Lina Khan Has Big Plans For Big Tech — But She Might Not Have the Tools
Last week, Lina Khan, a Columbia Law professor who built her reputation on progressive antitrust policies, was sworn in as chair of the Federal Trade Commission. Her confirmation came just days after Congress introduced five antitrust bills specifically targeting Amazon, Google, Apple, and Facebook (the so-called “Big Four”) for their anticompetitive practices.
While Khan’s 69-28 Senate confirmation seems to indicate a bipartisan push for greater regulation of tech companies, she’ll be entering an agency juggling a monumental lawsuit with very few resources. The FTC launched more than 40 antitrust lawsuits during the pandemic, including a landmark case against Facebook over its illegal monopolization of social network services.
Leaked audio from Mark Zuckerberg in 2019 indicated that the company wouldn’t go down easy against the U.S. government, with the social media mogul stating, “ I don’t want to have a major lawsuit against our own government… But look, at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”
Confronting a billion-dollar company like Facebook requires an enormous expenditure of time and resources. Cases taken up by the FTC cost the agency enormously in fees paid to outside consultants and economists, who can charge as much as $1,350 an hour. At the same time, corporate merger filing fees have fallen during the pandemic, which traditionally serve as a major cash flow for the agency.
According to emails obtained by POLITICO, the lack of funding is also taking its toll on FTC staffing and resources. “[W]e will either need to bring fewer expert intensive cases or significantly decrease our litigation costs (e.g. experts, transcripts, litigation support contractors, etc.),” Executive Director David Robbins said in an October 29, 2020 email.
Robbins said in later emails that the agency would be freezing all hiring, promotions, and end-of-the-year bonuses indefinitely. The FTC may see funding increases in 2021 if Congress passes bills like the U.S. Innovation and Competition Act, which would allow the agency to increase their merger filing fees. However, it’s still unclear how much these fees would be raised and when the new payment schedule could be applied.
But that’s not all—Khan will also be facing a legal system that has had a traditionally narrow view on what constitutes monopolistic behavior.
The two primary laws regulating antitrust, the Sherman Act and the Clayton Act, were both passed over a century ago, and even at the time, pro-labor groups lamented these acts were watered down through the heavily lobbied legislative process. Since these acts were passed, courts have erred on the side of underenforcement of antitrust and made it increasingly difficult to successfully challenge anticompetitive conduct.
According to a report by Democratic members of House Judiciary Committee, which was written with the help of Lina Khan last year, “By adopting a narrow construction of ‘consumer welfare’ as the sole goal of the antitrust laws, the Supreme Court has limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process—contravening legislative history and legislative intent.”
These outdated legal structures are difficult to apply to modern digital companies, with Khan’s own work centering on this tension. In 2017, she gained recognition for her piece “Amazon’s Antitrust Paradox”, which makes the case for evaluating antitrust violations on a different standard than consumer welfare. Consumer welfare cases rely on proving that a company’s high prices are negatively impacting consumers. This legal standard doesn’t really work for companies like Amazon, which offers affordable products, while potentially using predatory pricing and data insights from their platforms to edge out smaller competitors.
As former FTC chairman William Kovacic told The New York Times, “If you want your vision to endure, you have to change law and policy, and you can’t do that by yourself.”
Europe has ramped up Big Tech antitrust enforcement over the past decade, bringing major cases against companies like Google, while the U.S. has lagged behind. The European Commission issued billions of dollars in fines against Google for antitrust violations, while the FTC’s antitrust investigation resulted in a recommendation to not pursue a case against the company. However, leaked FTC documents later revealed that the agency privately concluded that Google had committed three counts of monopolistic abuses of power against its competitors.
Khan’s appointment and new legislation signal a desire from Congress to speed up antitrust enforcement, but it’s going to be a long fight that requires agreement from the FTC, Congress, and the courts. If Congress is serious about cracking down on Big Tech, it will need to equip Khan and the FTC with the tools necessary to get the job done. If not, the FTC may again be resigned to only privately acknowledging wrongdoing, while publicly letting companies off the hook.
To read more on the history of antitrust regulation in America, and the difficulty of regulating Big Tech companies under current regulatory structures, see The New Center’s policy paper, “How Can Washington Take On Big Tech? The Digital Commerce Agency.”