FTC leader bypassed ethics official’s recusal request on Meta case

Federal Trade Commission Chairwoman Lina Khan dismissed the advice of the agency’s ethics official on a case involving Facebook’s parent company, Meta.

The Biden-appointed leader’s decision to reject the agency’s internal advice raises fresh questions about the candor of Ms. Khan’s testimony to Congress in April.

Ms. Khan’s conduct involving the FTC’s interactions with Big Tech has been heavily scrutinized. She helped drive away the last Republican commissioner at the FTC, and Congress raised questions.

The FTC’s mission includes protecting people from businesses’ unfair methods of competition, and it challenged Meta’s acquisition of the virtual reality platform Within Unlimited last year. Meta then requested Ms. Khan recuse herself from the matter, and the FTC rejected that request.

Ms. Khan’s previous commentary about Facebook created the appearance of a conflict in the eyes of the FTC’s Designated Agency Ethics Official Lorielle L. Pankey, according to Internal documents obtained by Bloomberg.

The ethics official recommended Ms. Khan’s recusal in an August 2022 memo to then-FTC commissioner Christine Wilson published on Friday.

“From a federal ethics perspective, I have strong reservations with Chair Khan participating as an adjudicator in this proceeding where — fairly recently, before joining the commission — she repeatedly called for the FTC to block any future acquisition by Facebook,” Ms. Pankey wrote in the memo. “In my view, such statements would raise a question in the mind of a reasonable person about Chair Khan’s impartiality as an adjudicator in the commission’s Meta/Within merger review.”

Ms. Pankey wrote that if Ms. Khan did participate in the matter, it would not necessarily be a federal ethics violation.

Ms. Khan did not heed the ethics official’s advice to recuse herself. In an internal November 2022 memo published by the FTC, Ms. Khan said her prior remarks on Facebook did not meet a legal standard for demonstrating she had made up her mind about the case involving Meta.

A federal judge rejected the FTC’s case against Meta’s acquisition earlier this year, and the agency dropped its internal review amid mounting scrutiny, including on Capitol Hill.

Rep. Cathy McMorris Rodgers, Washington Republican, pressed Ms. Khan in April to explain whether she followed advice from the FTC’s designated agency ethics official.

“Are there any instances where you’ve not followed DAEO’s advice, yes or no?” Mrs. Rodgers asked at a House Energy and Commerce Committee hearing. “Could you list any?”

“No, I’ve, in instances where companies like Facebook or Amazon have petitioned for my recusal, I have consulted with the DAEO and have taken actions that are consistent with the legal statements that the DAEO has made,” Ms. Khan answered.

The last remaining Republican commissioner at the FTC listed Ms. Khan’s handling of the Meta case as helping to prompt her departure from the agency. Ms. Wilson left the FTC earlier this year over concerns about what she labeled Ms. Khan’s “lawlessness.”

The FTC did not immediately respond to a request for comment on Saturday.