The FTC Declares War On Innovation

When Lina M. Kahn, Associate Professor of Law at Columbia University, was sworn in as Chair of the Federal Trade Commission (FTC), she pledged to “protect the public from corporate abuse.” Unfortunately, in fulfilling this promise, the FTC has turned an increasingly skeptical eye toward mergers and acquisitions, arguing they hurt competitors, the marketplace, and consumers. Aside from the fact that antitrust law has traditionally focused on consumer harm, this increased hostility at the FTC over mergers and acquisitions will disrupt the innovative technology ecosystem that generates significant benefits for American consumers. In disrupting this ecosystem, Chair Kahn’s FTC has declared war on innovation, American consumers, and the competitive marketplace that rewards success.

Recently, the FTC has intervened in pro-consumer business activities by seeking to block two acquisitions involving Microsoft and Meta, the parent company of Facebook. These interventions are unsurprising given public and political vitriol directed toward large technology companies, and Chair Kahn’s public embrace of a “big is bad” approach to antitrust enforcement.

Antitrust enforcement has centered around two competing visions. The first, which traces its origins back to the progressive era, assumes the existence of big companies always harm competition, markets, and consumer interests. Such an approach, colloquially known as “big is bad,” has influenced recent legislative proposals, such as the American Innovation and Choice Online Act, the Open App Markets Act, the Journalism Competition and Preservation Act, and the Platform Competition and Opportunity Act. This approach has gained new traction with the neo-brandeis movement, which is similarly hostile to large companies but seeks to inject public interest into the debate, forcing courts to consider “a variety of social and political goals,” not just consumers or competition.

The competing vision of antitrust enforcement is the consumer welfare standard, articulated by Robert Bork and later adopted by the U.S. Supreme Court. Under the consumer welfare standard, “business conduct and mergers are evaluated to determine whether they harm consumers in any relevant market. Generally speaking, if consumers are not harmed, the antitrust agencies do not act.” For example, the consumer welfare standard guided the Department of Justice’s Antitrust Division to approve airline mergers in the early 2000s. Specifically, it became clear to regulators that larger airlines could create efficiencies “in airport operations, information technology, supply chain economics, and fleet optimization that will benefit consumers” through lower ticket prices.

Deferring to the dated big is bad approach to antitrust enforcement, FTC recently announced its intention to block Microsoft’s $69 billion purchase of Activision, creator of the popular Call of Duty series. The FTC expressed concern that “Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.” These concerns existed despite a promise from Microsoft to make Call of Duty available to rivals Sony and Nintendo under a legally enforceable agreement.

Additionally, the FTC is seeking to block Meta’s acquisition of Within, the developer of Supernatural, a popular virtual reality fitness application. In its lawsuit, the agency argued, “Meta is trying to buy its way to the top” instead of competing. Since announcing its opposition to the acquisition, the FTC has since narrowed its complaint, acknowledging that Meta and Within Unlimited are not direct competitors. Similarly to the case against Microsoft, the FTC is grounding its case in speculation and an outdated ideology that reflexivel