The Federal Trade Commission is once again confronting a Big Tech target, but critics accuse the agency of going "rogue."
Chairwoman Lina Khan has the FTC suing Amazon for allegedly deceiving millions of consumers into signing up for its Prime program and then limiting their ability to cancel. Khan and the online retail giant have a long history together.
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“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” she said in a statement.
Khan, 34, became the youngest person ever to lead the FTC when President Joe Biden named her chairwoman in June 2021. She first shot to stardom in the "hipster antitrust" movement while still a Yale law student with a 2017 paper titled "Amazon's Antitrust Paradox."
The paper argues that the tech giant enjoys monopoly-like powers by operating in so many different business categories and advocates a more aggressive regulatory stance, including possibly breaking up the company.
Her critics say she's now following that doctrine but not keeping with the FTC's mission in doing so.
“Antitrust is a very powerful tool designed only to be used in cases where we see anticompetitive behavior that harms consumers,” CATO Institute technology policy fellow Jennifer Huddleston said. “It’s concerning that we’re now seeing this kind of ‘big is bad’ mentality, with so much animosity toward the tech industry in general.”
In its latest filing, the regulatory agency claims in a suit filed in the Western District of Washington that Amazon violated the FTC Act and the Restore Online Shoppers' Confidence Act by using intentional design decisions to deceive and complicate users' ability to end their Prime subscriptions. Amazon denies the claims as "false on the facts and the law.”
But it's far from the FTC's first spat with Amazon under Khan's watch. The company recently agreed to pay a $30 million settlement related to alleged privacy violations involving its Alexa and Ring devices.
Before that, Amazon filed a petition with the FTC upon Khan's appointment asking that she be kept off any decisions involving the company because she'd "already made up her mind" it was guilty of monopolistic behavior.
She has so far defied the critics, and the agency says she will continue doing so.
“Chair Khan has no family or financial conflicts that would require her recusal from Amazon cases," said FTC spokesman Douglas Farrar. "Big tech companies’ dishonest recusal calls are simply an effort to intimidate a public servant whose job is to protect Americans from unfair competition. It won’t work."
The FTC does make a strong point in its most recent case involving Amazon Prime, according to George Washington University law professor William Kovacic.
"The theory of harm in the FTC's Amazon case is reasonable," Kovacic, an FTC general counsel during the George W. Bush administration, said. "Firms should be obliged to give consumers accurate, truthful information about subscriptions before they enroll. Firms also should not be permitted to establish needlessly difficult mechanisms for consumers to use in seeking to terminate subscription rates relationships. The key question in the case will be whether the facts will sustain the theory."
Worries about Big Tech are a bipartisan concern, with Sen. Josh Hawley (R-MO) penning a book titled The Tyranny of Big Tech in 2021. But Khan has also drawn the ire of Republicans, getting into spats with House Oversight Committee Chairman James Comer (R-KY) and Judiciary Committee leader Jim Jordan (R-OH) in just the last month.
Comer opened an investigation into Khan over whether she's transformed the FTC into a "rogue agency," while Jordan accused Khan of taking political actions against Twitter following Elon Musk's takeover.
The Comer investigation followed the surprise resignation of FTC Commissioner Christine Wilson, who alleged "abuses of power and disregard for the rule of law" at the agency earlier this year.
The House's actions fold into wider concerns among conservatives with what they see as executive overreach and a drive to regulate over and above what's allowed by law.
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Khan and her aggressive approach to running the FTC are one more example, argues American Action Forum President Douglas Holtz-Eakin, of her attacking successful firms solely due to their size.
“The explicit rejection of the consumer welfare standard and the general lack of concern for consumers is why there are such reservations about Khan," Holtz-Eakin said. "She has repeatedly ignored evidence-based policy making and tried to drastically expand the regulatory state to go after every large company.”