The fight between the FTC and Facebook comes down to who gets to vote

The FTC’s quest to break up Facebook has to get past one looming question in the next few days: Does its new progressive trustbuster chair get a vote?

The agency has to make a decision by next Thursday on whether to re-file an antitrust case against the social network that a D.C. federal judge tossed last month. The case — which deals with Facebook’s years-old acquisitions of Instagram and WhatsApp — will mark the first major vote for the agency since it gained a Democratic majority last month.

But before the FTC holds that vote, it has an even weightier call to make: whether Chair Lina Khan needs to recuse herself from the Facebook case altogether, as the social media company has demanded. If she sits out, the remaining commissioners would likely deadlock 2-2 on a vote to file a new complaint against Facebook, splitting along party lines and ending the case just seven months after it started.

Those familiar with the agency’s workings say Facebook’s effort is a long shot. A decision against Khan would not just be a blow to this case but would throw into question whether the FTC can achieve the lofty goals she has laid out for the agency, including reining in other tech giants.

Before joining the FTC last month, Khan spent her career as an academic and advocate arguing that antitrust enforcement had failed against Big Tech. As recently as last year, Khan said both Facebook and Amazon have engaged in illegal activity, calling the social network’s acquisitions “a land grab to...lock up the market” and accusing Amazon of seeking to “weaponize” rivals’ data. She also was a lead investigator in the House Judiciary’s antitrust probe into competition in online markets.

Facebook cited these facts in a petition it filed with the FTC last week urging Khan to recuse, a request similar to one filed by Amazon earlier this month.

Khan has said she has no financial conflicts that would require her recusal from cases involving the tech giants. But Facebook and Amazon argue that Khan has “prejudged” the cases against them.

The debate over Facebook’s recusal request is raising tricky questions about how neutral the independent agency's appointees must be and whether that changes depending on the circumstances,

It’s also a sign of the pushback that’s likely to intensify against a number of progressive antitrust crusaders Biden has brought on. He has tapped progressive favorites for a number of top posts, including picking Jonathan Kanter to be the Justice Department’s antitrust chief and Tim Wu as a top White House adviser on technology and competition.

In the case of the FTC, it’s common for commissioners to have represented companies in antitrust cases and weighed in on competition policy issues, sometimes even particular cases, said Bill Kovacic, the agency’s former chair appointed by President George W. Bush.

“The reason you get chosen for the job is you know something about the field and you share an agenda and a worldview,” said Kovacic, who also served as the FTC’s general counsel before he was nominated to be a commissioner. “In some cases, you are pretty pointed about where you think the law should be applied and how.”

A recusal on the Facebook case could be a particularly tough sell, since the allegations will be decided by a federal judge, not the commissioners themselves.

The cases the companies rely on to argue for Khan’s recusal involve instances where the FTC was issuing rules or pursuing a case in its in-house court, said Stephen Calkins, another former agency general counsel. In those cases, the FTC commissioners were effectively functioning as judges, which meant they needed to weigh evidence and issue a ruling.

With the Facebook case, “we’re not in that world,” said Calkins, now a professor at Wayne State University Law School in Michigan. In this instance, the commissioners are more akin to prosecutors because they are voting whether there is “reason to believe” Facebook violated the law, while leaving that judgment to the federal court, he said.

“But,” he noted, “there are still some limits on prosecutors.” For example, prosecutors cannot have a personal interest, such as a financial interest, in the outcome of a case.

But even the Supreme Court case Facebook cites for the limits on prosecutors acknowledges that “the strict requirements of neutrality cannot be the same for administrative prosecutors as for judges.”

Even if Khan’s work were to be considered a conflict of interest, Biden could have other options to keep her in the mix. Administrations have sometimes gotten around potential conflict of interest problems at other independent agencies with waivers.

During the Trump administration, the White House awarded multiple waivers from ethics pledges for Bernard McNamee, a member of the Federal Energy Regulatory Commission, so he could participate in cases involving his recent legal clients. That allowed FERC to maintain a quorum and vote to approve electricity market rules and pipeline construction applications despite McNamee having worked for companies with financial interest in the cases.

The FTC’s disqualification rules were put in place in 1981 after courts overturned two of the agency’s decisions and a rulemaking over perceived bias by the commissioners. The procedures were designed to make it easier for companies to challenge the participation of a commissioner earlier in the process, rather than waiting until a federal court appeal that often takes place years after.

This came into play in 2007, when two advocacy groups sought to block Kovacic and then-FTC Chair Deborah Platt Majoras from reviewing Google’s merger with advertising technology company DoubleClick. Both Kovacic and Platt Majoras were married to antitrust attorneys who worked for the law firm Jones Day, which was involved in the merger’s review in Europe.

The duo issued statements explaining why they didn’t intend to recuse, and the agency’s other three commissioners said they saw “no legal grounds that would disqualify them.”

Khan might use that same strategy here and issue a statement as to why she believes a recusal is unnecessary, Calkins said. Facebook could then ask the federal judge in the case to rule on whether her involvement violates ethical or constitutional due process requirements.

The FTC has been pursuing an antitrust case against Facebook since 2019 and sued the company in December. Last month, a federal judge threw out the FTC’s complaint against Facebook, finding the agency didn’t offer enough details for its allegations that the social network has monopoly power. But U.S. District Judge James Boasberg offered the agency a chance to try again with an amended complaint, setting a deadline of July 29 for the FTC to file new allegations.

In December, then-chair Joseph Simons was the key vote, joining with the agency’s two Democrats in favor of filing the FTC complaint. That makes Khan’s vote the pivotal one now.

FTC spokesperson Lindsay Kryzak declined to comment on the Facebook recusal motion or how the agency intends to resolve it. But she said the FTC will announce how it intends to proceed before the court’s July 29 deadline.

Additional reporting by Gavin Bade.