FTC chair issues a warning shot to the tech industry

(CNN Business) The Federal Trade Commission is keeping a close eye on Big Tech as the industry expands into newer technologies such as artificial intelligence and the metaverse.

In an interview with CNN on Wednesday, FTC Chair Lina Khan said regulators risk "fighting yesterday's war" if they fail to comprehend how tech giants might take advantage of societal technology shifts to strengthen their own position, in ways that may violate antitrust laws.

The message is a warning to the tech industry as companies ranging from Facebook-parent Meta (FB) to Microsoft (MSFT) have announced big investments in virtual reality tech, and as AI-powered smart speakers have become ubiquitous (and have already inspired some competitive complaints).

"Dominant incumbent platforms are threatened at moments of technological transition," Khan said. "I think we are now similarly seeing lots of technological transition, via VR and AR contexts, in the cloud, with certain types of voice assistant technologies."

The remarks highlight how expansively the FTC views its mission as Khan seeks to reshape the US government's approach to antitrust. Khan is among the tech industry's fiercest critics, having helped lead a 16-month congressional investigation of the sector and spurred a national debate over Amazon's economic dominance with a Yale Law Journal paper highlighting the company's impact. Last year, President Joe Biden surprised many by not only nominating Khan to be an FTC commissioner, but to lead the agency.

In May, Senate lawmakers filled the commission's fifth and final position after a months-long delay, breaking a 2-2 partisan deadlock at the agency and enabling Khan to embark on more initiatives.

Khan said Wednesday the FTC is focused on three priorities amid a "very full agenda."

Teasing the likelihood of "significant enforcement actions," Khan said the agency is continuing to work with the Justice Department to revamp the country's merger guidelines. It is considering new rules and regulations surrounding anticompetitive business practices, an initiative that Khan said will likely look at restricting the use of noncompete clauses by employers. And the FTC is also considering tougher rules on corporate data collection practices, which Khan said has become part of a wider "commercial surveillance" industry that grew particularly powerful during the pandemic.

"We've seen a lot of concern across the board on how endless data collection could be potentially leading to various harms for Americans," Khan said. "So that's something we're actively considering, alongside ongoing enforcement in that area."

Congress could soon heap even more onto the FTC's plate. Lawmakers are contemplating changes to US antitrust law that would erect new barriers between tech giants' multiple lines of business and, separately, legislation that could establish the country's first-ever national data privacy rights.

While the Commission does not have a direct role in crafting the laws, Khan said the agency is prepared to offer lawmakers the expertise and knowledge of its staff, and called the bipartisan privacy proposal "an important step forward." The draft legislation is viewed as a breakthrough in negotiations that have stretched on fruitlessly for years.

Whatever law Congress may come up with, Khan said, "we stand ready to enforce it."

Even as the FTC seeks to position itself to address future mandates, it still has its hands full with the demands of today. The FTC's signature lawsuit involving the tech industry, an anti-monopoly suit against Meta, is not expected to go to trial until 2024 at the earliest.

Meta has opposed the suit by saying the mergers at issue in the litigation were not opposed by the FTC at the time, and the company has called for Khan to recuse herself from decision-making surrounding the case, citing her earlier work on the congressional investigation of the tech industry. The FTC has previously declined to comment on the request.

Since the suit was first filed during the Trump administration, the social media sector has continued to evolve, with Meta facing a rising threat from the short-form video platform TikTok.

Khan declined to say how TikTok's rapid rise may affect the FTC's allegations that Meta has unlawfully monopolized the market for "personal social networking." But she said it's another example showing how new competitive threats can encourage anti-competitive lawbreaking by dominant companies.

"We have to be mindful that this is, once again, a moment where incumbents could face important competition," Khan said. "And it's up to the antitrust agencies to make sure we are fully enforcing the laws and not allowing these incumbents to unlawfully maintain their monopoly with the use of these technologies."