FTC Memo Details Plans To Combat ‘Root Causes’ Of Big Tech Dominance

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An internal memo published by the Federal Trade Commission (FTC) Thursday detailed Chairwoman Lina Khan’s vision for antitrust enforcement, including plans to target several of Big Tech’s business practices.

The memo, sent to FTC commissioners and staff, titled “Vision and Priorities for the FTC,” outlined several key antitrust enforcement areas Khan sought to prioritize, including addressing “root causes” of monopolies, considering the harm of anticompetitive conduct on workers and other businesses, and focusing on “next-generation technologies.” Although Khan did not identify any of the major tech companies by name, she highlighted several allegedly anti-competitive business practices that have been the subject of tech antitrust litigation.

She wrote the agency will begin “taking aim at the ways in which certain contract terms, particularly those that are imposed in take-it-or-leave-it contracts, constitute unfair methods of competition or unfair or deceptive practices.”

Most social media companies’ privacy and terms of service policies are consented to by “take-it-or-leave-it” contracts, where the user either agrees to the social media platform’s terms or does not use the service. The contracts came up in the data privacy lawsuit Smith v. Facebook, in which plaintiffs argued Facebook’s terms of service were so long and vague that users who agree to them are not meaningfully consenting to the tech company’s terms.

Khan also took aim at exclusionary contracts, writing they were a chief area of concern for the agency. (RELATED: FTC Orders Big Tech Companies To Provide Operations Data)

Apple CEO Tim Cook speaks during a product launch event on September 12, 2018, in Cupertino, California. (Photo by NOAH BERGER/AFP via Getty Images)

Apple CEO Tim Cook speaks during a product launch event on September 12, 2018, in Cupertino, California. (Photo by NOAH BERGER/AFP via Getty Images)

“Non-competes, repair restrictions, and exclusionary clauses are just some of the terms we have heard about in our public comments,” Khan wrote. “Consumers, workers, franchisees, and other market participants are at a significant disadvantage when they are unable to negotiate freely over terms and conditions.”

Both Apple and Google are currently contesting lawsuits over their app store terms of service which require developers to use the tech giants’ payment systems for in-app purchases, on which the companies collect a commission. The FTC’s own antitrust complaint against Facebook alleges there are exclusionary clauses in the tech giant’s contracts with app developers that help Facebook maintain its monopoly.

“The terms of Facebook’s agreements with app developers, including as changed over time by Facebook policy updates, themselves impacted app developers’ incentives and ability to compete,” the complaint read, arguing the contracts were written for the purpose of “extinguishing potential competitive threats and maintaining monopoly power.”

The FTC has also previously targeted Apple specifically as guilty of imposing harmful and anti-competitive restrictions on how consumers can repair their Apple devices.

Khan went on to argue that the FTC should adjust its approach to antitrust enforcement and focus on researching and understanding new technologies and markets.

“We should broaden our institutional skillsets to ensure we are fully grasping market realities, especially as the economy becomes increasingly digitized,” Khan wrote.

Khan was a vocal critic of Big Tech prior to joining the FTC, writing a paper titled “Amazon’s Antitrust Paradox” on the need for more muscular antitrust enforcement in digital markets. Both Amazon and Facebook have asked Khan to recuse herself from FTC matters related to the companies due to her views on Big Tech.

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