Yesterday, three of TechFreedom’s policy experts delivered remarks at the FTC’s March Open Commission Meeting. Their oral remarks are presented here, lightly edited for clarity.

Remarks of Berin Szóka, President of TechFreedom:

I’m Berin Szóka, President of TechFreedom. 

In 1914, one lawmaker promised that the FTC Act would take “business matters out of politics.” Yet the current Chair says “all [of the Commission’s] decisions are political.”  

In 1935, the Supreme Court said the Commission “must . . . act with entire impartiality.” Yet the current chair has repeatedly ignored concerns about the Commission’s impartiality and her own. 

The Supreme Court also said Congress expected the FTC “to be non-partisan.” But the Commission has been a purely partisan body for the last year—for the first time in its history. Even before the two Republican Commissioners resigned, the Chair ran the agency as if they simply didn’t exist. Most petty was delaying publication of dissenting opinions until after the Commission had issued its press release—so that most media coverage wouldn’t include both sides. 

This is worlds away from the apolitical “body of experts” the Supreme Court described in Humphrey’s Executor. If, as constitutional scholars widely expect, the Court overrules the case, the President could remove Commissioners at will. 

The FTC’s only hope of saving Humphrey’s Executor is to function much more like the FTC of 1935. Minority Commissioners might well lose every vote, but they should at least get a vote, have full access to Commission documents, and not have their dissenting opinions buried. Both sides should want at least this much when they’re not running the Commission—whether or not better process ultimately saves Humphrey’s Executor

Even if Congress can’t stop the President from firing Commissioners, it can require the President to explain his rationale. Since 1864, such a requirement has helped to avoid the removal of any Comptroller of the Currency and has protected agency Inspectors General since 1978. Requiring Congressional hearings would also help raise the political cost of Presidential meddling. 

Now is the time for both such amendments to the FTC Act and for internal process reforms—before we know who will control the FTC for the next four years. If five Commissioners speak with one voice, lawmakers just might listen. 

Remarks of Bilal Sayyed, Senior Competition Counsel at TechFreedom:

Until the Commission’s UMC Statement of Nov 22 is rescinded or revised, I encourage the Commission to apply it outside the scope of the Sherman Act, and only where competitive harm—at least—can be presumed with high confidence. 

The AMERCO matter from 1985 might suggest a good set of facts. There, the Commission alleged, in part, that AMERCO, the parent company of U-Haul, used its holdings of the debt of Jartran, a competitor of U-Haul, to prevent Jartran from reorganizing under Chapter 11 of the Bankruptcy Code. According to the complaint, U-Haul and AMERCO “engaged in acts and practices that were inconsistent with U-Haul’s legitimate interests as a creditor, and in fact were intended primarily to delay or prevent Jartran’s reorganization as a competitor.” 

This is within the more general theory of “cheap exclusion” that runs through cases like Rambus, Unocal, and Biovail during the tenure of Chairman Muris, none of which were standalone Section 5 cases, but which seem at least presumptively anticompetitive without necessarily meeting the requirements of a monopolization claim. 

Separately, today the Commission will discuss the staff’s report on the causes behind supply chain disruptions. One factor that may be relevant is consolidation among non-U.S. suppliers that supply into the United States. 

As the Commission considers the staff’s report, I hope it revisits the Commission-created “foreign-to-foreign” exemption in the HSR Rules, as I proposed at the October 2022 open meeting. In short, acquisitions of a non-controlling interest in a non-U.S. entity, by a non-U.S. person, regardless of the amount of sales into the United States either or both firms have, are exempt from the notice and waiting period requirements of the HSR Act. 

With the U.S. supply chain being substantially foreign-based, this exemption should be reconsidered. 

Remarks of Andy Jung, Associate Counsel at TechFreedom:

Good morning. I’m Andy Jung, Associate Counsel at TechFreedom.  

In February, the Commission asked for further public comment on amending the impersonation rule.  Today, I want to address the elephant in the Zoom room: Section 230. 

The Commission proposes greatly expanding the rule’s scope, first to prohibit impersonation not only of businesses and government officials, but also private citizens. Second, liability would extend “to parties who provide goods and services with . . . reason to know that those goods or services will be used in” unlawful impersonations. The proposed rule speaks of “Means and Instrumentalities” of impersonation but does not provide definitions. 

These broad terms would cover services like Photoshop, as well as generative AI tools, which may be the Commission’s primary target. The Commission proposes penalizing the providers of online services used by third parties to generate impersonations like AI-generated deepfakes. 

But Section 230, a federal law, immunizes Internet services from liability for content they are not responsible for developing. Lawmakers and public policy experts are currently debating to what extent Section 230 immunizes generative AI providers from liability for their tools’ outputs. The courts have not yet ruled on these questions. 

If the FTC issues anything like the proposed rule, it will have to litigate the Section 230 question. Yet the supplemental notice does not discuss or seek comment on Section 230 at all

The Commission should not short-circuit the comment process. Stakeholders can provide feedback on whether the rule is sound policy and help the FTC defend the rule in court if it decides to proceed. Why wouldn’t the FTC want that kind of help?