inc. over its suggested acquisition of a virtual-reality startup, Within Unlimited. The case, currently on test in a federal court in California, alleges that Meta is aiming to dominate the emerging VR world, much in the same way the FTC says it did by purchasing Instagram and WhatsApp, potential competitors to its main social networking platform, Facebook.
Talking at a conference in October, Khan told the FTC is concentrating on ways digital platforms use mergers to maintain their power as technology changes. “Right now we are witnessing that time of technological change—be it in the context of the cloud or voice assistants or virtual fact, she said. We have to be specifically vigilant across the panel, but especially in the merger context.
Khan has moved back on the idea that the agency under her leadership is “anti-merger.” “We have exceptionally talented staff and very finite resources, so I can guarantee you we’re not spending those resources doing fishing tours,” she conveyed to an audience of business executives on Dec. 6. “One of the lessons over the earlier duo of decades is that the FTC and DOJ have forgotten things, that we’ve had typical blind spots in how we study at deals. We’re attempting to resolve that.
Since Khan took over in June 2021, the FTC has sued to stop Lockheed Martin’s offered acquisition of Aerojet Rocketdyne Holdings and Nvidia’s attempt to purchase SoftBank Group’s ARM. Both deals collapsed at the beginning of the FTC’s opponent. After the commission sued, three hospital groups also abandoned projects to merge, as did Great Outdoors Group, the near-held owner of Bass Pro Shops and Cabela’s, which had aimed to buy Sportsman’s Warehouse Holdings Inc.
Khan “is walking the walk in terms of putting Big Tech and bigger corporations on notice,” says Matt Kent, match policy advocate for the nonprofit client group Public Citizen. “That is truly stimulating and an adaptation of practice for the FTC.
Outside of mergers, Khan’s FTC began an ambitious rule-making procedure on online privacy this summer; pushed Ericsson AB’s internet phone service provider Vonage to refund $100 million to customers and make its cancellation process more comfortable, and settled a case against Harley-Davidson Inc. for enacting overly restrictive repair policies the agency states restricted the ability of customers to use independent shops.
Khan has marked criticism from the business world and its followers. Her Republican commissioners have charged her of withholding information, jettisoning the FTC’s prior norms of bipartisanship and collegiality. The US Chamber of Commerce, which has called out the FTC for creating a “black-box environment” for business, sued the agency this summer for failing to make public copies of its voting systems and communications with international regulators.
House Republicans have shown they intend to ratchet up scrutiny of Khan after they take control of the chamber in January, with the Judiciary Committee’s top GOP member, Representative Jim Jordan of Ohio, charging her of seeking a “radical, anti-free-market plan.
Agency morale is at an all-time low after years in which the FTC was rated as among the top places to work in the federal government. Employees have complained about Khan’s lack of communication and decisions that move forward without team input. In an employee survey that accepted place from May to July of this year, only 44% of the staff said having a high level of respect for FTC leaders, while 32% said they prepare to leave the agency within the year, according to a person who viewed the numbers but wasn’t allowed to discuss the survey results because they aren’t however public.
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