The FTC Has Given Up on Consumers

It is not often that federal agencies make front-page news.

Yet, that is what happened last week when the Federal Trade Commission (FTC), now led by big-tech skeptic Lina Kahn, voted 3-2 along party lines to rescind a 2015 Statement of Enforcement Principles Regarding “Unfair Methods of Competition.” The 2015 statement committed the FTC’s enforcement decisions to be guided by “the promotion of the consumer welfare standard.” While few outside the antitrust world will know the nuance of the FTC’s statement, its withdrawal will mean the agency is emboldened to recklessly attack big tech and go after other organizations for partisan gain.

Consumers should rightly be worried.

Back in 2015, the FTC, led by Obama appointee Edith Ramirez, issued a bipartisan Statement of Enforcement Principles Regarding “Unfair Methods of Competition” that not only placed the consumer welfare standard at the heart of enforcement but also pledged that enforcement decisions would be “evaluated under a framework similar to the rule of reason, that is, an act or practice challenged by the Commission must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justification.”

The statement also stated that the agency would be “less likely to challenge an act or practice as an unfair method of competition on a standalone basis if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm arising from the act or practice.”

These principles ensured that consumer welfare would be at the center of decision-making when enforcing America’s antitrust laws, not a reflexive and outdated “big is bad” mentality.

After resending the 2015 statement, the FTC will now be encouraged to investigate what it imprecisely determines are “unfair methods of competition,” even if they enhance consumer welfare. Additionally, the FTC decided that any commissioner can begin an investigation into unfair competition, whereas previously, a majority vote was needed. Finally, the FTC Chair, currently Lina Kahn, will be allowed to issue subpoenas unilaterally.

These new provisions point to the likelihood of an increasingly aggressive FTC with significantly expanded powers to reign in big tech based on partisan concerns, political ideology, and operating an outdated presumption that big is bad.

Following the vote, the Democratic majority released a statement saying rescinding the 2015 enforcement principles was “a critical tool that the agency can and must utilize in fulfilling its congressional mandate to condemn unfair methods of competition.” The Republican minority, on the other hand, released a dissenting opinion that warned abandoning the consumer welfare standard in favor of a big is bad mentality would leave consumers facing “higher prices, less innovation, and reductions in quality.”

For consumers, the revocation of the 2015 principles will mean significant harm will be inflicted upon them. It will also mean that political appointees at the FTC can inject their partisan agendas into antitrust enforcement. For example, any Democratic appointee will be able to initiate antitrust investigations simply for believing a company is too large, and any Republican appointee will be able to start an antitrust investigation for alleged bias and censorship.

In either case, settling political scores, not consumer welfare, will be prioritized.

Under the nebulous term of unfair competition methods, practices such as self-preferencing, using consumer data not available to competitors, merging with other companies, and preinstalling software could see companies facing an antitrust investigation. Importantly, these investigations would not consider the array of benefits these practices provide for consumers.

Over the last decade, big tech companies have engaged in the aforementioned behaviors to improve consumer welfare. Amazon routinely self-preferences its own AmazonBasics range, providing consumers with low price high quality goods, Google preinstalls its popular Chrome browser and maps service to its products, Microsoft regularly purchases smaller companies to enhance its product range, and Apple routinely uses consumer data to ensure it is offering cutting edge and in-demand customized services. While these services may hurt competition, they ultimately enhance consumer welfare.

While cracking down on big tech might be politically expedient and broadly popular among the general public currently, the FTC’s decision to rescind the bipartisan 2015 Statement of Enforcement Principles Regarding “Unfair Methods of Competition” will only result in lost consumer welfare. The provisions could see big tech companies penalized for engaging in behaviors that have granted consumers lower prices and access to a wide variety of goods and services.

More concerning is that, by rescinding the 2015 statement, it is blatantly obvious that the FTC no longer regards consumers as a priority when it comes to enforcing antitrust laws. Rather, they are defaulting to a “big is bad” mentality and allowing antitrust statutes to be used to settle political scores.

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