The wrath of Khan? New FTC chair is Big Tech’s biggest nightmare

Two words send shudders down the spines of Big Tech executives while also raising their blood pressure: Lina Khan.

The newly appointed chair of the powerful U.S. Federal Trade Commission, an agency with broad authority to police America’s biggest corporations including its technology giants, has been one of Silicon Valley’s chief critics, earning her the bromide of being leader of the “hipster antitrust” movement among young scholars. They want to expand existing antitrust law to better target issues like corporate concentration and income inequality.

Along the way, the 32-year-old Khan has gained the support of politicians across the ideological spectrum, from progressives Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, D-Vt., to hard-right conservatives like Sens. Josh Hawley, R-Mo. Warren, who ran on breaking up Big Tech in her 2020 presidential campaign, described Khan’s appointment as “tremendous news.” During Khan’s confirmation hearings, Sen. Ted Cruz, R-Tex., said he looked forward to working with her.

“Antitrust enforcement fell through the floor for decades, and the courts have been defanged as well. I am thrilled by her appointment,” civil liberties attorney Shahid Buttar told MarketWatch. “Lina’s appointment has broad societal implications far beyond tech, and into consolidation in media, finance, broadband access.”

Khan’s appointment on June 15 was Big Tech’s second major body blow in less than a week. On June 11, the Democratic-controlled House introduced sweeping antitrust legislation with bipartisan support that put Google parent Alphabet Inc.

, Inc.
Apple Inc.
and Facebook Inc.

in its crosshairs.

The five bills could have far-reaching — and potentially devastating — consequences for tech firms, forcing them to shed businesses like Facebook’s Instagram, severely restricting their ability to scoop up and acquire would-be competitors, and imposing limits on platform-run businesses. The “Ending Platform Monopolies Act,” which proposes structural separation, in part says, “It shall be unlawful for a covered platform operator to own or control a line of business, other than the covered platform, when the covered platform’s ownership or control of that line of business gives rise to an irreconcilable conflict of interest.”

Read more: House Democrats just introduced 5 antitrust bills aimed at reining in Big Tech

What has the tech sector spooked is the role Khan could have in shaping antitrust law. It was her work as counsel on a House subcommittee, after all, that led to formulation of the five bills, and she has made no secret of how she views the big five companies, whose total market value is more than $8.5 trillion.

“What became clear is there had been a systemic trend across the US… markets had come to be controlled by a very small number of companies,” she told the BBC this year.

Critics like Khan, who wrote a paper in 2017 called “Amazon’s Antitrust Paradox” for the Yale Law Journal, argued that Amazon shouldn’t be excluded from antitrust scrutiny simply because it had a history of cutting prices. The premise of the paper was that traditional antitrust focus on prices consumers pay was inadequate to identify potential harm done by Amazon, and that current competition laws aren’t fit for the challenges of today and are badly outdated. Buttar calls the paper a “seminal work” that helped spark the House’s new antitrust legislation.

“These firms essentially provide infrastructure to the digital age,” she told the BBC in her previous interview.

“A small group of private executives are setting the rules of who gets to use the infrastructure and on what terms,” she added.

Khan, who was not available for comment for this article, is considered as much a threat to Big Tech as the antitrust bills, FTC and Justice Department investigations, and state attorneys general lawsuits.

Her appointment as chair of the FTC — rather than one of its four other members, as some in the Beltway and Silicon Valley assumed — confounded and outraged tech executives. They’re rattled by a LinkedIn profile that includes stints as an associate professor at Columbia Law School since September 2020, where she shares close ties with outspoken tech critic Tim Wu, as well as counsel for the House Subcommittee on Antitrust, Commercial, and Administrative Law, of which Rep. David Cicilline, D-R.I., is chairman, and whose findings led to the five antitrust bills.

Khan’s link to Wu is particularly vexing, tech industry observers note, since the FTC is supposed to operate independently of the White House and Wu is an antitrust advisor to President Joe Biden.

The direct link amounts to a “red-light phone” between the FTC and White House, argues Carl Szabo, vice president and general counsel of NetChoice, an industry group whose funders include Amazon, Facebook, and Google.

“You’ve put somebody in the position of neutrally enforcing the laws when they would much rather write them,” Szabo told MarketWatch. “Imagine being asked to sit before a judge who has written a paper claiming the defendant is guilty. This casts a pall of controversy and political connections, undermining trust.”

“She should recuse herself from any decision [on Big Tech] that she has rendered,” Szabo said. “Otherwise, it will end up being disputed in court.”

None of tech’s big players have publicly commented on Khan. But Jake Ward, president of Connected Commerce Council, an organization representing thousands of small businesses, told MarketWatch: “[Khan] brings an activist perspective, and wants to change a market that is working just fine. Congress and the FTC have done a nice job over the last 100 years on antitrust. We don’t need new laws; the ones we have work just fine.”

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