Commissioner Maureen K. Ohlhausen
83 Geo. Wash. L. Rev. 1999
Published in Connection With the Law Review’s 2014 Symposium “The FTC at 100”
In January 2014, Apple settled with the Federal Trade Commission
(“FTC” or “the Commission”) an unfairness case involving Apple’s processing
of in-app purchases by consumers. This settlement generated three separate
statements from four Commissioners. The Commissioners’ statements
explore how to apply the FTC’s three-part unfairness test, and they diverge
primarily on what factors to weigh in the unfairness analysis. These statements
are the most comprehensive Commission-level discussion of unfairness
analysis since a 1984 case, International Harvester Co. This Essay outlines
the development of the FTC’s unfairness test and then compares how the FTC
applied that test in International Harvester with how the Commissioners applied
it in the Apple, Inc. in-app purchases case, with a particular focus on
what was actually weighed in the cost-benefit analysis in both matters. From
this comparison, I draw two conclusions about the FTC’s modern unfairness
analysis that are as true in International Harvester as they are in Apple, Inc.
First, the “substantial harm” factor is a threshold test, not a balancing test.
Second, when weighing countervailing benefits in the third prong of the unfairness
test, the only benefits weighed are those from the practice at issue:
only the practice’s effects should be considered under the third prong of the
unfairness test and it is inappropriate to weigh other benefits such as the total
benefits of the product or platform itself or benefits of the company’s entire
line of products. Thus, in Apple the majority properly followed the well-established approach
set forth in International Harvester. Departing from International
Harvester’s guidance on applying the substantial injury threshold and on balancing
costs and benefits could inefficiently focus the FTC’s enforcement on
smaller companies and leave significant consumer harms unchallenged.
