FTC Budget Request Would Lead to More Interference and Less Innovation | Citizens Against Government Waste

FTC Budget Request Would Lead to More Interference and Less Innovation

The WasteWatcher

Federal Trade Commission (FTC) Chair Lina Khan has made clear that she will use the power of her agency to interfere with nearly every industry and aspect of the economy.  She has revoked the longstanding consumer welfare standard, blocked nearly every merger and acquisition, and proposed far-reaching regulations that would impact every business in America, several of which are likely beyond her statutory authority.  Chair Khan’s overreach means that no business or consumer is safe.  Vigorous congressional oversight into her conduct at the FTC is necessary, and members of Congress should resist any bill that would give Chair Khan and the FTC more power and money to wreak havoc on the economy.

 On April 18, 2023, the House Energy and Commerce Committee Subcommittee on Innovation, Data and Commerce held a hearing to review the FTC’s fiscal year (FY) 2024 budget request.  The $590 million request is $160 million, or 37.2 percent, more than the $430 million provided in FY 2023.  The agency would use $70.8 million, or 44.3 percent, of the $160 million to hire 310 new full-time employees (FTE), including 106 in the Bureau of Competition. 

In the budget request, the FTC notes that the new FTEs would be tasked with increasing merger reviews to identify, challenge, and litigate what the agency will deem to be anticompetitive mergers and conduct, as well as conduct merger and merger remedy retrospectives.  In his opening remarks at the hearing, subcommittee Chair Gus Bilirakis (R-Fla.) said “maybe instead of carrying out President Biden’s leftist crusade unsuccessfully, you can instead prioritize resources we give you to help vulnerable Americans.”  If Congress appropriates money that is anywhere close to the agency’s request, it will be throwing fuel on the fire and giving Chair Khan the green light to continue her reckless assault on innovation.  

The most recent example of the FTC abandoning the consumer welfare standard is the April 3, 2023, announcement that the agency is blocking Illumina’s acquisition of Grail, a cancer test developer.  This case originally dates to April 2021, when the FTC initially stopped the $7.1 billion purchase from moving forward.  In September 2023, an administrative judge dismissed the FTC’s challenge and allowed the deal to proceed.  According to an FTC press release accompanying the decision, “the Commission found that the acquisition would diminish innovation in the U.S. market for tests while increasing prices and decreasing choice and quality of tests.  This is extremely concerning giving the importance of swiftly developing effective and affordable tools to detect cancer early.”  Rather than allowing the market to operate freely, the FTC chose to bog down yet another corporate acquisition that would likely lead to greater healthcare access, lower prices, and more lives saved. 

Another notable example of FTC overreach is the lawsuit to block Microsoft’s purchase of video game developer Activision.  The FTC claims that if Microsoft acquires Activision, they will restrict access to the popular video game franchise Call of Duty.  Contrary to what the agency claims, Microsoft has worked diligently to ensure video game players, regardless of the platform they use, will continue to be able to access to the Call of Duty franchise by reaching non-exclusive agreements with other video game companies including Boosteriod Cloud, Nintendo, and Nvidia.  The only outlier from these agreements is Sony, which has reportedly refused to enter an agreement with Microsoft, choosing instead to use its own regulator to help impede the sale.  It’s clear that consumers would benefit from this deal and the majority are in favor of Microsoft’s purchase.  The United Kingdom’s Competition and Markets Authority (CMA) conducted a survey on the acquisition which would that 75 percent of respondents were in favor of the deal, and on April 6, 2023, CMA “found no incentive to withhold Activision content in relation to console, and the evidence shows it should reach the same conclusion in relation to cloud gaming streaming.”  If the FTC cared about consumer welfare, it would approve Microsoft’s deal. 

The FTC has expanded its powers well beyond reviewing and possibly blocking mergers and acquisitions.  On January 5, 2023, the agency issued a proposed rule that would ban non-compete agreements in virtually every employment contract in the country.  These agreements are designed to ensure companies can protect their trade secrets and intellectual property by preventing employees from revealing this information when they leave to work elsewhere.  This rule is likely to be found to be an unconstitutional overreach by Chair Khan and the FTC. 

A similar outcome in court is likely for the FTC’s August 11, 2022, Commercial Surveillance and Data Security Rulemaking, which includes 95 questions related to these issues.    This is not only another overreach by the agency, but also is being proposed while Congress is considering a national data privacy law.  Because of the impact consumer data privacy has on every American and business in the country, unelected bureaucrats should wait for Congress to determine the appropriate standards, rather than creating its own rules and regulations without congressional authorization.  The noncompete clause and privacy rulemakings are prime examples of how Chair Khan is issuing rules to score political points rather than protect consumers.

 Under Chair Khan, the FTC has abandoned its mission and has exceeded its constitutional powers.  The agency has made it its mission to block mergers based on their size rather than the benefits or harms consumers would face.  The FTC is also issuing blanket proposed rules that would affect every industry and put valuable IP at risk.  Unfortunately, with the departure of Republican commissioner Christine Wilson, a longstanding protector and proponent of the consumer welfare standard, there is no longer a voice at the agency to call out the wrongful policies being promoted by the current chair and supported by the remaining Democratic commissioners. 

Thankfully, the Supreme Court’s April 14, 2023 unanimous decision in Axon v. FTC will allow constitutional challenges against the FTC to proceed in federal district courts.  This should have an impact on the ability of the agency to run roughshod over the economy, taxpayers, and consumers.

Congress should reject the bloated proposed budget and stop the FTC from getting more power or funding to promote misguided and damaging policies.  Increased oversight is a far better way to protect consumers and taxpayers, and members of Congress should continue to insist on greater accountability and transparency from Chair Khan and her agency.

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