‘Unthinkable’: FTC’s work with foreign regulators under fire from Congress

Federal Trade Commission Chairwoman Lina Khan is under fire for allegedly colluding with foreign regulators to cramp American businesses with rules crafted by European officials.

Federal lawmakers have concerns Ms. Khan is deliberately circumventing the U.S. lawmaking process to impose her own political agenda, and Sen. Ted Cruz is digging into Ms. Khan’s work with European regulators.

The Texas Republican wrote to Ms. Khan this week demanding an explanation for using taxpayer funds to support European regulatory efforts that he said may gut Americans’ life savings.

“It is one thing for the EU to target U.S. businesses, however misguided such efforts may be,” Mr. Cruz wrote. “But it is altogether unthinkable that an agency of the U.S. government would actively help the EU do so.”

Mr. Cruz said two European Union-approved laws, the Digital Markets Act and the Digital Services Act, hit the U.S. hardest while leaving European and Chinese competitors unscathed. The FTC, which is focused on competitive harms from businesses, dispatched officials to Brussels earlier this year to help implement the rules.

The two laws, agreed to last year, place requirements on Big Tech companies and online service platforms. But Mr. Cruz said the restrictions hammer the U.S. while allowing Europe and China to mostly operate as usual. U.S. companies operate 16 of the 19 online platforms affected under the Digital Services Act rules, Mr. Cruz said.

“Your agency’s collusion with foreign governments not only undermines U.S. sovereignty and Congress’s constitutional lawmaking authority, but also damages the competitiveness of U.S. firms and could negatively affect the savings of millions of Americans who hold stock in those companies via retirement savings accounts and pension plans,” Mr. Cruz wrote.

Ms. Khan has unsuccessfully targeted American Big Tech companies over antitrust concerns, losing battles to block mergers by Facebook and Microsoft. Mr. Cruz said the U.K. took action to try and stop a Microsoft acquisition opposed by Ms. Khan soon after she met with U.K. regulators.

Mr. Cruz demanded answers from Ms. Khan about her agency’s actions before Congress returns to work in Washington next month.

The Texas Republican is not the first lawmaker to scrutinize whether Ms. Khan is deliberately looking to force rules on businesses that she has not persuaded Congress to adopt.

Rep. Kevin Kiley, California Republican, questioned Ms. Khan last month about whether she was intentionally picking losing legal fights to create the appearance of insufficient laws.

“You’re actually bringing the cases,” Mr. Kiley said at a House Judiciary Committee hearing. “You’re losing because you don’t have the authority that you want from Congress, so this is how you think you’re going to persuade Congress to give you more authority — is by exceeding the authority that you now have?”

“We only bring lawsuits where we believe there is a law violation given the facts in the law at hand,” Ms. Khan answered. “We fight hard when we believe that there is a law violation and unfortunately things don’t always go our way.”

The Judiciary Committee, House Energy and Commerce Committee and the House Oversight and Accountability Committee are all investigating Ms. Khan’s work.

Lawmakers are probing Ms. Khan’s leadership and judgment, in the wake of a mass exodus of staff and the departure of all Republican FTC commissioners. More than 120 employees left the regulatory agency within a year of Ms. Khan’s 2021 confirmation.

Ms. Khan, however, appears undeterred. She is advocating for the Biden administration’s proposed rewrite of merger rules that are under development and formally announced a new leader of the FTC’s Bureau of Competition. Ms. Khan said Tuesday that Henry Liu, formerly a partner at the Washington law firm Covington & Burling, was joining her team.

The FTC said Wednesday it received Mr. Cruz’s letter but declined to comment on it.