How Trump 2.0 is changing the FTC, and what it means for Big Tech
Since President Donald Trump took office in January and replaced former FTC Chair Lina Khan with Andrew Ferguson, the U.S. Federal Trade Commission (FTC) has undergone a series of changes. Analysts have expressed concern that this change in leadership could provide Big Tech firms with excessive freedom, potentially leading to negative impacts on the internet experience for users worldwide.
What is the FTC's role?
The Federal Trade Commission (FTC) is an antitrust agency that regulates businesses and safeguards consumers to uphold American laws. It enforces new regulations to protect both consumers and employees, takes action against mergers that could lead to unfair competition, and initiates lawsuits against companies suspected of violating the law.
The FTC is headed by five commissioners, who are nominated by the U.S. president and confirmed by the Senate. To ensure a balanced perspective, no more than three commissioners can belong to the same political party. The president appoints one of the commissioners as the Chair.
What is Lina Khan's legacy at the FTC?
During former U.S. President Joe Biden's term, the FTC was chaired by Lina Khan, who was celebrated for her paper on Amazon's increasing dominance. Ms. Khan was perceived as a staunch advocate who sought strict regulations on mergers and acquisitions by Big Tech firms.
Under her leadership, the FTC initiated legal actions against Nvidia for its $40 billion merger with Arm, sought to prevent Microsoft's $69 billion acquisition of Activision Blizzard, attempted to halt Meta's acquisition of the virtual reality startup Within Unlimited, and reviewed Meta's acquisitions of Instagram and WhatsApp. While these legal efforts to curb Big Tech's influence, except for the Nvidia-Arm deal, were unsuccessful during her tenure, they effectively sent a strong message to Big Tech companies. Notably, the Nvidia deal was ultimately canceled by the companies.
In September 2023, the FTC, along with 17 state attorneys general, filed a lawsuit against Amazon, alleging that it was illegally maintaining a monopoly power. Additionally, another FTC case focused on Amazon's alleged use of deceptive practices, known as dark patterns, to enroll users in its Prime service.
How is the agency changing under Mr. Trump?
After Mr. Trump took office in January, he appointed Andrew Ferguson as the FTC Chair, who expressed his commitment to Mr. Trump's 'deregulatory' agenda. Subsequently, Mr. Trump fired the two Democratic commissioners, Alvaro Bedoya and Rebecca Kelly Slaughter, leading them to sue Mr. Trump in response. Notably, some prominent Democrats, including Ms. Khan, also alleged that the firings were illegal.
On the contrary, Mr. Ferguson, a Republican who had been nominated to the FTC by Mr. Biden, endorsed the firings. He asserted that Mr. Trump possessed the constitutional authority to dismiss commissioners and claimed that this action was 'essential to uphold democratic accountability for our government.'
As a result, the FTC appointed Republicans Melissa Holyoak and Mark R. Meador as commissioners. Consequently, the once bipartisan FTC was transformed into a 3-0 Republican majority.
How is Mr. Ferguson leading the FTC?
In a CNBC interview on March 13, current FTC Chair Mr. Ferguson distanced himself from the regulatory 'uncertainty' he perceived under Ms. Khan. He stated that he would either litigate or 'get out of the way.' However, he acknowledged the difficulty in dropping his predecessor's enforcement actions due to the 2-2 composition of the commission. Just days after this comment, Mr. Trump fired the two Democratic commissioners.
The changes at the FTC suggest a more lenient approach to business regulation as the independent agency now comes under Mr. Trump's direct control. Nevertheless, this does not imply that ongoing cases will be automatically dropped, despite tech billionaires like Meta CEO Mark Zuckerberg lobbying Mr. Trump and echoing the president's anti-DEI talking points.
In some cases, including the one against Meta, the agency has been showing bipartisan solidarity against Big Tech firms. The FTC's ongoing lawsuit against Meta over the company's WhatsApp and Instagram acquisitions was initiated during Mr. Trump's first term. After a judge rejected it, the complaint was revised and resubmitted by the FTC under Mr. Biden.
In another instance, on May 22, the FTC announced it was dropping the case against Microsoft's $69 billion acquisition of Activision Blizzard, citing lack of public interest.
The FTC is also scheduled to take on Amazon in court this September over its Prime subscription. In a separate statement, Mr. Ferguson emphasised that the Trump-Vance FTC will never back down from taking on Big Tech.
But, despite Mr. Ferguson's assurances, there are concerns that the FTC is rattled by Mr. Trump's spending cuts as a result of Elon Musk's DOGE-related layoffs.
Will the FTC stop Big Tech firms from breaking antitrust laws?
Mr. Ferguson has affirmed his commitment to upholding American antitrust laws, regardless of his personal or political beliefs. But a complete Republican majority at the FTC contradicts his claims.
Furthermore, the FTC has requested information from Media Matters, a left-wing watchdog that monitors right-wing misinformation, regarding its communications with groups researching hate speech or misinformation, per a report by Reuters. This request comes after Elon Musk-owned platform X had previously sued the group for its coverage of hate speech on platform X.
Trump's FTC also pushed to July the previously delayed enforcement of the 'click-to-cancel' rule proposed in 2023 by the previous FTC. This rule aimed to protect internet users from being trapped in hard-to-cancel subscriptions. Fired commissioner Mr. Bedoya and fellow commissioner Ms. Slaughter had stated that they would have voted against this delay.
Despite these developments, the FTC under Mr. Trump is proceeding with a Biden-era antitrust probe into Microsoft, Bloomberg reported. The upcoming Amazon cases will also reveal whether Trump's FTC can independently uphold the law or if it has become a Republican arm of the government that will favor the e-commerce giant.
Even though the bipartisan FTC has been dismantled, there is still strong Republican support for Big Tech regulation. For instance, Vice President J.D. Vance, who in the past cautiously praised Ms. Khan's approach to Big Tech regulation, is a Republican politician who supports Big Tech regulation.
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