Meta Rebuffed by FTC on Barring Khan From Within Merger Case (2)

The US Federal Trade Commission denied a request by Meta Platforms Inc. to bar Lina Khan, the commission’s chair, from an antitrust case challenging its proposed acquisition of a virtual-reality startup.

The agency voted 2-1 in Khan’s favor, with the Republican on the commission dissenting, according to a court filing on Thursday. The decision will allow the FTC’s case to move forward.

A federal judge in California on Wednesday denied the FTC’s request to block the deal while an in-house trial over the Within Unlimited acquisition moves forward. US District Judge Edward Davila agreed to pause the deal for a week while the FTC decides whether to appeal his ruling, move forward with administrative litigation against the merger after it closes or dismiss the case altogether.

If the FTC moves forward with the administrative case, Khan would be among those deciding its outcome. Meta had objected to her involvement due to statements she’d made in the past about the company and its market power.

The decision regarding Khan’s potential recusal could have implications beyond the Meta-Within case; Amazon.com Inc. has also sought to bar her involvement from cases involving the company, so far unsuccessfully.

Based on the FTC’s rules, “the Commission has determined that disqualification of Chair Khan is not warranted,” FTC spokesperson Douglas Farrar said.

“Given the serious issues of bias raised in our petition, we disagree with this decision,” Stephen Peters, a Meta spokesman, said. “We will continue to vigorously defend this deal and are confident that our partnership with Within will be good for people, developers and the VR space.”

The FTC sued in July to block Meta’s acquisition of Within Unlimited, maker of popular virtual-reality fitness app Supernatural, filing complaints in federal court and in its in-house court. Meta then sought to remove Khan from the case, arguing her public comments about the company indicate she isn’t capable of impartiality. Khan has spoken publicly about her concern that the largest tech companies, including Meta, have too much power.

In its majority opinion, the FTC’s two Democrats said Khan’s experience and knowledge of tech platforms were an important basis for her nomination.

“Depriving the Commission of Chair Khan’s expertise on the intersection of antitrust law and technology would undermine both the interests of the agency as an expert body and the intent of the President who nominated her,” the commission wrote.

In a written dissent, Republican FTC Commissioner Christine Wilson said that Khan’s previous work and public comments would cause a reasonable person to question her impartiality.

“Here, justice demands that Chair Khan be recused from serving in an adjudicative role with respect to the Meta/Within Transaction,” she said.

Read more: Meta Seeks Recusal of FTC Chair Khan in Within Deal Challenge

Khan, who worked as an aide to the House Judiciary Committee’s antitrust probe into the tech platforms before her FTC appointment, declined Meta’s request for recusal. That decision transferred Meta’s recusal petition to her fellow commissioners for a final ruling.

The social-media giant previously sought to bar Khan from participating in a separate monopolization suit filed by the FTC during the Trump administration. Both the FTC and the federal judge overseeing the FTC’s suit rejected that request.

(Updates with Meta comment in seventh graph)

To contact the reporters on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net;
Emily Birnbaum in Washington at ebirnbaum3@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Jon Morgan, Romy Varghese

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