Lina Khan FTC’s Lawsuits Against Tech Feel Like Targeting

Photo by AlbertHerring, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons

Fair or not, the Biden administration’s FTC is better known as Lina Khan’s FTC. She has had a sweeping agenda in her years as commissioner testing the boundaries through the court system as to just how much authority Congress has actually given the agency.

1. Firms that lure workers with false earnings claims are breaking the law. @FTC has taken action against @Lyft for deceiving drivers about how much they could expect to earn on its platform.

We’ve ordered Lyft to stop this conduct & pay $2.1 million.https://t.co/oQF1KTk3WO

— Lina Khan (@linakhanFTC) October 25, 2024

Yesterday, she announced a proposed settlement with Lyft including a comparatively small $2.1 million fine.

The FTC’s release and even the proposed order agreed to by Lyft is actually short on details relative to Lina Khan’s personal tweets. In them, she says:

… Lyft told potential drivers they could make up to $33/hour in Atlanta and up to $31/hour in Miami. In reality, these figures reflected earnings of the top one fifth of drivers.

How would a reasonable person read a claim that they could earn up to a $31/hour? If it were me, I would assume that such a figure would represent ideal circumstances. “Up to” is the standard sort of language used in advertisements everywhere.  It means “you might get this much, but you probably won’t. If you somehow manage it, consider yourself fortunate.”

If the standard truly were that advertising were required to show typical customers doing typical things instead of merely things that might be technically, perhaps that would make be an improvement to society! If so, however, the FTC should make that case and apply it to all advertising:

• Force McDonald’s to show the typical burger served by one of its restaurants instead of the photogenic artifacts that appear in its commercials
• Force BMW to advertise drivers speeding up and them immediately slowing down repeatedly in heavy traffic instead of professional drivers on a closed circuit track.
• Ford must show four trucks shuttling office workers for every time they show someone using the bed or towing something.
• State lotteries may not advertise “win up to $10,000,000”. Instead, they must say “typical payout of $0.”
• Weight Watchers must show a typical customer’s results rather than celebrity ones.

Needless to say, this would be an upheaval for an industry that tries to get customers to imagine making the best use of the products they advertise. If the aspirations depicted are not typical, does Lina Khan want to ban them?

Another Khan tweet about Lyft reads:

Lyft also enticed drivers by promoting “earnings guarantees,” which supposedly guaranteed that drivers would be paid a certain amount if they completed a specific number of rides in a certain time—like an offer of $975 for completing 45 rides in a weekend..”

She continues:

In reality Lyft would only pay drivers the difference between what they actually earned and Lyft’s advertised guaranteed amount.

We are not provided with an exhibit of the advertisements, but again this seems like a stretch. An “earnings guarantee” sounds to me like “if I do this many rides, I will earn at least $975; if I fail to earn that amount through fares, Lyft will make up the difference.” Yet this is exactly what Khan describes Lyft as having done.

Those of us who work in tech are not really surprised by this seeming unfairness though. Khan’s FTC has seemingly operated in a manner specifically targeting tech. Apple, which owns a small fraction of the global smartphone market stands accused of holding a monopoly in “performance” smartphones—a bizarre category used by no one in the industry and seemingly defined post-hoc so as to make Apple seem a monopoly. (Disclosure: I am an Apple shareholder.)

She has also sued Amazon largely focusing on fees charged to sellers for listing products on Amazon. This is certainly a thing Amazon does. However, most retailers do this in some form. Her complaint argues “Amazon Has Durable Monopoly Power In the Online Superstore Market” and “Amazon Has Durable Monopoly Power In the Online Marketplace Services Market”. These again are tenuously defined. In reality there are plenty of ways for people to buy goods online and there are plenty of ways for sellers to sell goods online.

Amazon controls Amazon.com, of course, so they name the price that comes with listing ones goods there. Among these is that Amazon forces sellers to agree not to undercut their prices elsewhere. This, again, is a practice done by retailers since before the internet and longer than Lina Khan or I have been alive. Somehow Amazon gets this particular exclusive scrutiny though.

These are not the only cases of the FTC seeming to have different standards for tech companies, but they are illustrative. It certainly feels as if tech is being targeted. To some extent we understand why. We cause a lot of change in society without knowing the effects beforehand. Nevertheless, I believe this shows the roots of the dissatisfaction some people have in tech with the current administration.

Edit:

Unfortunately we don’t know which ads the FTC found offensive. However, I have found two ads Lyft has run prior to the agreement that seem to match what Khan describes: