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CEO testifies on federal agencies as lawmakers clash on Musk

Axon Enterprise CEO Rick Smith testified that federal agencies like the FTC engage in regulatory overreach and that their power should receive more oversight.

Makenzie Holland
By
Published: 11 Feb 2025

As business leaders testified on regulatory challenges and the need to rein in federal agency power, House Democrats criticized Elon Musk and the Trump administration's cuts to federal agencies.

Axon Enterprise CEO Rick Smith testified Tuesday before the House Judiciary Subcommittee on the Administrative State, Regulatory Reform and Antitrust, detailing the significant hurdles his company faced during a Federal Trade Commission (FTC) investigation into a 2018 acquisition. Axon sued the FTC in federal district court, challenging the constitutionality of the agency's investigative and adjudicative process. In April 2023, the Supreme Court unanimously ruled in Axon's favor and the FTC dismissed its case. Axon develops law enforcement technology, including body-worn cameras.  

Smith said agencies like the FTC should not have the power to act as "prosecutor, judge and jury."

"The unchecked power of the government led to serious consequences for my company, for my employees and deeply for me personally," Smith said. "The agency wields unchecked powers in ways that can crush innovation, stifle economic growth and deny basic constitutional rights."

The Trump administration has waged war against federal agencies and their authority, from freezing the U.S. Agency for International Development (USAID) to halting work at the Consumer Financial Protection Bureau (CFPB), which has cases against firms including Walmart, Capital One and JPMorgan Chase. President Donald Trump also signed an executive order in January launching the 10-to-1 initiative, meaning that for any new rule an agency proposes, it must eliminate ten others.

"It's no secret that regulatory burdens have reached an all-time high," Rep. Scott Fitzgerald (R-Wis.), the subcommittee chair, said during Tuesday's hearing. "The number of rules that agencies create is overwhelming."

However, Democrats on the committee spoke against tech entrepreneur Elon Musk's access to sensitive data held by federal agencies as he leads the federal agency overhaul through his leadership of the U.S. Department of Government Efficiency. Rep. Jerry Nadler (D-N.Y.), the subcommittee ranking member, said Musk is usurping Congressional authority and that there is "no check and no balance from the Republican Congress."

"As we speak, Elon Musk and his band of near-teenaged accomplices are systematically working their way through the executive branch, knocking down agency after agency, while undermining the rule of law and shredding the constitution along the way," he said.

Regulatory reform weighs against concerns about Musk

Axon spent years in a legal battle with the FTC, challenging the constitutionality of its processes, Smith said.

Axon acquired what Smith described as a small, failing body camera competitor in May 2018 for $13 million. He said the company had been attempting to sell for 18 months, but other competitors declined to buy it. Smith said the acquisition resulted in a "disproportionate government response." Smith said the FTC demanded that the company license its intellectual property to create a "clone competitor." 

During Axon's dealings with the FTC, Smith said he learned that over the last 20 years, the FTC had won 100% of its cases in its in-house forum. The FTC can use an internal process called an adjudicative proceeding with administrative law judges instead of going to federal court to resolve cases.

"This is bigger than one company or one case," Smith said. "Every American, whether an individual or a small or large corporation, should have the right to a fair trial before an independent judge."

Magatte Wade, an entrepreneur from Senegal in West Africa and a hearing witness, voiced concerns about overregulation in the U.S., something she said has negatively impacted Senegal. Wade is known for speaking against overregulation in Africa.

"Even in the U.S., it is difficult for a business person to be fully compliant with all the laws," she said. "In Senegal, I usually have to pay lawyers to make sure I'm compliant all the way. It costs a lot of money and a lot of time and makes me very non-competitive."

Rep. Jamie Raskin (D-Md.), ranking member of the House Judiciary Committee, said Musk's access to agency data and potential business competitor information should be a higher priority for Congress than a hearing about regulatory reform. Raskin described Musk's attempts to halt work at agencies like CFPB as "scandalous."

"That's what we should be having a hearing about, not some academic conversation about the administrative state," he said.

Wade said Raskin's words concerned her. She said regulation is a significant topic that merits a Congressional hearing.

"As an entrepreneur, my time is valuable," she said. "I came here because I thought we were going to talk about the regulatory state and why it matters. I'm deeply offended by what you said there."

While regulations are essential in achieving policy objectives such as protecting public health and the environment, regulatory reform can "reduce unnecessary burdens on businesses and consumers," said Patrick McLaughlin, a research fellow at the Hoover Institution, and a hearing witness.

"When regulations pile up over time without systematic review, this regulatory accumulation has costly consequences," he said. "Compliance becomes more complex, businesses face mounting overhead costs and entrepreneurs struggle to navigate the maze of over one million regulatory restrictions that are currently on the books."

Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer

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