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‘Irrevocably Tainted’

Meta Seeks Khan's Recusal in FTC’s Virtual Reality Case

FTC Chair Lina Khan should recuse herself from the agency’s lawsuit against Meta’s acquisition of Within Unlimited because her publicly aired opinions “irrevocably tainted” the case, Meta argued Friday in 5:22-CV-04325 before the U.S. District Court in San Jose. Senate Democrats defended her willingness to hold Big Tech accountable and name executives in complaints, in interviews last week.

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Khan made numerous public statements that “demonstrate her bias against Meta and prejudgment that Meta can never be allowed to acquire another company,” the company argued in its filing: Her vote to bring the case and participation as an FTC adjudicator “irrevocably tainted” the lawsuit and related administrative proceeding, “such that any order enjoining or prohibiting the Within acquisition cannot be entered or survive appeal as a matter of law.” Facebook unsuccessfully sought Khan’s recusal in the agency’s case against the company’s alleged social network monopoly (see 2201110071).

Meta cited work Khan did with the Open Markets Institute before joining the agency, in which she recommended the FTC ban all Facebook deals for at least five years, and her other statements asking the agency to block deals. The company cited her Twitter activity in 2020 before she joined the agency, in which she “prejudged” Meta’s “entire acquisition strategy as unlawful” and urged enforcers to block deals. Meta cited her statements accusing the platform of amplifying “fake news,” conspiracy theories and bot-generated content. Khan “has made a career of targeting Meta,” the company said. “She has maintained, consistently and very publicly, that Meta is a serial antitrust violator that must not be allowed to acquire other companies.” The agency declined comment, referring to the docket in the case.

Khan recently told the Senate Judiciary Committee it’s a priority for her to name executives in complaints to ensure stronger enforcement and deter illegal behavior (see 2209200075). “She’s not prejudging the outcome, but she understands that most of the past penalties have been a tap on the wrist, not even a slap,” Senate Consumer Protection Subcommittee Chair Richard Blumenthal, D-Conn., told us. “The real way to get attention is to hold corporate officers accountable.” The hearing included testimony from Twitter whistleblower Peiter Zatko, who claimed Twitter misled the public about its data security and data sharing practices.

Asked about a potential investigation of Twitter, Senate Intellectual Property Subcommittee ranking member Thom Tillis, R-N.C., told us: “I do think that we’ve got a broader problem. I’m not just going to pick on Twitter, but a broader problem that for some reason we can’t quite get Congress to move on, so the FTC is really the only other alternative. Between the jurisdictional issues and everything else up here, we just don’t seem to make headway here.” Asked about a potential proposal to create a new agency focused on tech industry enforcement (see 2209160053), Tillis said, “I hate new agencies.”

Sen. Brian Schatz, D-Hawaii, addressed the potential FTC investigation of Twitter. Khan in the hearing didn’t confirm whether the agency is looking into the company’s data security allegations over whether it violated a 2011 consent decree. “We empower the expert agency and let them” make those determinations, said Schatz.