Khan: Meta Decision Disappointing but Could Help Future Cases

It’s disappointing the FTC failed to block Meta’s acquisition of Within, but the ruling against the agency could help the FTC bring other competition cases involving digital markets, FTC Chair Lina Khan said Monday.

The agency abandoned its lawsuit after the U.S. District Court for the Northern District of California found a lack of evidence for the case to move forward (see 2302060007). “That’s a good example of a case that didn’t go the way we wanted but really did lay out a map and showed the way for continuing to bring potential competition cases, especially in digital markets and especially in nascent markets,” Khan said during a joint FTC-DOJ enforcers summit.

The agency “wanted to win” and believed the facts were on its side, she said: “That opinion has a whole set of justifications, explanations that really do mark the programmatic advance for us.” Khan listed several aspects of the ruling she said will work in favor of the agency moving forward. She noted U.S. District Judge Edward Davila said rapid entry into a nascent market doesn’t prove there isn’t concentration in that market. “That’s significant,” said Khan: Defendants looking to combine often argue that because there’s a lot of fluidity and dynamism, there’s no concentration problem.

It was “significant” that Davila wrote that a plaintiff doesn’t need to make a case on “practical indicia” and also pass a hypothetical monopolist test, Khan said. She noted the court’s finding that “reasonable probability” is enough as a standard when a plaintiff is trying to assess the likelihood a nascent company would have been a potential competitor, she said: That’s a lower standard than what some other courts have adopted.

The FTC scored points in showing the competition doctrine is “alive and well,” Khan said. Meta argued it’s a stale doctrine that “doesn’t exist and shouldn’t be applied in this market. The judge "forcefully rejected that,” she said. While the agency is focused on the cost of setting bad legal precedent, it’s also focused on the cost of “not creating any precedent at all,” she said. Stale doctrine is an issue for enforcers, she said: “If you’re not pushing the courts to engage on how these statutes apply in the new economy, you get doctrine that is stale.”

AI is top of mind at the agency, Khan said, noting the FTC’s recent guidance on false and deceptive claims in relation to AI efficacy. High error rates, discrimination and companies overstating AI capacity are issues the agency is focused on, she said. She noted the agency’s guidance that upstream developers and manufacturers of AI tools can be held liable if the technology is “effectively designed to deceive users.” The agency recently launched an inquiry into competition concerns surrounding cloud computing. When technology shifts into these new areas, that’s when incumbents “start to panic,” she said. That’s the “lesson of Microsoft” and when products shifted from desktop to mobile, she said: “You see the incumbents having to resort to anticompetitive tactics to protect their moats and protect their dominance.”

The most profound developments in technology today involve data and AI, said DOJ Antitrust Division Chief Jonathan Kanter. For more than a year, DOJ has focused on building “core competency” in AI by hiring technologists and data scientists, he said. The department isn't making a “value judgment” on whether “these technologies are good or bad,” he said: DOJ needs to understand how the technology works and where “potential competitive chokepoints exist,” so agencies can enforce the law effectively.