Khan faces first congressional grilling as FTC chair

With help from Leah Nylen, Leonie Cater and Sam Sabin

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— FTC fireworks? Lina Khan is testifying before Congress today for the first time since becoming FTC chair. Expect tough questions for her and her fellow commissioners — especially amid uncertainty about the agency’s antitrust case against Facebook.

— Show me the data: Prominent House and Senate lawmakers are demanding that Facebook reveal the extent and spread of vaccine-related falsehoods on its platform.

— And show me the money: As Facebook reports its earnings today, we may get a glimpse at how much Apple’s new data privacy regime has harmed the social network.

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FTC COMMISSIONERS MAKE HOUSE E&C CAMEO — Leaders of the country’s chief consumer protection agency will face questions this morning from lawmakers on a House Energy and Commerce subpanel on everything from antitrust and new pandemic-era scams to more than a dozen FTC-related bills. The star witness will be Lina Khan, who is testifying in person before Congress for the first time since becoming (the youngest-ever) FTC chair. Here’s what to look out for:

— From the FTC: The commissioners will emphasize how badly the FTC’s ambitions have been undermined by a Supreme Court ruling in April that took away one of the agency’s most effective mechanisms for punishing unlawful business conduct — its so-called 13(b) authority. Until recently, the agency could use that power to force companies to pay back customers or surrender profits when commissioners find they have broken consumer protection or antitrust laws.

“Unless the agency has clear authority to obtain monetary relief, this [SCOTUS] decision will continue to impede our ability to provide refunds to Americans harmed by deceptive, unfair, or anticompetitive conduct,” the commissioners say in their joint prepared testimony. “Restoring the FTC’s power to seek injunctions and monetary relief is critical to our work.”

Members of the commission, which has long been strapped for resources and became even more inundated during the pandemic, will also ask the House panel for additional money. Khan and Rohit Chopra plan to attend in-person, while the agency’s three other commissioners, Christine Wilson, Noah Phillips and Rebecca Slaughter, will testify virtually.

— From the lawmakers: Members of the panel will be able to ask the commissioners about a bevy of legislative proposals from the subcommittee — some meant to boost the FTC’s power (giving it rulemaking or independent litigating authority, for example) and others that would limit it (such as by capping the length of the FTC’s consent decrees). Backers of the proposals say they’re all aimed at protecting consumers.

— The privacy subtext: Congressional Democrats have long said the FTC needs to be better on privacy, so don’t be surprised if they hammer that point home today and criticize the FTC as weaker than its other consumer protection peers. (It’s worth noting that in the absence of federal privacy legislation from Congress, some of the Democratic bills in today’s lineup would theoretically help the agency become a stronger privacy regulator.)

Republicans, meanwhile, may double down on recent calls for the president to prioritize privacy legislation and for lawmakers to convene a hearing on it. “Considering proposals on the agenda today were part of our bipartisan privacy negotiations last Congress, I’ll be listening for ways the bills being considered can be adapted into a national privacy standard,” E&C’s top Republican, Rep. Cathy McMorris Rodgers (R-Wash.), plans to say, per remarks shared with MT.

— And reading between the lines on competition: The hearing is supposed to be about the FTC’s consumer protection side, but don’t be surprised if Khan (and others) get questions on Facebook and whether the FTC chair plans to recuse herself from the agency’s antitrust case against the tech giant.

Republicans may also raise concerns about the agency’s decision to require all mergers to undergo 30-day reviews instead of terminating scrutiny of non-controversial deals early. GOP lawmakers are also unhappy about recent procedural changes that Sen. Mike Lee (R-Utah) and others have assailed as “diminishing the role of minority commissioners.”

FROM CONGRESS, WITH LOVE — Facebook is getting an earful from lawmakers after top Biden administration officials, misinformation experts and advocacy groups complained that the company has been less than forthcoming about the prevalence of vaccine misinformation on its platform — particularly as the Delta variant of Covid-19 sweeps the country and vaccination rates plateau.

One common grievance has been that while Facebook maintains that billions of its users have seen “authoritative” information about Covid-19 and vaccines, the company has not been upfront about how many people have seen the opposite. (“What we get are rosy pictures without a real honest conversation about what the dark side of this is,” a White House official said last week about the Facebook data.) The company has also taken steps that critics say will make that information harder to find. Facebook did not respond to a request for comment.

— Mail for Mark: Sen. Bob Menendez (D-N.J.); Rep. Jan Schakowsky (D-Ill.), chair of the E&C consumer protection panel that convened today’s hearing; and Rep. Anna Eshoo (D-Calif.), chair of E&C’s health subcommittee, sent missives to the Facebook CEO this week demanding more — and better — data on the scope of mis- and disinformation related to Covid vaccines.

— Menendez demanded that Facebook “make public all data pertaining to vaccine misinformation” by Aug. 10, arguing that the dearth of data “is part of a larger practice on the part of your company of refusing to provide straightforward answers to Congressional inquiries.” (In the memo, he listed several instances where Facebook either would not respond to his questions or appeared to dodge them.)

“It is ironic that a company that encourages its users to share the innermost details about their lives, refuses to share the most information about its practices,” Menendez added.

— Schakowsky and Eshoo, meanwhile, threw their weight behind an investigation by D.C. Attorney General Karl Racine into whether Facebook’s handling of coronavirus misinformation has violated consumer protection laws. Racine recently subpoenaed Facebook for records related to the matter, calling on the tech giant to share the findings of a purported internal study on pandemic mis- and disinformation. The two lawmakers piggybacked on those demands.

Echoing Menendez, Schakowsky and Eshoo added: “Your failure to meet Mr. Racine’s deadline is just the latest in a long line of failures to disclose or act upon internal research that outlines Facebook’s role in the spread of misinformation and disinformation.” They, too, asked for answers on how many people saw Covid-19 misinformation — and how much advertising revenue was generated from it — by late August.

— A Khan-related wrinkle: Schakowsky has pledged not to take meetings with companies that have asked for Khan to be recused from FTC cases, as Facebook has. So those responses will need to be submitted in writing.

A RELATED TECH QUOTE DU JOUR — In remarks to the intelligence community on Tuesday, President Joe Biden expressed alarm at the spread of “rampant disinformation” — and offered a disquieting hint about what might be coming. “Look what Russia is doing already about the 2022 elections and misinformation,” he said, citing Tuesday’s edition of the classified President’s Daily Brief. “It’s a pure violation of our sovereignty.”

NEXT UP FOR FACEBOOK — The social media giant reports its earnings at 5 p.m. ET today. Listen for top brass to comment on how its online advertising business is doing after Apple imposed privacy changes this spring that make it easier for consumers to opt out of tracking across apps. Facebook CFO David Wehner said in April that the company expected the Apple update “to begin having an impact in the second quarter.” (On Apple’s own earnings call Tuesday afternoon, CEO Tim Cook stressed that user privacy “is a fundamental human right.”)

— Also listen for remarks from Facebook about how the uncertain state of transatlantic data transfers may be affecting its operations in the U.S. and Europe.

ALL ABOUT THE BENJAMINS — The average cost to recover from a data breach reached an all-time high in the past year at $4.24 million per incident, as companies shifted to remote work during the pandemic, according to IBM Security’s annual Cost of a Data Breach report, released earlier today. For companies in the health industry, those costs averaged $9.23 million per incident.

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Silicon Valley’s work-from-anywhere ethos gives it a leg up in the talent war: “Now that a software engineer or marketing guru can work from a creekside cabin while still pulling down big bucks from Facebook or Salesforce, smaller firms far from the coasts are feeling the pinch,” WSJ reports.

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Eyeballs watching emoji: The Pentagon may expand its footprint in Silicon Valley, POLITICO reports.

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